As we march toward the 2023 Drug Supply Chain Security Act (DSCSA) compliance deadline, pharma companies continue to invest in track and trace systems. Back in the early days of DSCSA, Level 5 database compliance for serialization may have seemed out of reach for small pharma companies. But now, it has become apparent that Level 5 is required to fully harness the capabilities of serialization and extend its business value by sharing data with supply chain partners outside the enterprise. With a Level 5 solution, pharma companies can capture and analyze downstream information pertaining to supply chain trends and customer usage, which thereby increases visibility to, and control of, product logistics. 

In this article, we will summarize the technical operations of the Level 5 database and present the various applications of that Level 5 beyond the generation and management of serial numbers. We will also discuss the multitude of business benefits available to pharma companies, large and small, through the implementation of and enhancements to a Level 5 serialization solution.

Technical details of Level 5 serialization database
A Level 4 solution is a brand owner’s MES/ERP system, which manages the internal operations of manufacturing operations. The Level 5 is a cloud-hosted solution which allows integration of serialization and business data from multiple locations in the supply chain for pharmaceutical traceability and compliance with the FDA’s Drug Supply Chain Security Act (DSCSA).

The standard communication data format to exchange serialized data in the supply chain is EPCIS (Electronic Product Code Information Services). The GS1 global data standard and GS1 also publishes and updates DSCSA specific guidelines for using the ECPIS standard to comply with the DSCSA data exchange requirements.

A Level 5 Cloud acts as the brand owner’s repository for holding all the serialization data from across multiple manufacturing locations in a central place. The Level 5 database will generate serial numbers for assigning to individual saleable units as well as other packaging levels in the packaging hierarchy. The manufacturing site of brand owners and contract manufacturers print the serial numbers on the assigned primary package, case and pallet, and transmit this data back to the cloud in the form of serial number “commission” and “aggregation” events. By sending the serialization data ahead in the supply chain, the same events can be transmitted forward in the supply chain, for example, to the third-party logistics provider. This transfer of data is typically synchronized with the physical shipment of product to the 3PL. The 3PL, in turn, can reconcile the data with the physical product received to ensure data and product integrity.

Benefits of Implementing a Level 5 Solution
1. Level playing field for smaller/low volume brand owners
In an increasing number of instances, the cloud empowers small pharmaceutical companies with shoestring budgets to affordably leverage the same or comparable robust tools used by wealthy multinational corporations. A scalable cloud platform allows low volume serialization customers access to the same high end as the bigger players.

2. Cloud providers as extension of your IT departments
Level 5 cloud service providers have the expertise and technology to provide continuous security monitoring and incident response. They can act as an extension of your in-house IT resources, supporting you with compliance-driven knowledge and experience.

3. Rapid deployment and shortened validation timelines
With the increased adoption of Level 5 cloud implementations in the pharmaceutical industries, both validation resources and cloud providers have collaboratively developed standardized protocols for validation. Level 5 cloud implementations over validated and standardized infrastructure typically have a much shorter implementation and validation timeline compared to in house implementations with location-specific physical hardware and security implementations.

4. Control over your own data
Level 5 Cloud allows pharma companies to share information across authorized external parties. More importantly, cloud providers have contractual agreements and security controls built into their systems to guarantee that only your company’s authorized users have access to the company’s data.

Any reputable cloud system’s design will be specifically geared toward security assurance and authorized access, with the latest security measures (i.e., encryption, multi-factor authentication, etc.) built in.

5. Scalability and flexibility
Based on the brand owner’s requirements, Level 5 cloud infrastructure can be scaled up and down as required to keep with the continuously evolving compliance landscape. Virtual cloud environments inherently provide scalability and flexibility to support such changing requirements.

6. Reduced capex and ongoing operational costs
Implementing a Level 5 cloud solution allows brand owners to reduce the upfront investment costs, as all cloud providers work on a subscription model with a fraction of the setup cost of a dedicated on-premises infrastructure. As more businesses are now adopting the same approach, it will drive down the overall cost across the shared service infrastructure.


Fortunately, cloud computing services, traditionally developed in-house at large pharma companies, have now become available by serialization service providers to small pharma companies and third-party contract manufacturing organizations (CMOs). While Levels 1 through 3 serialization ensures regulatory compliance, a well-designed Level 5 system can provide a number of business benefits to the brand owner and their patients. First of all, a well-designed and operated Level 5 system enables downstream connectivity to trading partners, including end-users. Products can be tracked through the supply chain and into customer’s hands with much better accuracy and timeliness. Because products are serialized at the primary package, case, and pallet, it is much easier for each member of the supply chain to track the shipment time and place at each step in the supply chain. In summary, the supply chain tracking system is much more responsive and easier to use.

Before serialization implementation and with effective Level 5 management, returns processing was done with inadequate accuracy and timeliness. Now with serialization applied, returns processing can be much more simplified and accurate. The serialization documentation that accompanies a returned shipment is precise and has more information that is detailed and timely. And now that the FDA will require implementation of the Verification Router Service (VRS) by the end of 2023, pharmaceutical brands will be able to validate the status of a returned product to ascertain its re-saleability and ensure regulatory compliance.

Prior to the implementation of serialization, demand management was not always accurate and timely. A well-developed Level 5 serialization system greatly enables just-in-time management, and shipment documentation can now be provided with much more dependable, timely, and useful information. Also, management can notice disappointing sales in wholesale channels and possibly retail channels more quickly and take action to balance supply chains. Demand management can be optimized by a Level 5 that is well integrated with supply chain partners. As each product is shipped through the supply chain, a timely history of movement can be maintained. Shortages in some markets can be quickly detected, and those channels can be supplied in a timelier fashion. Also, when brand owners announce recalls serialization can facilitate this event in terms of timeliness, size of the recall, and geographical focus.

The timeliness and accuracy of a recall are significantly improved with information that is serialized and monitored by an effective Level 5 system, particularly given that shipments are now aggregated at the primary, secondary, and tertiary levels. This results in much greater control and timeliness of recalls, and in turn can decrease the financial ramifications of a recall.

A pharma company’s marketing departments can be much more in tune with each product’s marketing channels, given the available information through serialization in a continuously updated Level 5.
Demand-side information can be obtained faster and more completely than ever before with a Level 5 that is continuously updated with ERP and other marketing databases. Communications that are received from customers who use the products can provide invaluable information about important product characteristics—such inputs can be used in future advertising or physician training programs.

Broadening the applications and leverage of information that can be obtained and utilized from Level 5 data can provide several improvements to business processes and supply chain efficiency. Supply chain managers can clearly and more timely track products throughout their supply chains, and ultimately benefit all parties in the supply chain, marketing department and in the end benefit patients of these products. Continuously updated information on supply chain movements as well as any available information that is obtained and provided as input to the Level 5 system can be extremely valuable.

Level 5 can dramatically improve small pharma’s access to supply chain information and enable agile organizations to develop innovative marketing and cost-cutting strategies. It also removes the dependency on expensive data mining companies to provide brand owners with a snapshot of data about their products. An effective and well-developed Level 5 can significantly enhance a pharma company’s ability to boost its supply chain responsiveness, make recalls and returns more quickly and with better documentation, and enable track and trace of the company’s products. 

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Steve Wood serves as President & CEO at Covectra, a leader in serialization and track & trace solutions. He can be reached at swood@covectra.com.