Paperless Labeling Could Save Companies Up To $5 Mil. Each Year

Providing paperless labeling in lieu of paper package inserts could save each pharmaceutical manufacturer $3 mil. to $5 mil. annually, Parke-Davis VP-International Regulatory Affairs Irwin Martin said May 25.

"The cost savings to the pharmaceutical industry are significant," Martin told the Pharmaceutical Research & Manufacturers of America meeting on paperless labeling. "We're estimating that each company, depending on the size of the company, will save between $3 to $5 mil. in out-of- pocket manufacturing expenses." Martin chairs the PhRMA paperless labeling task force.

The meeting was convened to allow industry members and pharmacy representatives to explain to vendors what a paperless labeling system would require.

The task force will be taking summary proposals until July 1. Full proposals are due Sept. 1. Vendors that meet the task force's user requirements will be selected by Nov. 1. Glaxo Wellcome and Warner-Lambert have said they will participate in a pilot program of the new system (¹ (Also see "Paperless Labeling Planned By Glaxo And Warner-Lambert By Year End" - Pink Sheet, 15 May, 2000.)).

To counter pharmacy concerns, the task force is requiring that any paperless labeling system be cost-neutral for pharmacies. "We can't expect the pharmacy organization to absorb any cost at all to get information that they're getting now for free," Martin said.

He suggested that money for maintaining and running the system - such as for buying paper to print out labeling - could come out of a clearinghouse that could potentially be funded by industry.

"There will be dollars presumably going into a clearinghouse....Which is why we didn't say 'free,' by the way, because that implies that you're just getting the data. 'Cost-neutral' means that you're getting whatever you need to support that."

Martin said that while he did not speak on behalf of all firms, it might be fair "to charge the pharmaceutical company a reasonable fee to distribute the information....Clearly, if we're spending $3 mil. to $5 mil., and we change that to $50,000 a year, that's still a very good return on investment."

The task force emphasized that the electronic labeling database would not be proprietary, and vendors would be able to sell the data to any interested parties.

"We're going to give you something which we think is of value: today's label," Martin said. The task force is requiring that labeling changes be available through the electronic labeling system within 24 hours.

"I can tell you that anybody in the pharmaceutical industry will be buying this, because we want to know what our competitors are doing," Martin stated.

"Physicians and poison control centers and others," would also likely be willing to pay for today's labeling," Martin suggested. "We're hoping that there's enough interest there that that will give you the financial incentives you need in order to give it to the pharmacy for free."

Pharmacy representatives contended that interruption of workflow caused by any electronic labeling system would add indirect costs to dispensing.

Even though the task force user requirements specify that any system must allow access to labeling within 15 seconds, "even 15 seconds in my opinion is too long," Walgreens National Director of Pharmacy Affairs Bill Burgess said. Burgess spoke on behalf of the National Association of Chain Drug Stores.

The time a pharmacist would take to go to the terminal, input the information and print the label could add over 30 seconds per prescription, Burgess said.

"That might not sound like a lot of time to you," Burgess explained, "but I can tell you in a Walgreens environment, where we have stores that fill 400, 500, 600, 700 prescriptions a day - even some that fill 1,000 a day - when you start talking about adding seconds to the fill process, there's a cost to us."

Burgess applauded the task force's suggestion that paperless labeling should work within each pharmacy's existing computer systems, but expressed skepticism that this could be achieved because chains and independents each employ unique technology.

"Certainly I would agree that it would not be workable as a stand-alone system, because we don't have the space to put additional PCs in our store," Burgess said.

Approximately 15 potential vendors attended the May 25 meeting. Several expressed optimism that a paperless labeling system is feasible.

"There are probably 40 to 50 pharmacy software vendors in the marketplace today. All vendors buy a drug file from First DataBank, MediSpan or one of about five wholesalers of that information," PDX-NHIN CEO Ken Hill said. "I'd go so far to say that 100% of these vendors distribute drug information on a daily basis. This would be simply another piece of drug information that would be dispensed."

The problem of interruption of workflow can be easily overcome, Hill suggested, by putting "the ability to access this information at the point where the pharmacist is counseling with that patient, in a way that he can access it quickly."

Hill is also VP of the vendor trade group American Society for Automation in Pharmacy. "It is my opinion that...this is something that can be done in the time frames that you have specified," he concluded.

First DataBank Product Manager Tom Bizzaro concurred. "The concept makes sense to me," he said. "If we can compile the data, I think that we can make it available on many different types of media." Bizzaro questioned, though, whether any system could meet the task force's goal of accessibility to all dispensing sites.

Martin emphasized that the pilot program needs to demonstrate to FDA that 100% of dispensing sites can access paperless labeling in order to seek a change in CFR 201.100 to allow a different method of information delivery for prescription drug information. A change in labeling would allow electronic labeling, but not require it.

The task force has been working with the agency, in particular Center for Drug Evaluation & Research Electronic Review Associate Director Randy Levin, as it develops requirements for a paperless system.

The task force hopes to implement a paperless labeling system by 2002, the goal date set by the FDA Modernization Act for the agency to accept all documentation electronically. "It would certainly be nice to segue the paperless labeling initiative into that year," Martin said.

He suggested that a paperless labeling system could also benefit FDA's proposed revision of the prescription drug label format.

"One of the revisions that had been proposed was a 'what's new' section, or words to that effect," Martin said. "We've tried to explain that that is absolutely impossible and of no use using paper. Because by the time it's printed, attached and through the wholesaler and to the pharmacy, it's no longer new....If we do it electronically," the inclusion of a "what's new" section "actually makes sense."