CVS Pulls Out of Secondary Drug Market

SEPTEMBER 01, 2005

CVS has decided to no longer purchase medicines from wholesalers that trade in the secondary market. Officials of the nation's 3 biggest pharmaceutical wholesalers, Cardinal Health, AmerisourceBergen, and McKesson, however, do not believe that the recent decision will impact their business.

"The CVS decision is consistent with Cardinal Health's practices to purchase all branded pharmaceuticals direct from the manufacturers," said Cardinal spokesman Jim Mazzola.

"We previously bought the vast majority in that manner, but as of July 1, 2005, we will purchase all branded pharmaceuticals directly from the manufacturer. Cardinal will purchase generics only either direct from the manufacturer or through a pretty select group of authorized distributors," he said.

AmerisourceBergen also does not anticipate any problems as a result of the retail pharmacy chain's announcement. "It does not impact us. We are very comfortable with their [CVS] decision," said company spokesman Michael Kilpatric. "We purchase only one half of 1% of our purchases from authorized distributors. The remaining are bought directly from the manufacturer. In fact, AmerisourceBergen has a list of 10,000 items that may be a problem, such as Lipitor [for drug counterfeiting], that are only bought directly from the manufacturer," he added.

McKesson did not wish to comment on the CVS decision.

CVS is adding more levels of scrutiny to ensure the continued reliability of the pharmaceutical supply chain. Concerns have been mounting that wholesalers trading in the secondary market potentially provide an entry point for counterfeit or adulterated products to enter the legitimate pharmaceutical marketplace.

In a statement, Rep Steve Israel (D, NY) praised the decision. It shows " that even the drug industry believes it is time to clean up the prescription sales chain. The fact that, while most Americans trust the doctors who write their prescriptions and the pharmacists who fill the prescriptions, in between the manufacturer and pharmacy prescription drugs can change hands up to a dozen times, in a shady gray market, where they can be tainted, diluted, relabeled, and counterfeited."

On May 9, 2005, Rep Israel introduced Tim Fagan's Law, or HR 2345. The legislation seeks to increase criminal penalties for the sale or trade of counterfeit prescription drugs; to modify requirements for maintaining records of the chain of custody of prescription drugs; and to establish recall authority for the FDA.

The law is named after teenager Tim Fagan who was given counterfeit epoetin alfa (Epogen) to combat anemia. Fagan's mother was giving him the injections after he underwent a liver transplant in 2002. After each injection, he would scream in agony and experience full body cramps. The family did not understand the cause until they received a call from the pharmacy that filled the prescription, alerting them that it had distributed at least one counterfeit batch of the drug.

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