California Staggering Its E-Pedigree Regulations

As the California State Board of Pharmacy (CA BoP) begins initiating the adoption of regulations to implement the state’s electronic drug pedigree law, recent cases of fraud and diversion are coming to light, perhaps offering renewed justification for the law.

In July, dozens of people were charged in New York City for diverting and trafficking prescription drugs for treating HIV that were paid for by Medicaid, in some cases twice. Diverters reportedly purchased prescribed drugs from Medicaid beneficiaries, removed patient labeling from bottles, and added counterfeit labels as needed to redistribute the drugs back in the supply chain. According to a press release issued by the U.S. Attorney’s Office in the Southern District of New York, “the FBI seized more than $16 million worth of second-hand prescription drugs, comprised of more than 33,000 bottles and more than 250,000 loose pills.” These items were “kept in uncontrolled and sometimes egregious conditions by various defendants and their coconspirators,” it was reported.

Virginia Herold, CA BoP’s executive officer, isn’t surprised by the case. “California has seen similar investigations, and we end up prosecuting these cases when we find them,” she told PMP News. “We stumble upon this stuff during routine pharmacy inspections, finding hundreds of empty containers as well as containers purchased from outside the country. It is almost impossible to tell where they came from.” Investigating across state lines is also difficult, she added.

Consequently, “consumers have cause to be concerned,” she said. Even if the drugs themselves are not counterfeit, they could be damaged, she says. “One drug in short supply identified recently by Congressman Cummings in a federal investigation had changed hands eight times and could easily have been subjected to substandard care. There is no concern about healthcare when the goal is to make money from drug sales." She also added that suspects could be tempted to “dilute drugs for profit or [conduct] other manipulation.”

California’s law was intended to thwart such criminal activity. “The advantage of an electronic pedigree is that the buyer and the seller certify serial code numbers at every sales transaction,” she said. “If one does not match, you know something is wrong.”
Under California’s law, at least 50% of a manufacturer’s pharmaceutical products will need to bear a serial number at its lowest saleable level by January 1, 2015; the remaining 50% will need to do so by January 1, 2016. Wholesalers must be able to verify and pass electronic pedigrees by July 1, 2016, and pharmacies must be able to verify all electronic pedigrees by July 1, 2017.

CA BoP is now beginning to develop its series of rules needed to implement the law. Future rules are expected to cover grandfathering, inference, decommissionng, drop shipments, and linking invoices and shipping notices.

At its July 17 meeting, the CA BoP approved language for serial number identifiers and grandfathering provisions. The board approved language that states the “unique identification number” to be applied to the smallest package “shall conform to requirements for Standardized Numerical Identifiers (SNIs) set forth” by FDA’s March 2010 guidance (http://www.fda.gov/RegulatoryInformation/Guidances/ucm125505.htm).

CA BoP also approved language regarding specification of existing drug stock. Under the provisions, drug manufacturers “shall submit to the board, by December 1, 2014, but no later than December 31, 2014,” a list of drugs by name and SKU “representing at least 50% of the manufacturer’s total that are ready for initial implementation of the serialized electronic pedigree requirements as of January 1, 2015.” They will have to outline how they calculated the percentage. And “by December 1, 2015, but no later than December 31, 2015,” manufacturers will need to list the remaining percentage of drugs by name and SKU “that are ready for implementation of the serialized electronic pedigree requirements as of January 1, 2016.”

Such regulations on the serial number identifier and grandfathering provisions are expected to be issued in August.

Inference was also discussed at the July 17 board meeting, and on July 23, the CA BoP released a request for information that seeks stakeholder input to develop regulations involving inference. Specifically, the CA BoP must define the “circumstances under which it would be permissible to substitute an inference as to the contents of an aggregate container for verification and validation of that container’s individual unit contents.”

Because “all participants in the dangerous drug supply chain” need to “‘verify and validate the delivery and receipt of dangerous drugs against [electronic] pedigrees at the unit level, in a manner that maintains the integrity of the pedigree system without an unacceptable increase in the risk of diversion or counterfeiting,’ ” the board must be reassured that inference will not increase risk.

Supply-chain participants include manufacturers, wholesalers, or pharmacies furnishing, administering, or dispensing dangerous drugs, and the CA BoP wants to hear from all of them, explained Herold.

“We would like to hear members of the supply chain detail the types of anticipated problems that inference would solve,” she said.

For comments to be considered for the September 11 meeting of the Enforcement Committee, they must be submitted by September 1 (http://www.pharmacy.ca.gov/laws_regs/inf_cert_rfi.pdf).

The CA BoP is also revamping its Web site in order to provide an area dedicated to e-pedigree issues. New features are expected to include the law itself and related documents, pending regulations, and a Q&A section.

Herold remains hopeful that California’s law will ultimately foil those attempting drug diversion and counterfeiting. “There are some really bad things going on in the supply chain,” she said. “We are continuing to work toward implementation of the law.”

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