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EDI Helps Pharmaceutical Company With Regulatory Compliance, Order Management

New government regulations of the drug industry drove the need for a more responsive, feature-rich and flexible EDI environment - but that created opportunities for one pharmaceutical company.

EDI Helps Pharmaceutical Company With Regulatory Compliance, Order Management

Founded in 2008, Kowa Pharmaceuticals America Inc. develops and delivers solutions in the field of cardiometabolic therapeutics. Like most manufacturers, wholesale distributors, dispensers and other participants in the pharmaceutical supply chain, Kowa was impacted by the Drug Quality and Security Act (DQSA) of 2013, which aims to create an electronic traceability system for pharmaceuticals.

Jim Teegarden, Director of Trade Relations at Kowa Pharmaceuticals America, recognized early on that the DQSA would not only require moving to a new EDI environment, but that a more robust EDI solution presented an opportunity to streamline order processing and enhance communication with Kowa’s trading partners.

“My job is to monitor Kowa’s relationships with the wholesale drug distributors that are our trading partners,” Teegarden says. “That includes keeping them informed about product availability, managing their inventories, monitoring their days on hand, and staying in contact and ensuring we’re always on the same page.”

From Mandate to Action

Kowa Pharmaceuticals decided to move proactively to standardize on EDI for orders in compliance with DQSA mandates.

At that time, Kowa had several smaller customers still ordering via fax. To ensure compliance prior to DQSA timelines, quickly moving these wholesalers to EDI was in everyone’s best interest. Teegarden says he requested that all wholesalers ordering via fax introduce him to their EDI teams as promptly as possible to begin the transition to EDI. “So from that point, the EDI 810 invoice and the EDI 850 purchase order became our sole process for exchanging order information, and that has worked very well,” he says.

A need to move beyond the limited capabilities of a brokered EDI system led to the search for a solution that would integrate with Kowa’s ERP system, Microsoft Dynamics AX.

Kowa next moved to provide each partner with an EDI 856 advance ship notice that met regulatory guidelines for transaction history, transaction statement, and transaction information.

Some functionality was already in place. Kowa had been using a brokered EDI service that was not integrated with its Microsoft Dynamics AX ERP system. But that system offered few transaction details.

It was time to take EDI to the next level, Teegarden says. “I didn’t want to leave anything to chance regarding our supply chain documents, so it was clear our company needed to look for a new EDI system.”

Kowa chose web-based TrueCommerce EDI for Microsoft Dynamics AX, which combines a deep level of turnkey integration embedded within AX along with a scalable managed services hosting model. Configurability to flexibly adapt to an organization’s AX workflow without the need for programming was another advantage of the TrueCommerce EDI integration for AX, says Teegarden.

The solution went live March 1, 2016. Currently the manufacturer has 20 authorized trading partners, including the three largest U.S. pharmaceutical wholesalers with approximately 100 distribution centers among them, as well as 17 smaller wholesalers in the U.S. and Puerto Rico, each with one to seven DCs.

Numerous Improvements

Today, Kowa receives all product orders through EDI. They are organized using the TrueCommerce Scheduler add-on for automated import/export to and from Microsoft Dynamics AX at predefined times. The AX system passes EDI information to and from Kowa’s warehouse management system.

Teegarden says he works with EDI directly in AX on a weekly basis specifically for exporting EDI 844 product transfer account adjustment documents from trading partners, most of which are related to either contract pricing or 340B drug pricing programs.

But what are the improvements, and how significant have they been?

“Prior to implementation,” Teegarden says, “I had to depend on an associate in the warehouse to ensure that I received copies via email of all the brand pharmaceutical orders that we received. Now I see POs on my end through TrueCommerce in real time. So if there are discrepancies, I have the opportunity to cancel the order, and ask the buyer to place another order, all of which saves us headaches downstream.”

An added benefit is that authorized users no longer have to wait until the end of the week for reports from accounting, or request mid-week sales updates. Order management headaches are now a thing of the past.

“I now know what our invoices are going to total before end-of-the-day processes—and that is only possible because TrueCommerce offers both built-in and custom reporting to provide it,” Teegarden says. “When I see EDI 810 invoices going out via EDI to our trading partners, I know what the dollar amounts are, and I know when those invoices are acknowledged. The same thing goes for ASNs. Now I can frequently close out my product distribution business week by Friday morning.”

Partner relationships have expanded beyond buyers and brand managers to include EDI and traceability teams.

If a trading partner fails to acknowledge receipt of a document in a timely manner, the Kowa IT team can see if it has a problem on its end. If not, a user can contact support at TrueCommerce.

In addition to improving visibility on order data, the solution saves time for both business users and warehouse staff. The time it takes to review orders, ASNs, outbound invoices or documents related to picking, packing and shipping of orders is greatly reduced.

Just-in-Time Compliance

Kowa put the new system in place just in time for the sweeping regulatory changes. For example, the Drug Quality and Security Act requires manufacturers to provide transaction information, transaction history, and transaction statement in an electronic document to trading partners for all sales by Nov. 27, 2017.

EDI greatly helps meet that burden, in Teegarden’s view. “You can’t efficiently keep track of what’s going on any other way. You cannot handle the volume of invoices and other documents and be able to look at all of them and create the reports you need any other way than EDI.”

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Kowa Pharmaceuticals America Inc.

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