Regulatory Solution Needed as Gray Market for Diverted and Counterfeit OTC Devices Grows


Gray market diagnostic OTC medical devices pose substantial health and safety risks to patients.

Over 10 million Americans measure their blood glucose daily, relying on at-home diabetes tests to take sensitive measurements of their blood sugar levels to monitor their insulin requirements. A burgeoning “gray market” of reselling test strips is placing at risk the health of patients with diabetes. These are not the only diagnostic over-the-counter (OTC) medical devices that are trafficked on the gray market, but diabetes medical supplies seem to be the most popular items in this category to be diverted.

The term “gray market” refers to products that are traded or sold outside of the manufacturer’s authorized distribution channels. One example of this is when products are diverted from a country where they are approved for use into another country where they are not approved. Historically, the United States had enjoyed a strong, secure supply chain due to robust checkpoints in the distribution channel. However, although changes in the industry and the globalization of health care have created more opportunities over the years, they have also created more risk.

Gray market diagnostic OTC medical devices pose substantial health and safety risks to patients. Whether it involves sellers advertising “unused” test strips online or device distributors diverting them from international channels and reselling them to domestic distributors, such products may be adulterated or counterfeit. Further, when diverted diagnostic OTC devices such as test strips are reintroduced to the legitimate supply chain, records of the products’ handling or storage conditions are nonexistent.

Several differences in the international test strip packaging and instructional inserts are capable of confusing US consumers. For example, instruction inserts are often in a different language, a US toll-free number to call for assistance is missing, and storage temperatures may be listed in Celsius instead of Fahrenheit. In addition, there are cases of distributors advertising online or on signage posted by the side of the road to buy unused test strips from consumers. These strips, which are now adulterated, are then ultimately resold to pharmacies that may be unaware of the product’s history. Further, the danger of counterfeit medical products infiltrating the legitimate supply chain through gray market channels is also a concern.

The National Association of Boards of Pharmacy® (NABP®) has a long history of working with wholesale distribution facilities to protect the integrity of the medication distribution system and employing appropriate security and best practices. NABP expanded these efforts in September 2016 and launched the Verified-Accredited Device Integrity Program™ (VDIP™), which accredits distributors of diagnostic OTC medical devices that may be delivered by a pharmacy pursuant to a prescription. As an extension of the Verified-Accredited Wholesale Distributors® (VAWD®) program, VDIP helps prevent diverted or substandard diagnostic OTC medical devices from entering the US medical supply chain.

Established in 2004, the VAWD program helps protect the public health from counterfeit, adulterated, and substandard drugs that enter the supply chain, and the initiative receives support from Food and Drug Administration. Currently, 24 states recognize VAWD and 3 states — Indiana, North Dakota, and Wyoming – require VAWD as a component of licensure for wholesale distributors.

Like VAWD, VDIP allows diagnostic OTC device distributors a means to assure pharmacies that they are receiving products from a legitimate source.

NABP continuously reviews and updates its accreditation criteria for all its programs and will continue this practice for VDIP. For example, in 2015 NABP updated the VAWD criteria to align with the Drug Supply Chain Security Act.

In addition to NABP conducting an extensive examination of a diagnostic OTC device distributor’s licensure status, disciplinary history, record keeping, product verification processes, and policies and procedures, the Association’s surveyors perform on-site surveys as part of the accreditation process. These surveyors represent a wide range of experience, from pharmacist to former regulatory specialist to former law enforcement. Further, NABP’s annual surveyor training keeps surveyors up to date on new regulations and procedures.

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