Verifying Pedigree: Digital Solutions for Safety

Counterfeit products within the pharmaceutical supply chain pose a health threat to patients worldwide. According to an article published by the Center for Medicine in the Public Interest, worldwide counterfeit pharmaceutical sales are increasing at about 13 percent annually — nearly twice the pace of legitimate pharmaceuticals — and could become a $75 billion industry by 2010. That’s an alarming 92 percent jump from 2005. Obviously, there is money to be made, and opportunistic criminals are cashing in.

“When I started in the biopharmaceutical business in 1988, it was readily apparent that there were some hazardous practices rampant in the industry,” says Patrick M. Schmidt, chief executive officer, FFF Enterprises, Inc. Schmidt notes that on April 12 of that same year, the Prescription Drug and Marketing Act (PDMA) was signed into law to mandate that prescription drug products purchased by consumers would be safe and effective, and to prohibit the unacceptable risk of counterfeit, adulterated, misbranded, subpotent or expired drugs being sold to the American public. Unfortunately, more than 20 years later, the pharmaceutical industry still has not fully implemented the PDMA’s pedigree requirement of recording a pharmaceutical product’s path through the distribution supply chain.

While Congress and the FDA have taken actions to protect the marketplace and consumers from the inherent dangers of counterfeit medications, significant security gaps remain. One area of risk involves the product pedigrees themselves, which are intended to authenticate a drug’s history. Unfortunately, as with the drugs themselves, paper pedigrees are often vulnerable to tampering; a recent case in New Jersey involved the fraudulent pedigrees and sale of $7.3 million worth of stolen AIDS treatment products. In this instance, having a pedigree was not enough. The fact is that if the pedigree can’t be verified, it may be worth less than the paper on which it’s printed. That is why the implementation of electronic pedigrees may be an idea that is truly overdue.

Embracing Digital Age Solutions

In recent years, the need for improved drug-tracking technology has taken on increased urgency, especially since authorities have begun ramping up drug pedigree enforcement activity. According to some reports, many states, including Florida and Nevada, have issued drug pedigree fines ranging from $18,000 to $1 million. In response, some distributors and manufacturers have invested hundreds of thousands of dollars in electronic pedigree systems and radio frequency identification technology (RFID). RFID uses attached tags containing silicon chips and antennas that send and receive data on a radio frequency from an RFID transceiver. In widespread use within the retail industry, RFID has yet to be fully embraced by the pharmaceutical industry. Critics note the technology is not without its problems. For one thing, the RFID tags make use of radio waves, which are susceptible to any outside force that interferes with the transmission of radio signals. Another common issue arises from inventory storage methods. When large numbers of products with RFID tags are stored together in the same scanning field, the reader can energize multiple tags at once, which sometimes causes them to transmit their signals simultaneously. This information overload interferes with the RFID reader’s function and can prevent it from being scanned. In addition, there’s the considerable infrastructure costs associated with deploying most RFID systems.

For many in the pharmaceutical industry, the absence of federally mandated pedigree regulations has created its own unique challenges. Some states have adopted their own pedigree requirements, making it difficult for manufacturers to comply. Several years ago, Florida made drug pedigrees mandatory, and currently, 31 states require manufacturers and distributors to document pedigree. With the exception of California, most exempt the original manufacturer of record, but they do require subsequent wholesale distributors to complete and pass pedigree in paper or electronic form. Other common exemptions include transactions that take place within the normal chain of distribution, meaning the transaction did not deviate from the customary drug shipment route.

In 2004, the California Board of Pharmacy (CBP) sponsored legislation that made comprehensive changes to the wholesale distribution system to protect against counterfeit drugs. The initiative requires an electronic pedigree on drugs, and states that retail pharmacies might not be able to receive drug shipments if the drugs did not carry electronic pedigrees from the manufacturers. The law was intended to go into effect Jan. 1, 2009, but the CBP moved the compliance deadline to 2015 after numerous pharmaceutical companies and industry associations requested more time to prepare. While that buys more time, clearly the clock is ticking.

“Historically, distributors have been resistant to implementation of electronic pedigrees, and many companies in the supply chain have been slow to respond to new proposed guidelines,” says Chris Ground, senior vice president of national accounts, FFF Enterprises, Inc. “I think the need for this technology is becoming increasingly clear, and more companies and organizations are partnering together to see it implemented.”

Leading the Way in Supply Chain Safety

While some within the industry have been slow to get behind electronic pedigree technology, others have made it their mission to blaze new trails in supply chain safety. Ground notes that FFF launched its Verified Electronic Pedigree (VEP) system in 2004 — a first in the nation. Since its implementation, the company has worked diligently to assure that VEP continues to meet or exceed all pedigree legislation enacted throughout the United States. VEP allows customers to easily verify online the pedigree of pharmaceuticals purchased from FFF within seconds of logging in.

“FFF has long been committed to ensuring a safe, secure drug supply for our customers,” says Schmidt. “We believe our VEP system validates FFF’s unique business model of purchasing only from the manufacturer and distributing only to the healthcare provider.”

Schmidt maintains this business model is the single most effective way to secure the pharmaceutical supply channel, without the need for expensive technology and hardware. “Limiting the number of transactions protects products — and patients — from the risks of secondary and gray market distributors, which is typically where counterfeiters enter the supply channel,” he adds.

FFF’s VEP system employs a sophisticated pharmaceutical pedigree security system, developed by FFF’s partner SupplyScape Corp., that is as easy to use as the most popular search engines — and it does not increase cost to FFF customers. The system is hosted by Boston-based SupplyScape, which designed the VEP architecture to meet or exceed state and federal pedigree requirements.

“VEP allows our customers to document FFF’s channel security and comply with the state and federal regulations,” Schmidt explains. “I think this system also demonstrates that RFID, while a helpful technology for e-pedigree deployment, is not a necessary part of an in-compliance system. VEP demonstrates that we can provide regulatory-compliant pedigrees without RFID. The combination of our unique business model and the ability to verify its security with VEP provides a high-impact, affordable solution that protects healthcare providers from new burdens and additional costs.”

Electronic Pedigree Benefits

While compliance is the primary motivation for implementing an electronic pedigree solution, many potential additional benefits can be derived from the use of electronic pedigrees. These include improved patient safety and protection of product-revenue streams from diversion and counterfeiting; better shelf-life management; greater inventory availability; streamlined business processes; and enhanced recall management.

Within the industry, there are undoubtedly many arguments for and against the implementation of drug pedigrees, but the need for an industry-wide response has been brewing for more than two decades. Consider the following:

• Congress passed the Prescription Drug Marketing Act (PDMA) with a drug pedigree requirement in 1987.
• While the FDA has been hesitant to implement the requirement due to the burden of manual record keeping, it has been encouraging adoption of electronic technology to enable pedigrees.
• Many states have already enacted laws requiring drug pedigrees, and more are likely to follow. California is set to require electronic pedigrees by 2015.
• Public confidence in the pharmaceutical industry has been undermined by the existence of dangerous counterfeit or adulterated drugs within the supply chain.

If the pharmaceutical industry can come together to see electronic pedigrees implemented, the means by which counterfeiters can introduce illegitimate products will eventually be eliminated. Additionally, by closing safety gaps in the drug distribution network, manufacturers can stem the loss of revenues, profits and brand reputations caused by counterfeits within the supply chain.