The “Normal Distribution” Concept

Important Notice To Readers of This Essay On November 27, 2013, President Barack Obama signed the Drug Quality and Security Act of 2013 into law. That act has many provisions, but one is to pre-empt all existing and future state serialization and pedigree laws like those that previously existed in California and Florida. Some or all of the information contained in this essay is about some aspect of one or more of those state laws and so that information is now obsolete. It is left here only for historical purposes for those wishing to understand those old laws and the industry’s response to them.

 

Understanding the concept of “Normal Distribution” is important in understanding the status of pedigree regulations in the United States pharmaceutical supply chain.  The term itself didn’t exist back in the late 1980’s when the federal Prescription Drug Marketing Act (PDMA) pedigree provisions were originally enacted by Congress but the concept is built into that law as the “Authorized Distributor of Record” (ADR) concept.  When states began enacting their own pedigree legislation back in the early 2000’s, the term “normal distribution channel” was defined to describe the path of drugs when they move through the most common–or “normal”–sequence of supply chain owners.  It’s a concept that is explicitly defined in most state pedigree legislation.

When a pedigree law is a “normal distribution” law, it generally means that pedigrees are not needed for any shipment or change of ownership where the drugs do not leave this common/typical/normal path as defined in the law.  But as soon as a change of ownership or custody occurs where the drug leaves this “normal” path, a pedigree is then necessary.

Typically, when a pedigree is required outside the “normal distribution channel”, that pedigree must document the entire supply chain history from the manufacturer to the pharmacy that ultimately dispenses the drug.

Most states in the U.S. that have pedigree laws have “normal distribution” laws.  Each state tends to define the term differently although there are only a few major variations.  I haven’t cataloged them all, but it appears that the most common type of “normal distribution” pedigree laws are those that define the term as drugs that only move between the manufacturer (or their 3PL), one wholesaler and one pharmacy, whether chain or independent (I’m paraphrasing here).  There are a few that define it to mean drugs that only move between the manufacturer (or their 3PL), up to two wholesalers sequentially, and one pharmacy.

The actual language varies and can be fairly complex so you really have to read the text of each state’s pedigree laws to fully understand the particulars.  Here are a few quick examples:  Colorado, Wisconsin, Illinois, Indiana and Texas.  In each case, search the document or page for the word “normal” (usually multiple times) until you find the definition of the term.  Please don’t use my links as your only reference to the regulations.  Some of these references may not be the actual current regulation but they include the state’s definition of the term “normal distribution channel”.

As I understand it, the original concept of “normal distribution” came from, or through, the National Association of Boards of Pharmacy (NABP) which publishes “model rules” for states to use as a reference as they create and adjust their pharmaceutical supply chain regulations in an effort to produce uniformity–or at least similarity–among the state laws.  In 2004, NABP revised their model rules to include pedigree rules.  Most states with pedigree regulations follow the NABP model rules, but to varying degrees.  The NABP model rules include the concept and definition of “normal distribution channel” and the model requirement that pedigrees would be required for any drugs that move through the supply chain on a path that departs from this “normal distribution channel”.

THE PROBLEM WITH “NORMAL DISTRIBUTION” PEDIGREE LAWS

Requiring pedigrees for drugs that move outside the “normal distribution channel” seems to make sense on first thought.  When you look at the kind of crimes that have resulted in the introduction of illegitimate drugs into the legitimate supply chain in the past, you find that the drugs were often characterized by many changes in ownership.  Sometimes initially legitimate drugs passed from “wholesaler” to “wholesaler” to “wholesaler”, many times, and at some point, criminally transformed into illegitimate drugs and were eventually sold to pharmacies where they were sometimes dispensed to patients.  These many changes in ownership are the target of the “normal distribution” pedigree laws.

The goal is to allow most drugs to move through the “normal” supply chain unhindered by the need to keep a pedigree up-to-date–something that can be costly when done on a large-scale basis.  Since the largest volume of drugs do pass through these “normal” routes, few drugs would actually need a pedigree.

Once a “normal distribution” wholesaler sells a drug to a non-“normal distribution” customer, a pedigree must be provided, and that pedigree must show the complete supply chain history from the time the drug was received by the first wholesaler–the one that received it from the original manufacturer–until the current transaction.  The problem is, to be capable of accurately knowing the complete supply chain history of any single package of drugs, everyone–even “normal distribution” wholesalers–would have to keep pedigree-like records and carefully track each package through their own facilities from source to customer.  This would need to occur for all drugs, just in case one was eventually sold outside of the “normal distribution channel”.

One possible alternative is for wholesalers to simply decide that the record-keeping burden is too heavy and therefore choose not to sell to customers who are not within the “normal distribution channel”.  The perception that some companies have taken this path has caused other companies to seek protection from the courts.  (See also this and this.)

California is the only state that has a pedigree law but does not make use of the concept of “normal distribution”.  All manufacturers, wholesalers and pharmacies that distribute drugs inside the state of California after 2015-2017 (the date depends on the segment) must participate in the passing of drug pedigrees.  No company or segment is exempt.  Since those dates are in our future, today, very few drugs pass through the U.S. supply chain with pedigrees accompanying them.  This is despite the fact that more than half of the states have some kind of drug pedigree regulation on their books.  But once 2015 arrives, many companies in the supply chain will experience a huge increase in the number of pedigrees that must be received, tracked, updated and passed.

In my view, a truly viable pedigree regulation and pedigree model must work as well for both large and small legitimate companies.  Put another way, a pedigree regulation or model that only works well for larger legitimate companies and does not also work for smaller legitimate companies is not acceptable.  “Normal distribution” laws cause unnecessary hardship on legitimate companies in the supply chain just because they are too small to be able to buy directly from the manufacturer, while giving a free pass to larger companies who can.  For that reason, “normal distribution” pedigree laws do not meet this acceptability test.

The goals of the “normal distribution” concept are noble.  It’s just that the concept falls short of being acceptable.  In a future essay, I hope to contrast the “normal distribution” concept with the “authenticating wholesaler” concept to see how they compare.  Both are intended to reduce the number of pedigrees that must be maintained in the supply chain but they accomplish it in different ways.  Stay tuned.