Wholesalers Seek Rx Coalition To Create Product Tracking System

Drug wholesalers are putting together a coalition with industry and FDA representatives to work on product identification and patient safety issues.

The Healthcare Distribution Management Association is planning a series of meeting with manufacturers, pharmacists, regulators and distributors beginning in mid-December to seek consensus on how drug products could be tagged with unique identifiers at the unit level.

HDMA is hoping that meetings with the coalition group, including members of FDA, will help the agency draft an appropriate rule on bar coding and product identification.

In addition to FDA, HDMA is inviting the Pharmaceutical Research & Manufacturers of America, the Generic Pharmaceutical Association, the National Association of Chain Drug Stores, and the American Society of Health-System Pharmacists to participate in the coalition.

FDA is expected to promulgate a regulation following a public meeting on the issue this summer (¹ (Also see "Bar Code Labels With NDC Numbers Possible In 2-3 Years, PhRMA Predicts" - Pink Sheet, 5 Aug, 2002.), p. 23). The rule is understood to be behind schedule and is not likely to be published before May.

Manufacturers are skeptical of requirements to provide detailed information in bar codes. At FDA's public meeting, PhRMA cautioned that there may not be "sufficient space" to print a bar code on each unit of product. Aventis Pasteur has said the inclusion of lot number and expiration date in bar codes could delay vaccine manufacturing "as it will increase production lead time" (² (Also see "Vaccine Supply Delays Could Result From Bar Code Data Mandate – Aventis" - Pink Sheet, 26 Aug, 2002.), p. 8).

HDMA has started presenting its case for the use of advanced tracking systems to FDA.

HDMA Chairman-Elect Jon Borschow, president of Puerto Rican distributor Borschow Drug, and HDMA President Ron Streck met with FDA officials, including Senior Associate Commissioner for Policy & Planning Bill Hubbard, on Oct. 16 "to promote the use of automated identification technology when drafting industry regulations," the association said.

"The HDMA group stressed an approach to regulation in which the FDA would mandate a desired outcome for patient safety, and would allow industry innovation to provide the solutions."

HDMA plugged the future benefits of adopting "electronic product code" technology. "The focus of the meeting was to share views related to the state of identification technologies, and to make the FDA aware of the many benefits of a unique identification number, a key attribute of the EPC concept."

Electronic product code technology is currently under development through the Massachusetts Institute of Technology Auto-ID Center. HDMA said it would be several years before the pharmaceutical industry realistically could be expected to widely adopt the technology.

Therefore, "FDA was encouraged to consider both current and future technologies when issuing their ruling," HDMA said.

Borschow made electronic product code technology the focus of his address to HDMA's annual meeting in Phoenix, Ariz. Nov. 6-9. "Designed as an eventual replacement for the [universal product code]...the EPC provides two important benefits," he said.

"For pharmaceutical products...the EPC would contain the [National Drug Code] number and a serial number which confers on that particular product unit a unique and indelible identity and history."

"Second, EPC can involve a radio frequency, or RF, tag that can be embedded in product packing that includes a digital chip...and allows the unit to be located and identified. Whenever the chip receives an RF signal, it responds by broadcasting its own unique identifier," Borschow said.

Electronic product coding would also provide cost-savings, he indicated. Once economies of scale are achieved, "these chips will cost less than five cents, and the readers will cost less than $200."

The benefits to distributors would be substantial, Borschow said. Unit-level tracking would translate into "lower capital investment" in "shelving and handling equipment" because of the possibility of "true random storage" at peak densities.

"The technology would enforce 'first-in, first-out' stock rotation, and let you know the expiration date mix you have in the warehouse at any time for any given product."

EPC would "virtually eliminate all pick, pack and ship errors. Expired or damaged product units would be electronically quarantined. Even short-dated products would be restricted to customer-request only."

In addition, customer returns and manufacturer recalls could be processed more efficiently. "The customer would simply scan the item to be returned, identify the reason for its return, and obtain immediate electronic authorization by the wholesaler along with the credit amount granted and the reasons."

"Because the EPC stores the lot number with its matching recall criteria," recalled product would "automatically become unavailable for picking and removed....Only those customers who have handled the lot number are electronically notified."

Borschow also stressed the potential for the technology to result in greater patient safety through increased security. "EPC can provide a front line of defense and protection against diversion," he said. "With EPC, each item would in essence create its own pedigree as it moves...through the distribution system that would be impossible to counterfeit because of temporal data. The product could also be coded for a particular market, making it non-reimbursable out of that market."

Patient safety systems are an increasing focus for wholesalers. AmerisourceBergen is investing $27 mil. in medication error prevention services through the acquisition of Bridge Medical (³ (Also see "ABCs Of Bar-Coding: AmerisourceBergen Buying Bridge Medical" - Pink Sheet, 11 Nov, 2002.), p. 23).

"The EPC could also ensure that the latest professional product labeling and patient information would follow the product throughout the supply chain, including off-label uses that might be invaluable in the event of a terrorist attack," HDMA noted.

Other addresses at the annual meeting included Chairman Bob Schwartz' 2002 recap and forecast of important legislative issues for HDMA in 2003.

Schwartz, CEO of Barnes Wholesale Drug, said the drive to reform price reporting to the government would continue in the new legislative year. "Members of Congress recognize that [average wholesale price] is artificial," he noted.

"HDMA has been working behind the scenes to ensure distribution and handling costs are adequately covered" and "providers are adequately reimbursed for the services they provide."

"We've received assurances that any proposed legislation will not include price reporting requirements for distributors," Schwartz said.

Another "important focus for HDMA in 2003" will be combating "price reporting legislation" in the states. "Price control legislation seems to have taken on the face of requiring manufacturers and wholesalers to report their prescription sales prices to state Medicaid agencies," Schwartz noted.

"Fortunately, HDMA was successful in thwarting price reporting legislation in all five of the states that introduced measures this year."

Schwartz also pledged to continue fighting reimportation legislation like the "Canada only" provision passed by the Senate in July (⁴ (Also see "Senate Medicaid Supplemental Rebate Amendment May Block PhRMA Suits" - Pink Sheet, 22 Jul, 2002.), p. 22).

Alleviating year-end product shortages is another major goal for HDMA in 2003, following a host of shortage problems in 2002. Schwartz indicated that distributors and wholesalers need to communicate and work together more effectively to eliminate the problem.

Streck also called for better communication between manufacturers and distributors in accounting practices (⁵ (Also see "Distributors Need Notice Of Manufacturers’ Accounting Changes, HDMA Says" - Pink Sheet, 11 Nov, 2002.), p. 22).

"In meeting with manufacturers on the issue, I was stunned by the broad-based lack of understanding at the corporate level of how wholesalers do business and where the demand for product originates," Schwartz said. "I'm afraid that corporate America has forgotten that their profits come from the customers they serve, not Wall Street."

HDMA is asking members to complete a "Year-End Product Availability Survey," and plans to issue a white paper with recommendations on year-end closings (⁶ (Also see "Wholesaler Task Force Looking At Shortages, Forward-Buying" - Pink Sheet, 7 Oct, 2002.), p. 33).

Recommendations on mitigating shortage problems, developed at a workshop that included the American Medical Association, ASHP, industry and FDA, were recently published (see ⁷ ).