State pedigree laws running into some barriers

July 11, 2005

As California and Florida gear up to implement new pedigree laws—legislation that requires a paper trail on prescription drugs to thwart counterfeiting—there are growing signs of resistance and complaints that it will be very costly to install a uniform tracking system.

While CVS and Walgreens will not talk on the record about costs of implementing pedigree programs, they defer to the trade organization Healthcare Distribution Management Association, which supports a uniform electronic tracking system. It would take at least five years for all companies to adopt the technology necessary for tracking drugs and not all of them are willing to share confidential business information, HDMA warned.

"Both distributors and manufacturers have concerns about data sharing," HDMA said in a recent report on the issue. "In surveys and interviews, distributors expressed concerns that their contracts with some customers preclude them from sharing shipment data with manufacturers."

In Florida, where the pedigree law goes into effect next summer, the legislation was just modified so that small independent pharmacies would not be kept from receiving Medicaid payments if an investigation revealed a counterfeit drug was sold because of an "honest mistake" made by a pharmacist who missed it. In the case of small "mom and pop" pharmacies that have several low-income customers, according to state representative Juan C. Zapata of Miami, the law would still allow them to receive the reimbursement when a pharmacist unknowingly sold a counterfeit drug.

Zapata, who sponsored the changes just signed into law, said the pedigree statute now allows for an electronic format so that information about pedigrees could be e-mailed. "We don't think this system is foolproof, but it does provide a paper trail," Zapata said.

Florida attorney general Charlie Crist said drugs could not be legally sold in Florida without a valid pedigree guaranteeing that they are authentic and properly stored. In a recent case, he said, two men were arrested and accused of facilitating the sale of $1.2 million in prescription drugs with fake pedigrees.

In California, the pedigree law does not go into effect until Jan. 1, 2007, but if a determination is made that it is economically and technologically impossible to implement the law, the effective date could be delayed for another two years, according to John Cronin, senior VP and general counsel for the California Pharmacists Association. "California is not ready," he said. "We need more time."

"The big problem here is not just being able to track the drug from manufacturer to wholesaler," Cronin explained. "It becomes a much bigger problem when you want to track it from pharmacy to the patient and then back to pharmacy. There are some unresolved technology issues." He also cited the lack of controls in foreign shipments, where many of the drugs are not even checked when they come into the United States.

"I don't think pedigrees solve it at all," said Dave Breslow, CEO, United Pharmacists Network, Glendale, Calif. His company represents 1,200 pharmacists in Southern California. "It is very easy to forge a pedigree. I am not a big fan of imposing this cost and labor on a pharmacy."

Breslow and others say the real source of the problem in counterfeiting is cheaper drugs coming in from foreign countries and secondary distributors, who buy excess supplies of drugs from hospitals and nursing homes at deep discounts.

CVS became the latest chain to clamp down on suppliers by saying it would no longer buy from wholesalers who get drugs from secondary distributors. Wal greens said that for nearly two years it has been requiring its wholesalers to prove that drugs are sourced from the manufacturer.