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By William McLaury, Head, Pharma Supply Chain Strategy, Novartis Pharmaceuticals Corp. & Bill Connell and Julia Wiest, Pharma Supply Chain Strategy, Maxiom Group
The close-out of 2012 initiates the 24-month countdown to the California Board of Pharmacy’s (CBoP) manufacturer deadline for Article 5.5 on ePedigree and serialization requirements. These regulations will be affecting many nodes of the pharmaceutical supply chain, starting with the manufacturer down through the packager, wholesaler, distributor and final dispensing entity. The regulation requires that all “dangerous drugs,” defined as drugs unsafe for self-use, which are distributed in California, be serialized and have an electronic pedigree. For the purpose of clarifying this regulation, the CBoP definition of “dangerous drug” is synonymous with the FDA’s definition of “prescription drug.” Implementing the “right” solution for your company will demand an all-hands-on-deck coordinated approach by the internal and external stakeholders in your supply chain.
The driving purpose of this proposed legislation is to prevent counterfeit drugs from entering the California supply chain, distribution network, and consumer market. In recent years there has been an increasing amount of counterfeit drugs entering the U.S. consumer market, offering non-FDA approved and potentially substandard or even harmful products fraudulently marketed using the legitimate pharmaceutical brand name but at lower prices. These lower prices have been attracting the unsuspecting, unscrupulous or greedy pharmacist/dispensary. Federal and state law enforcement have found this to be a growing and endemic problem. Recent cases include Allergan’s Botox and the cancer drug, Avastin®, both of which were being sold by a foreign supplier operated by Canada Drugs. In an effort to increase accountability, the FDA has posted the names of the doctors that knowingly purchased the non-FDA approved foreign Botox.
There is a lot of discussion about why the CBoP is requiring the ePedigree versus another method (such as authentication). The ePedigree provides an ‘audit trail’ (documented evidence) that in theory could help to identify and catch a “bad actor” in the supply chain. The ePedigree requires “a certification under penalty of perjury from a responsible party of the source of the dangerous drug that the information contained in the pedigree is true and accurate.” There are some that think the ePedigree will put a burden on the good actors in the supply chain and not stop the bad actors that are using methods such as internet pharmacies to sell counterfeit drugs.
In its basic form, the regulation states that 50% of all dangerous drugs that are distributed in California must be serialized and have an electronic pedigree by January 1, 2015; 100% by January 1, 2016. With any regulation, the devil is in the details. Serialization requires manufacturers, or in some virtual supply chains third-party packagers, to establish and apply to the smallest saleable unit package or immediate container a “unique identification number.” For more on the unique number, the CBoP refers to the FDA’s March 2010 publication: “Guidance for Industry, Standards for Securing the Drug Supply Chain – Standardized Numerical Identification for Prescription Drug Packages.”
While there is no specific penalty/fine written into the proposed language of this regulation to-date, there are two possible scenarios to note. First, California 2012 Lawbook for Pharmacy defines penalties per offense for violation of pharmacy law. Article 20.4321 states, “any person who knowingly violates any of the provisions of this chapter, when no other penalty is provided, is guilty of a misdemeanor, . . . shall be punished by a fine of not less than two hundred dollars ($200), and not more than two thousand dollars ($2,000), or by imprisonment of not less than 30 days nor exceeding six months, or by both.” Second, a 2008 draft of California pedigree law, while not currently valid, stated specific penalties for violating pedigree law. This draft, if implemented, would fine the manufacturer $5,000 per saleable unit not having sufficient records to prove compliance, or having a fraudulent pedigree.
How to Begin
To start, put together an internal project team with representatives from each stakeholder department, including: supply chain, manufacturing/contract manufacturing, packaging/graphics, regulatory/government affairs/compliance, distribution/3PL, information technology/data management, wholesalers/customers, finance, and quality. This coordinated effort needs to have buy-in across the company and supply chain. Keys to success for being compliant at each timed phase of this regulation will be the ability to anticipate the complexities, allocate necessary resources, and allow enough time to get the serialized product into the distribution channel by both the January 1, 2015 and 2016 deadlines.
There are two big strategy questions that need to be decided early. One, how are we going to define the initial 50%, or which products do we want to serialize first to comply with the January 1, 2015 deadline? And two, how do we want to serialize our unit packages “in-line” or “off-line?”
The January 1, 2015, deadline represents the first significant milestone of this regulation, and it solely applies to manufacturers. Manufacturers must have 50% of their drug product serialized and with ePedigree. The regulation allows the manufacturers to choose which 50% of product is compliant, based on three measurement methods: “(i) unit volume, (ii) product package (SKU) type, or (iii) drug product family.” The freedom to choose a method allows for some strategic decision making. When choosing the 50%, consider the following: patent timelines (on or off), internal and external production, volume levels, whether there is available real estate on the package for the unique number/barcode, etc.
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