FDA Promises to Fight Pedigree Injunction

Today, FDA issued a statement in which it vowed to fight the injunction now barring it from requiring extensive pedigree information from small pharma distributors. The injunction, which stems from a lawsuit brought against the Agency by a group of small wholesale drug distributors in New York State, would effectively prevent FDA from strengthening the weakest link in the pharma supply chain. It could also have an impact on the industry's adoption of RFID and "track and trace" technologies  (which have seen less-than-enthusiastic uptake, given costs, ROI concerns and debates about optimum frequencies, etc.) .  It would also seem to make doing business with smaller distributors even less attractive than it already is for drug manufacturers.  For well-informed discussion of this subject, read Jayne Juvan and Adam Fein. Here's FDA's "official" position statement, as set out in a Q&A on its web site.

A. What is affected by the preliminary injunction?

1. ¢ 21 CFR § 203.50(a). The court order enjoins FDA from implementing 21 CFR § 203.50(a). 21 CFR § 203.50(a)(6), states that information regarding "each prior transaction involving the drug, starting with the manufacture" be included in the pedigree. However, while the preliminary injunction is in effect, pedigrees shall include information regarding prior transactions going back to the manufacturer or the last ADR that sold, purchased, or traded the prescription drugs. FDA encourages wholesalers to include information regarding each prior transaction going back to the manufacturer when that information is available.
   1. ¢ 21 CFR § 203.50(a)(1)-(5). The court order also enjoins FDA from implementing the language in 21 CFR § 203.50 that requires pedigrees to include lot and control numbers, dosage, container size, and number of containers. As described in more detail below, however, the preliminary injunction does not affect the statutory requirement that pedigrees contain the dates of all listed transactions and the names and addresses of all parties involved in those transactions. In addition, since the court did not enjoin implementation of 21 CFR § 203.3(u), a written agreement between a manufacturer and a wholesaler may limit ADR status to a particular lot number(s), dosage, or the number or size of the containers of prescription drugs. We also note that, without the lot number on the pedigree, it would be extremely difficult to track the inventory that matches the pedigree if the inventory is further sold, purchased or traded. Therefore, FDA recommends that the lot or control number, dosage, and the number and size of the prescription drug containers be included on the pedigree even though it is not required while the preliminary injunction is in effect.
   1. ¢ Pedigrees for all current and future inventory are affected by the preliminary injunction as long is it remains in effect.

B. What is not affected by the preliminary injunction?

Pedigrees still must be passed by non-authorized distributors of record (non-ADR) prior to each wholesale distribution. In addition, the court does not mention other pedigree-related regulations or other agency-issued documents relating to the pedigree requirement. Accordingly, those regulations and documents, some of which are described below, are not affected by the preliminary injunction.

1. ¢ 21 CFR § 203.3(u). This regulation, which went into effect on December 1, 2006, defines "ongoing relationship" for the purposes of determining who qualifies as an authorized distributor of record (ADR.) As of December 1, 2006, only those

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1. wholesale distributors who have an ongoing relationship (including a written agreement) with the manufacturer, as that term is defined by this regulation, are exempt from the pedigree requirement.

1. ¢ Compliance Policy Guide (CPG) 160.900, which issued in November 2006, remains in effect until December 1, 2007. The CPG describes how FDA intends to prioritize its enforcement efforts regarding the pedigree requirements in the first year after the effective date of 21 CFR §§ 203.3(u) and 203.50. However, FDA will not enforce 203.50(a) as long as the preliminary injunction remains in effect.

1. ¢ All other definitions in 21 CFR Part 203 that relate to the pedigree requirement, including but not limited to, the definitions of manufacturer and wholesale distribution, have been in effect since December 2000 and remain in effect despite the injunction.

1. ¢ The names and addresses of all parties to the transaction and the date of the transactions are required by the statute and must be included in the pedigree.

1. ¢ 21 CFR § 203.50(b). This regulation, which went into effect on December 1, 2006, requires all wholesale distributors (both ADRs and non-ADRs) involved in the distribution of a prescription drug to retain a copy of the pedigree for three years. Accordingly, all wholesale distributors that provide or receive pedigrees after December 1, 2006, must retain copies of the pedigrees for three years.

1. ¢ 21 CFR § 203.50(c). This regulation, which also went into effect on December 1, 2006, provides that a manufacturer that subjects a drug to additional manufacturing processes is not required to provide a pedigree identifying previous sales of the drug or its components.

1. ¢ 21 CFR § 203.50(d). This regulation also went into effect on December 1, 2006, and requires manufacturers to maintain a current written list of all ADRs, to specify whether each ADR is authorized to distribute all of the manufacturer's drug products or only particular products, to update its list of ADRs on a continuing basis, and to make its list of ADRs available for public inspection or copying. Accordingly, as of December 1, 2006, all manufacturers should have available for public inspection a current list of ADRs that indicates which drug products the ADR is authorized to distribute.

1. ¢ 21 CFR § 203.60. This regulation sets forth certain requirements with respect to the use of electronic records and signatures, record retention, and the availability of records for review and reproduction by FDA and other federal, state, and local regulatory and law enforcement officials. This regulation has been in effect since December 2000 and remains in effect despite the injunction.

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C. Since the court's order only applies to 21 CFR § 203.50(a), does this mean that the statutory requirement that non-ADRs provide pedigrees that include "each prior sale, purchase, or trade" of the drugs is still in effect?

1. ¢ Yes. The court order does not enjoin FDA from enforcing the statute. The court order affects only the regulations at 21 CFR § 203.50(a). It has been FDA's long- standing position, consistent with the language of the PDMA and its legislative history, that, 21 CFR § 203.50 notwithstanding, the statute itself requires non-ADRs to provide pedigrees that documents each prior transaction going back to the manufacturer. FDA recognizes, however, that confusion regarding the pedigree requirement could cause disruptions or delays in the nation's drug distribution system. Accordingly, as long as the court order remains in effect, FDA intends to exercise enforcement discretion, as described below. To this end, FDA does not intend to enforce the statute insofar as it requires pedigrees to contain information regarding each transaction going back to the manufacturer. Rather, FDA intends to permit non-ADRs to provide pedigrees that include information regarding transactions going back to the manufacturer or the last ADR that handled the prescription drugs. FDA, however, encourages all wholesalers to provide complete pedigrees documenting each prior transaction involving the prescription drug when that information is available.

D. How will FDA apply the courts order outside of the Eastern District of New York (EDNY) and to wholesale distributors that are not plaintiffs in the lawsuit?

1. ¢ FDA believes that limiting application of the preliminary injunction to either the named plaintiffs or the EDNY could lead to confusion and possible disruptions or delays in the nations drug distribution system and could provide undue advantage to certain wholesale distributors. Accordingly, to the extent that it could be argued that the injunction should be limited in scope, FDA intends to exercise enforcement discretion in a manner that is consistent with the courts opinion. To this end, as long as the court's order is in effect, FDA does not intend to initiate any enforcement actions against any wholesalers solely for (1) failing to include lot numbers, dosage, container size, or number of containers on a pedigree; or (2) failing to provide a pedigree that goes back to the manufacturer so long as the pedigree otherwise identifies the last authorized distributor of record that handled the drugs.

E. How does the courts order impact what FDA said in the Guidance to Industry: PDMA Pedigree Requirements “ Questions and Answers (http://www.fda.gov/cder/regulatory/PDMA/PDMA_qa.pdf)?

1. ¢ To the extent that Questions 2, 9, 10, 11, 14, 24, 29, and 33 refer to 21 CFR § 203.50(a), as long as the preliminary injunction is in effect, such references are limited to the scope of the courts order. For example, if the question states that a pedigree include information about each prior transaction going back to the

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1. manufacturer, then the answer would be limited to including information going back to the manufacturer or the last ADR that handled the drugs.

4  Here's FDA's official backgrounder BACKGROUNDER re: RxUSA Wholesalers, Inc. v. HHS On December 8, 2006, a federal district court in the Eastern District of New York issued a preliminary injunction in RxUSA WHOLESALE v. HHS to prohibit FDA from implementing a regulation that requires that certain information be included in a pedigree, which documents the custody of certain prescription drugs in the drug supply chain. The regulation, (21 CFR § 203.50(a),) which went into effect on December 1, 2006, was issued by FDA to implement the Prescription Drug Marketing Act of 1987 (PDMA), as amended by the Prescription Drug Amendments of 1992 (PDA). FDA continues to believe that its regulation faithfully interprets the Federal Food, Drug, and Cosmetic Act (specifically, the PDMA and the PDA) and intends to defend both the regulation and the statute as the litigation continues. The PDMA requires, among other things, that certain wholesalers, commonly called secondary wholesalers, provide a statement of origin (also known as a pedigree) prior to each wholesale distribution of prescription drugs The requirement to pass a pedigree applies to those wholesalers who are not authorized distributors of record (ADRs) for the prescription drugs that they distribute. The pedigree requirements do not apply to manufacturers or to ADRs. This means that ADRs are not required to pass a pedigree. The PDMA defines an ADR as a wholesale distributor that has an "ongoing relationship" with a manufacturer. The PDMA does not define "ongoing relationship." In the preliminary injunction, United States District Judge Joanna Seybert enjoined FDA from implementing 21 CFR § 203.50(a). By enjoining section 203.50(a), the court's order covers two significant issues. ¢ First, the court's order enjoins FDA from implementing the language in 21 CFR § 203.50(a) that requires a pedigree to identify each prior sale, purchase, or trade of a drug back to the drug's original manufacturer. ¢ Second, the court's order enjoins FDA from implementing the language in section 203.50(a) that specifies the different type of information, including lot numbers and container sizes that must be included on a pedigree. The court's order does not erase the fundamental pedigree requirement in the PDMA, however, nor does it mention any of the other provisions in 21 Part 203 (including the definition of "ongoing relationship" in 21 CFR § 203.3(u), which serves to define who qualifies as an authorized distributor). Rather, the injunction affects only the regulation that specifies the type of information that the pedigrees must contain and how far back in the distribution chain drugs must be traced. Under the court's order, the statute notwithstanding, pedigrees passed by non-ADRs only have to track back to the manufacturer or the last authorized distributor that handled the drugs. As specified in the statute, all pedigrees also have to include the dates of the listed transactions and the names and addresses of all parties to those transactions. FDA is mindful that wholesale distributors operating outside the Eastern District of New York have been following this case and may have questions on whether (or how) the court's preliminary injunction could affect them. FDA believes that limiting application of the injunction to either the named plaintiffs or the Eastern District of New York could lead to confusion and possible disruptions or delays in the nation's drug distribution system and could provide undue advantage to certain wholesale distributors. Therefore, FDA intends to exercise enforcement discretion in a manner that is consistent with the court's opinion. To this end, as long as the court's order is in effect, FDA does not intend to initiate any enforcement actions against any wholesalers solely for: ¢ failing to include lot numbers, dosage, container size, or number of containers on a pedigree; or ¢ failing to provide a pedigree that goes back to the manufacturer so long as the pedigree otherwise identifies the last authorized distributor of record that handled the drugs. FDA has posted new information on its website at http://www.fda.gov/cder/regulatory/PDMA/pdma_addendum.pdf that explains its interpretation of the court's order in more detail and further clarifies its expectations regarding compliance with the PDMA and its implementing regulations. These new materials also explain how the court's order affects both the Q&A Guidance and Compliance Policy Guide that FDA issued in November 2006 and which can be seen at http://www.fda.gov/cder/regulatory/PDMA/PDMA_qa.pdf and http://www.fda.gov/cder/regulatory/PDMA/PDMA_CPG.pdf . On December 4, 1999, FDA published in the Federal Register (64 FR 67720) final regulations regarding the PDMA that, among other things, defined an ongoing relationship to include a written agreement between a manufacturer and wholesaler (21 CFR § 203.3(u)) and set out certain requirements related to pedigrees (21 CFR 203.50). With respect to this latter regulation, 21 CFR 203.50(a) delineated the type of information that must be included in a pedigree and specified that a pedigree must identify each prior sale, purchase, or trade of the drug all the way back to the drug's original manufacturer. Due to concerns raised at the time, FDA delayed the effective date of sections 203.3(u) and 203.50. On June 14, 2006, however, FDA announced in a Notice in the Federal Register (71 Fed. Reg. 34429) that it would no longer delay the effective date, and that the two provisions would become effective on December 1, 2006. The reasons for the agency's decision are described in that Federal Register Notice and its 2006 update to FDA's Counterfeit Task Force Report. On September 20, 2006, several wholesale distributors of prescription drugs filed a complaint in federal district court in the Eastern District of New York seeking, among other things, a declaratory judgment that 21 CFR § 203.50 is unconstitutional because it violates due process and equal protection. On November 22, 2006, the wholesalers moved for a preliminary injunction seeking to stay the effective date of section 203.50 until final resolution of the case. Ver. 12.15.06