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Press Release08 Aug (Fri) Morning Paper

(Release after 07 Aug 12:00)Release

date07 Aug / (10 pages in

total)Department in charge

Division of Pharmaceutical Policy

Division Head Hyeong-Woo Koh

Tel044-202-2490

Person in charge Go-Woon Lee 044-202-2487

Drug serialization system to be implemented next year

- MoHW to allow phased serialization of manufactured/imported ethical drugs from next year -

□ Ministry of Health and Welfare (MoHW, Minister Hyungpyo Moon) announced that ‘Drug serialization system’ will be implemented from January next year that assigns a unique number per drug package unit.

○ It aims at safe use of drugs including clear drug distribution and prevention of misuse/abuse and counterfeit of drug, and

- Enables tracking-management of full pathway of drug distribution in smallest drug distribution unit from manufacture/import by pharmaceutical companies to healthcare service providers via wholesalers.

○ GS1-128 code, an international standard code system, includes Expiry date, Batch No. and Serial No. as well as Product code, and

- Turkey, China, and many other countries are preparing to employ or already employed a drug serialization system, and USA and EU will also employ such a system in 2017.

- In Korea, amendment to the applicable regulation in 2011* established a basis to add the serialization from 2015.

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* [Guideline on the Use and Management of Barcodes and RFID Tags for Drugs] (MoHW Notification, Amended and proclaimed in May 2011)

【Note】 GS1-128 numbering system

Application Identifier 01 17 10 21

Description Product # Expiry date Batch No. Serial Number

Data format n14 n6 an..20 an..20

□ MoHW plans to make each pharmaceutical company serialize manufactured/imported ethical drugs from January next year, but

○ allow phased serialization within a period not exceeding one year if a prior implementation plan* is submitted and approved.

* A separate form will be provided (Submission due date will be notified later).

○ In such cases, each pharmaceutical company shall serialize the products equivalent to 30% of its sales from January next year, and

- complete serialization of other ethical drugs by the end of next year.

○ It takes account of cost and time burden for addition of serialization, delay in the system introduction schedule in USA/EU, etc. after full discussion with related industry representatives.

- In particular, considering that it is difficult to set a fixed standard because preparation status varies with companies, etc., decision on which products will be serialized first will be made autonomously.

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○ However, it is obligatory that Designated Drugs* including narcotics, psychotropics, etc. should be included in the products to be serialized first, considering the necessity in safety management, etc.

* Narcotics and psychotropics, drugs with flammability/explosiveness, biologics, etc. (A total of 428 items)

□ Record of supply of serialized ethical drugs shall be reported by each pharmaceutical company and wholesaler to Korea Pharmaceutical Information Service, and

○ MoHW stated that the information reporting to Korea Pharmaceutical Information Service will be implemented in 2016 considering the time of stock exhaustion or market circulation volume, etc. of ethical drugs manufactured/imported by this year.

○ For this, pharmaceutical companies, wholesalers, healthcare service providers, and Korea Pharmaceutical Information Service will form a consortium together in the second-half of the next year to conduct a pilot project for the whole process including reporting and utilization of serialization information.

○ MoHW revealed a plan to establish a system through which serialization information is available to wholesalers and healthcare service providers as well as pharmaceutical companies based on the outcome of the pilot project, etc.

□ Establishment of this system of use of serialization will enable the management of distribution of drugs in their smallest distribution unit, facilitating the shutdown of distribution and advance recall of problematic drug products as well as the identification of faulty/counterfeit drugs.

○ In addition, the reported serialization information is expected to help reduce the financial burden on National Health Insurance and establish the transparent drug distribution order via utilization in investigation of

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drug distribution status or actual transaction price, etc.

□ Meanwhile, MoHW stated that it will, together with Korea Pharmaceutical Information Service, inspect the implementation status based on prior implementation plan submitted by each pharmaceutical company, etc., and

○ Will also provide incentives by which Drug Distribution Information Provision fee will be reduced for products serialized first, etc.

- In addition, briefing sessions for correct manner of drug serialization will be held for pharmaceutical companies, wholesalers, etc. from September.

○ MoHW source said, “Execution plan has been discussed in TF composed with Korea Pharmaceutical Manufacturers Association, Korean Research-based Pharmaceutical Industry Association, etc. since March”, and

- “We will keep doing our best to successfully implement the drug serialization system for safe use of drugs and clear drug distribution”.

<Attachments> 1. Execution plan for drug serialization system 2. Employment of serialization in leading foreign countries

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Attachment 1 Execution plan for drug serialization system

1. Execution of serialization system

◇ From Jan 2015, pharmaceutical companies, etc. shall serialize ethical

drugs manufactured/imported in Jan 2015 and onward

However, pharmaceutical companies, etc. having difficulty in full ◇

execution may implement the serialization in a phased manner by the

end of 2015 if they submit and have approved prior implementation plan

[1] Submission of prior implementation plan

○ Each pharmaceutical company should submit the plan for implementation of serialization (including the products to be serialized first) to Korea Pharmaceutical Information Service in advance (by Oct 2014).

○ Serialization in a phased manner will be allowed and administrative disposition will be postponed for a certain period of time, etc. only for those pharmaceutical companies that submit and have approved the plan.

- Administrative disposition (Suspension of sales for 15 days ~ 6 months for the

product) will be postponed for a maximum of 1 year until the pharmaceutical company reports the serialization information (31 Dec 2015)

[2] Plan for serialization marking/management

○ Each pharmaceutical company shall first serialize the products equivalent to 30% of its sales from Jan 2015.

- However, harmonization of sales and the number of products should also be considered, e.g. the selection of the products should be made so that

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around 30% of the number of products may also be included.

○ It will be made that Designated Drugs* should be serialized first, considering the necessity in safety management, etc.

* Narcotics and psychotropics, drugs with flammability/explosiveness, biologics, etc. (A total of 428 items)

- It is made obligatory that big companies manufacturing Designated Drugs should include the Designated Drugs in those products serialized first.

* However, in the case of companies which manufacture Designated Drugs only, requirements will be the same as those for other companies.

○ Serialization of other ethical drugs should be completed by the end of 2015.

○ Quarterly monitoring on status of serialization will be conducted (2015).

- Monitoring and inspection will be conducted so that serialization may be smoothly implemented according to implementation plan, etc.

[3] Exemption from serialization

○ Fluid products, artificial perfusates, etc. which are unlikely to be counterfeited and difficult to serialize are exempted from serialization.

* Weight and volume are relatively large and thus the distribution structure is simple and storage and distribution management cost is high (They are also designated as exemption products in the USA).

** Radiopharmaceuticals, orphan drugs, and cell therapy products are already exempted from barcode attachment (Notification [Guideline on the Use and Management of Barcodes and RFID Tags for Drugs])

- It needs to be considered that barcode attachment is not technically easy and serialization constitutes a factor causing price rise as selling price is low, etc.

○ Pursuit will be made to reflect those products exempted from the

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serialization in Notification.

2. Plan to establish information reporting/utilization system

Changing the basis of distribution management system from ◇ total volume

to smallest distribution unit of individual product

◇ Establishing information utilization system where Korea

Pharmaceutical Information Service manages the serialization

information reported by pharmaceutical companies and wholesalers and

information is also available to healthcare service providers

□ Timeline for information reporting/utilization

○ (Basic direction) Establishing a system where pharmaceutical companies and wholesalers report serialization information at the time of shipping of a product, and the reported information is also available to healthcare service providers (‘Track and Trace’), in a phased manner

- Pursuit will be made with consideration for market circulation volume or time required to establish information system, etc., considering that ethical drugs manufactured/imported from Jan 2015 will be serialized.

○ (Pilot project) Pharmaceutical companies, wholesalers, healthcare service providers, and Korea Pharmaceutical Information Service will form a consortium together to conduct a pilot project for the whole process of serialization, reporting and utilization (from the second half of 2015).

○ (Pharmaceutical companies/Wholesalers) Shall report serialization information, drug arrival/shipping information, etc. from Jan 2016.

* Common form for information reporting, etc. will be detailed by MoHW-Industry TF (from Sep 2014).

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○ (Information utilization) Healthcare service providers will utilize the serialization information from 2016 when serialized ethical drugs will be fully circulated, with consideration for time of stock exhaustion.

3. Other cooperative measures/ subsequent schedule

[1] Other cooperative measures

○ (Health industry) Preferential treatment in giving various incentives including designation as Innovative Pharmaceutical Company and support for consulting cost, etc.

○ (Provision of information) Reduction*/Exemption of Drug Distribution Information Provision fee

* Currently, pharmaceutical companies employing RFID are given 50% reduction of the fee.

○ (MFDS) Arrangement was made so that in the case of imported products without serialization, the importer may put barcode including serialization on the products before shipping (04 Aug)

[2] Subsequent schedule

○ (Sep 2014 ~) Regularized operation of MoHW-Industry TF for information reporting, etc.

- Providing guideline/education and briefing sessions to pharmaceutical companies/wholesalers, etc.

* Guideline for serialization method was distributed (HIRA, 30 May).

○ (~ Oct 2014) Prior submission of serialization implementation plan*

- The submitted plan will be approved after review (Korea Pharmaceutical Information Service).

* Submission form and due date, etc. will be notified later.

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○ (~ Oct 2014) Pursuit will be made to amend the related laws and notifications.

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Attachment 2 Employment of serialization in leading foreign countries

[1] (Turkey) First in the world to employ pharmaceutical track and trace system for the purpose of solving the problem of drug theft and circulation of counterfeit drugs and protecting drug safety (iTS portal was opened in Jan 2012)

○ It is made obligatory that all drugs be serialized, and information be reported on an individual drug unit basis at every stage of distribution (2010 ~)

[2] (India) Serialization is applied to export drugs (2013 ~) as export of counterfeit drugs with false information on place of origin becomes a problem.

[3] (China) Serialization is applied to drugs listed in National Essential Drug List (~ 2012); Planning to expand to all drugs by the end of 2015.

○ However, numbering system of China's own is applied unlike Turkey and India which use GS1 standard.

[4] (EU) ‘End-to-End’ method where pharmaceutical companies upload serialization information into the central information system (European Hub) and then the information is verified at user level (healthcare service

provider).

○ Establishing drug verification system based on serialization to enable consumers (patients) to know whether a drug is authentic or counterfeit when they buy the drug.

- It will be made obligatory from 2017 based on outcome of Sweden (2009 ~

2010)/Germany (2012 ~ 2013) pilot project, etc.

[5] (USA) ‘Track and Trace’ method where pharmaceutical companies,

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wholesalers, healthcare service providers, etc. all shall report drug distribution information.

○ As US Senate passed H.R 3204 (Sep 2013), reporting of details of distribution will be made obligatory from 2015 and serialization marking will be made obligatory from the end of 2017.

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< Comparison of information reporting method >Track and Trace End-to-End

< Schedule of introduction of related systems in leading countries >

* Adapted from [Study on Measures for Operation of Drug Serialization System] (May 2014)

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