Unintended Outcomes May Prompt PDMA Rule Changes

Ed Lamb
Published Online: Wednesday, August 1, 2007

Since December 2006, pharmacies receiving drug deliveries from small and secondary wholesalers have also been receiving more paperwork than before. The paperwork is the respective product?s pedigree, a record of wholesalers that have purchased and sold the product and the dates on which they did so.

Pedigrees for human drugs are required under the federal Prescription Drug Marketing Act (PDMA) and are primarily intended to deter market entry of counterfeit drugs.1,2 A handful of states, notably Florida and Nevada, have also put pedigree requirements in place.3,4

For the most part, pharmacists are having to do little different in terms of purchasing, stocking, and transferring drugs as pedigree requirements come online. If PDMA provisions that subject only secondary wholesalers to the rules for documenting the chain of custody remain in place, however, pharmacies may have increasingly fewer options for purchasing supplies, and accurate records of where drugs have come from could be difficult to obtain.

Several members of the National Coalition of Pharmaceutical Distributors (NCPD), which represents independent medical suppliers, have won a temporary injunction on a provision of the PDMA that exempts drug makers and ?authorized distributors of record? (ADRs) from creating and passing along pedigrees.5

Gene Alley, president of Stat Pharmaceuticals and NCPD vice president for regulatory affairs, said, ?NCPD wants pedigree requirements. We want supply-chain security, but we don?t want to be sacrificial lambs. The best way to protect the supply chain is to make ADRs? subject to providing pedigrees.6

Protecting the Supply Chain
The PDMA was signed into law in 1987. Most of its provisions did not take effect until 2000, however, because of the concerns of regulators and industry stakeholders that the pedigree rules would adversely impact smaller and secondary wholesalers and disrupt the pharmaceutical supply chain.1,7 Late in the summer of 2006, the FDA announced that, following a recommendation of its Counterfeit Drug Task Force, the PDMA would be fully implemented beginning December 1, 2006.

From that date, any wholesaler not identified as an ADR for a given drug product by the product?s manufacturer would have to create or update a pedigree and transmit the pedigree to any other wholesaler or pharmacy, hospital, or physician?s office that subsequently purchased the product. ADRs would not have to provide pedigrees, even if they obtained products from non-ADRs. The FDA clarified in 2000 and affirmed in 2006 that, to become an ADR, a wholesaler needs to have ?an ongoing relationship? with a drug maker and a written agreement detailing what products the wholesaler is authorized to distribute and the period for which the authorization is in effect.2

Federally mandated pedigrees would have to include the names and addresses of all parties involved in these transactions, going back to the manufacturer or the last ADR that had the product, product lot and control numbers, dosage, container size, and number of containers. Neither the law nor the FDA?s guidance specifies a format for the pedigrees, but regulators are encouraging everyone in the supply chain to adopt electronic methods of tracking goods and have indicated that radio-frequency identification technology could be adapted to facilitate pedigree compliance.

GS1 EPCglobal, an international consortium dedicated to advancing the adoption of electronic product codes, has issued voluntary formatting standards for paper-based and electronic drug pedigrees.8,9 Healthcare Distribution Marketing Association (HDMA) spokesperson Amanda Forster noted that her organization, which represents primary drug wholesalers, is working with the consortium. ?HDMA has been leading the call for more uniform pedigree requirements, including the development of a track-and-trace system within the supply chain,? Forster said.10

Failing to provide a PDMA-compliant pedigree can result in criminal penalties. The PDMA creates a national baseline for documenting the chain of custody of drugs. Drug distributors also have to follow stricter state laws.

Exempting ADRs
Using the qualifiers ?would? and ?could? in the preceding discussion of PDMA rules is necessary because the law?s requirements did not go into full effect last December. A federal lawsuit resulted in a temporary injunction that prevents enforcement of the ADR and pedigree content provisions of the PDMA.

Officially, the plaintiffs in RxUSA v Department of Health and Human Services are seeking to have the ADR exemption ruled unconstitutional because it violates the equal protection clause. Equally concerning to the plaintiffs are that having to follow different rules will disadvantage them in the marketplace, and that not requiring ADRs to document where they obtained products could put patients at risk. An NCPD press statement summed up the argument against the ADR exemption this way: ?FDA?s rules, as written, would have left wide swaths of the supply chain unregulated and unmonitored, and would have resulted in a ?death by regulation? of thousands of independent specialty distributors.?11

The judge in the case appeared sympathetic to this argument, writing in the injunction order, ?This entire regulatory scheme and the anomalous result that would occur if the rule went into effect appear arbitrary. The pedigree requirement was created to show where wholesale distributors were obtaining their drugs. But the rule would essentially wipe out all the unauthorized distributors, leaving only authorized distributors who are exempt from the pedigree requirement. So none of the drugs ultimately going to the American consumer would contain pedigree information because the drugs would be provided solely through authorized distributors who are exempt from the requirement.?5 Despite this negative assessment, it is important to understand the rationale for the ADR exemption. The PDMA was enacted in an effort to limit the ways counterfeit medications can enter the supply chain. Even Alley conceded that fake products nearly always reach the market through secondary channels. ?We all should have some bar to clear in order to sell drugs,? he said.6

When products move from manufacturer to end user without being purchased or redistributed by secondary wholesalers?that is, when they go from drug maker to ADR to pharmacy, traveling through what Alley characterized as the ?normal supply chain??there is little risk of the products being bogus. If all pharmaceutical wholesalers were ADRs and each served as the only intermediary for drugs, there would seem to be little need for concern over counterfeits.

In the real world, small and secondary wholesalers play a large role in drug distribution, and drug makers have no incentive to make every wholesaler an authorized distributor. The FDA has ignored this, according to Alley, who noted that, until recently, the large drug wholesalers that constitute the majority of ADRs were the biggest purchasers of products from secondary suppliers. Although major drug distributors have reduced or eliminated their purchases of drugs through the secondary market, Alley said the loophole of pedigrees not being required when ADRs do obtain drugs through the secondary market ?will be the one counterfeiters will use.?6,12

The Pedigree Experience to Date
For now, the FDA is requiring non-ADRs to provide pedigrees that track back to the last ADR that sold a particular product.

Whether the federal ADR exemption will be upheld is not known, but the judge in the case speculated that imposing different pedigree requirements on different wholesalers ?may drastically change how prescription drugs are distributed in this country and ultimately affect the cost to the consumer.?5 The concern is that non-ADRs would have to cease operations if they found it too difficult to meet the cost of regulatory compliance or to get pedigree information from manufacturers or ADRs. As the number of wholesalers declined, competition that keeps costs down would also diminish.

Such an effect is already being seen in Florida, according to Alley. ?We had some major clients in Florida,? he said, ?but we have had to tell them, ?We have product, but we can?t sell it to you because we can?t do a pedigree going back to the manufacturer.? They [ADRs and manufacturers] won?t give us that information.? He added that major wholesalers that are willing to provide detailed pedigrees typically charge large fees for doing so and that the number of pharmaceutical wholesalers operating in Florida has dropped from more than 1500 last year to a ?few hundred.?6

Forster noted that HDMA members ?have publicly committed to the full and fair implementation of the PDMA. Our members have worked diligently to develop and implement systems that comply with the law and that safely and efficiently enable them to deliver medicines and meet individual customer needs.? In the case of Florida, however, what such a commitment entails is unclear because the state has not yet issued pedigree regulations.11

Alley and Forster did share the perspective that product pedigrees, under the PDMA or another regulatory scheme, are needed to protect patients. Alley said that all NCPD members were already complying with the PDMA. ?Those of us who are ethical independent distributors have the most to lose from insecurity in the supply chain,? he said. ?We support pedigrees for all suppliers.?

References

1. FDA. FDA announces new measures to protect Americans from counterfeit drugs. Press release. June 9, 2006.

2. FDA. Guidance for Industry: Prescription Drug Marketing Act (PDMA) Requirements; Questions and Answers. Rockville, MD: FDA; November 30, 2006. FDA Compliance Policy Guide (CPG) 160.900. Updated December 15, 2006.

3. Florida Department of Health. Pedigree Papers: Frequently Asked Questions. Available at: www.doh.state.fl.us/pharmacy/ddc-FAQs-Pedigree.html. Accessed April 13, 2007.

4. Nevada State Board of Pharmacy. Electronic Pedigree Program Handbook. Reno, NV: NBOP; 2006.

5. RxUSA et al. v Department of Health and Human Services, 06 CV 5086, (E.D.N.Y. Dec. 11, 2006). Available at: www.rxusa.com/litigation/Injunction - Objections - Decision and Order.pdf. Accessed April 13, 2007.

6. Interview with author. April 9, 2007.

7. FDA. FDA Counterfeit Drug Task Force Report: 2006 Update. Rockville, MD: FDA, June 8, 2006.

8. GS1 EPCglobal. Pedigree Ratified Standard, Version 1 as of January 5th, 2007. Lawrenceville, NJ; 2007.

9. GS1 EPCglobal. EPCglobal Inc ratifies electronic pedigree standard. Press release. January 11, 2007.

10. Interview with author. April 13, 2007.

11. National Coalition of Pharmaceutical Distributors. NCPD seeks new rules on pharmaceutical safety and authentication. Press release. December 20, 2006.

12. Frederick J. Cardinal latest wholesaler to curb secondary dealing. Drug Store News. May 23, 2005.



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