Electronic Labeling And Disclosure – Keeping Up With Changing Labeling Laws
As a technology company working closely with companies within the consumer products manufacturing, pharmaceutical products and retail industries, we’ve been working through approximately a dozen product labeling or transparency regulations in the last few years. Regulations around labeling within the industries are in constant flux, bringing with them frequent changes to requirements and content, often leaving enterprises struggling to comply. Why are these changes occurring so frequently?
Consumers today have become more conscious of their health, their purchases and the effects of their choices on themselves and the world around them. They are concerned about what they eat and how their purchases can have repercussions on communities and the environment. Because of near universal access to the internet through smartphones, this socially aware generation is used to quickly pulling up information about everything and is more likely to take their business to brands that are perceived as socially good. Echoing these shifts in consumer mindsets, governments across the globe are enforcing or in the process of introducing regulations for labeling and packaging that take into account the safety and concerns of their citizens. Let us take a look at the areas inspiring these regulation changes.
Growth of illicit trade in counterfeit products
Governments across the world are turning to traceability features and introducing regulations for serialization on pharmaceutical packaging or in the process of doing so. These regulations come in the wake of rising criminal activities in the form of illicit trade in fake and substandard medicines, continued existence of parallel supply chains and supply chain inefficiencies. The Drug Supply Chain Security Act (DSCSA) in the US came out in 2015 with the goal to create an electronic system that can track and trace certain prescription drugs, with dispensers, pharmacies, manufacturers, repackagers, wholesale distributors, third-party logistics providers, and trading partners being responsible for reporting all transactions as well as providing support in the investigation of suspect drugs. The act aims to electronically integrate all prescription drugs at the unit level into the system by 2023. Similarly, the EU’s Falsified Medicines Directive, that went live in February of 2019, looks to attach a unique serial code embedded into a 2D data matrix code on individual packaging, that can carry verified data associated at the unit, batch and pallet level.
Compliance to these regulations have thus become the major focus for all pharmaceutical manufacturers and supply chain partners, who now have to assign serialized codes and integrate them into their information management systems, ensure the authenticity and security of the data associated with each unique code and share the same with regulatory bodies for compliance.
Rise in demand for consumer transparency and clean labels
This information driven age has aided in the growth of social and environmental consciousness, and people today have become aware of their responsibilities and the impact their lifestyle choices have on societies and the environment. What consumers want from product labels goes beyond a simple ingredient list. They want to know the provenance of the bar of chocolate they want to buy; is it an authentic product? Does it contain anything they could be allergic to? Is it safe for a diabetic? Was it ethically and sustainably sourced and produced? Consumers are demanding more transparency not just into the contents of products but the processes involved in producing and distributing them as well.
In order to encourage healthier eating habits and lifestyle choices while keeping in mind widespread health concerns, regulatory bodies want enterprises to be responsible with their products and nutritional claims and they want that to reflect on the labeling. They are putting in place regulations to ensure that product labels have accurate nutritional information, in standardized formats that are easy to read and absorb. The National Bioengineered Food Disclosure Standard (NBFDS) which came into force this year, with a mandatory compliance date in 2022, is a reflection of these concerns. It is intended for manufacturers, importers, retailers and other entities in retail space for the disclosure of bioengineered food and ingredients on product labels. Through it, the USDA has established four channels to do so: (1) text, (2) symbol, (3) electronic or digital link or (4) text messages.
Regulatory bodies are also looking into revamping labels so that they are less confusing. For example, the UK’s FSA is exploring options on how to incorporate allergen content on pre-packed food for direct sale, that is quick to spot and easy to discern. GMA’s SmartLabel initiative is another example of enterprises and regulatory bodies embracing digitization for greater transparency in order to deliver standardized digital labels on everyday consumer products that display information in a clear and attractive format.
Changing political climates
Another cause for shift in regulations that will impact the design and content of product packaging and labeling is the changing political climate. The impending Brexit situation will bring changes in labeling regulations for certain food and beverages, in the event that the UK leaves the EU without a deal on October 31, 2019. The UK government will introduce changes to labeling concerning goods produced or imported or placed on the UK market after exit day. Retailers, manufacturers and distributors will need to remove all logos and trademarks with the EU emblem to reflect the change.
Operating in global supply chains
Modern enterprises operate massive and complex supply chains sprawled across the world. They sell their products in a large number of countries while maintaining compliance with the labeling regulations of each. The more global their reach, the more regulations they need to comply with.
A global presence also means a highly diverse audience, consisting of people speaking a wide variety of languages. For example, the EU requires all medical devices sold within its territories to have labels in languages of its member states. Similarly, multilingual countries like Belgium and Canada have regulations in place to ensure their linguistic diversity is reflected on all labels and packaging within their territories.
Why go digital?
The answer to keeping up with changing labeling regulations may lie in going digital. Electronic or digital disclosure of product information are in congruence with the habits of technology savvy modern consumers who are used to turning to their smartphones for information on just about everything. Electronic labels leverage the internet and a browser available on most smartphones as a means to deliver consumer specific product information which can be activated straight off the packaging. Unlike their print counterparts, changes to electronic labels can be done with quicker turnaround times, doesn’t require packaging reprints and cost a lot less in money and effort while being able to deliver more information to the consumer.
Labels of the future thus need to reflect the changing times, evolving technology landscape and capricious regulatory authorities. Electronic labels solve the problem of making labels less confusing while balancing highly detailed product information. They also take advantage of an existing and popular technology platform. They enable enterprises to accommodate fluctuating labeling requirements without suffering wastage of materials and capital on repackaging and re-printing. The move towards a digital supply chain supported by an information management system that not only records all data associated with unique identities, but integrates them into business practices and translates data into interactive and clear label formats is a daunting task. However, it is a worthwhile transition as enterprises will be future-proofing their businesses for a world that is turning more digital.
