Impact of RxUSA v. HHS On Future Pedigree Legislation

I attended the Partnership for Safe Medicines (PSM) Interchange 2011 conference on October 27 in Washington DC.  (I’ll cover that event more fully in a future essay.)  For me, the event couldn’t have been better, but I measure events like this perhaps a little differently than most people.  The agenda is important and the quality of the speakers is absolutely important, but in my view those are simply the things that lead to the one thing that can transform a merely good conference into a great conference:  the quality of the attendees.

(The quality of the attendees is exactly why I like the HDMA Track and Trace Seminar.  BTW, this year’s HDMA event starts this Thursday).

In the case of this year’s PSM event, I rate the quality of the attendees very high, and that’s because I had a number of great conversations with some very knowledgeable people during the breaks and at the social event the evening before.  That was my interaction with the attendees, not the speakers.  One of the topics of conversation surrounded the question of what exactly it was the led to the successful challenge to the Prescription Drug Marketing Act (PDMA) pedigree provisions in the RxUSA v. HHS court case and appeal and whether or not the same thing might occur with other drug pedigree laws.


One of the first speakers at the PSM event was U.S. Representative Jim Matheson (D-UT), sponsor of H.R.3026, the “Safeguarding America’s Pharmaceuticals Act of 2011” which was introduced into the House of Representatives on September 22, 2011.  There are some differences, but the core of this new bill is basically the same as the Buyer-Matheson-sponsored H.R.5839 “Safeguarding America’s Pharmaceuticals Act of 2008” which was referred to the Subcommittee on Health in the House Committee on Energy and Commerce back in 2008 where it was allowed to die.  H.R. 3026, the new bill, is now sitting in that same subcommittee.

Representative Matheson spoke about his latest bill.  The whole time he was speaking I kept wondering if this new bill makes any attempt to address the deficiencies in the PDMA pedigree provision that were the subject of the RxUSA v. HHS court challenge.  RxUSA, a small drug distributor, was successful in obtaining a court ordered preliminary injunction against the implementation of some of the FDA’s regulations [specifically within 21 C.F.R. § 203.50(a)].  The U.S. Food and Drug Administration (FDA) believed that those provisions were soundly based on the PDMA law.  The Department of Health and Human Services (HHS), the larger federal agency that the FDA resides within, appealed the lower court’s ruling and lost the appeal.  The FDA finally removed the enjoined provisions just this last summer.

Certainly, given that history and the resulting four-plus year delay in some protection of the supply chain, the authors of this new bill would have spent considerable effort making sure that they addressed any deficiency that existed in the PDMA that led to the successful court challenge.  In fact, these flaws in the PDMA are one of the main reasons you would even need new legislation.  And being the sponsor of that bill, certainly Representative Matheson should be aware of any effort to address those flaws.

By the end of his speech he hadn’t touched on that particular topic so I raised my hand to ask the question.  Representative Matheson had limited time and could only take three questions.  By the time the third questioner had been selected, I wasn’t one of them so I lowered my hand thinking that I wouldn’t get my question answered.  But then the person who had been chosen to ask the final question asked almost the exact same question that I had in mind.  The questioner was a VP at Pfizer.  Apparently we were thinking the same thing.  She asked if this new bill addresses the problems that apparently exist in the PDMA?

Representative Matheson’s answer:  “I don’t know”.


What was it that made RxUSA’s challenge so solid that the preliminary injunction stood up on appeal in the Federal Appellate Court?  RxUSA claimed that the FDA’s requirement that a pedigree must extend all the way back to the drug’s original manufacturer was potentially an “arbitrary and capricious” interpretation of the PDMA’s requirement that a wholesaler must provide a statement “identifying each prior sale, purchase, or trade of such drug.”  Both the District Court and the Appellate Court agreed and upheld the preliminary injunction on enforcement of that requirement.

It’s important to note that neither court determined with certainty that the PDMA or the FDA’s interpretation of it were arbitrary and capricious.  Instead, they determined that there is a “better than 50%” chance of proving them so, and that’s apparently enough to retain the preliminary injunction against enforcement until the issue can be fully determined in a different court action.  It doesn’t look likely that either party will pursue that question now.

RxUSA argued that since, under the PDMA, all Authorized Distributors of Record (ADRs) are exempt from the statute’s pedigree requirements,

Thus, if the FDA’s regulation were put into effect as written, all lower-level distributors would be required to provide pedigree information that is currently held only by authorized distributors. The [lower] court determined that this would effectively make it impossible for lower-level distributors to comply with the law.”  (quote from the Appellate Court decision)

That is, because the ADR was not required to record and maintain any pedigree, or statements “identifying each prior sale, purchase, or trade of such drug”, it would be impossible for a lower-level distributor to acquire the information necessary to generate a pedigree that extended all the way back to the original manufacturer, which was part of the FDA’s interpretation of the PDMA.  That’s because the pedigree that the lower-level distributor needed to produce would have to include the information about the ADR’s purchase and sale of the drug–information that only the ADR could provide.  Since the ADR wasn’t required to keep that information, they could choose not to keep it, or not to provide it and then the lower-level distributor could not fulfill the requirement.


I think it may.  First, I think it shows just how important it is for pedigree legislation to cover all the bases and leave little for interpretation.  Second I think it shows how closely the exact wording of a pedigree law must be followed.  This Court followed the letter and not merely the spirit of the law.  That’s not really surprising I suppose.

Of course, the Court did not review the entire PDMA, it looked at only the specific challenge brought by RxUSA.  But the argument that a downstream trading partner in the supply chain cannot fulfill their legal requirement because an upstream trading partner is unwilling or technically incapable of providing certain information that was necessary for them to comply, sounded familiar to me.  That’s very close to what would happen within the operation of a true “Distributed Pedigree” model.

In a distributed pedigree model, upstream trading partners (like manufacturers and the first distributor of a given drug) won’t feel threatened because their ability to obtain the information they need to comply is fairly well assured.  The farther down the supply chain you get, however (like “lower-level” distributors and pharmacies) the more complex and difficult it will be for companies to obtain the information they need at the moment it is necessary for them to prove that they can construct a pedigree.  If any one of the upstream previous owners of a drug cannot or will not provide the information that is necessary to the downstream trading partner for compliance it will be impossible for that downstream partner to comply with the law.  Fundamentally that sounds to me just like one of the arguments that RxUSA successfully made in their case.

Another thought is that it appears that none of the existing state pedigree laws have the flaw that exists within the PDMA.  None of them exempt ADR’s.  Most either exempt the pedigree entirely for certain types of supply chain movements—so called “normal distribution”—and/or they require all parties in the supply chain to update a pedigree document with all the information that downstream parties will need and passed it down the supply chain along with the drug—the so called “document pedigree” model.  In the document model downstream parties don’t have to obtain additional information from upstream parties, but the document gets larger as it moves down the chain since it is carrying all of the information contributed by prior owners.


I’m not a lawyer, so don’t take my theories as facts but check with your lawyer before taking any action.  The PDMA’s exemption of the ADR is at the core of the successful RxUSA challenge.  It’s pretty clear why the Congress might have preferred to make such an exemption.  Distributors who are authorized by the manufacturer to distribute their drugs are most likely to buy those drugs only from them, and in very high volumes.  To place strict record-keeping requirements on those companies would be pretty onerous because of the huge volumes of product involved, and would not likely be necessary considering that they buy almost exclusively from the manufacturer—a source generally considered safe.  So, on the surface, it seems logical to exempt them.  But that’s the flaw.

So what’s the solution?  Is it even possible to create a meaningfully protective law that doesn’t have that flaw and yet is capable of being mirrored in a technical pedigree model that is affordable for all participants?  This is the link between law, regulations, standards and technology.  All of these pieces need to fit together intelligently so that costs are minimized at the same time that protection of the supply chain against criminal activity is maximized.  Producing a pedigree or track & trace law in a vacuum without considering the all these elements is very likely to fail from some legal challenge as the PDMA pedigree has, or because the costs throughout the system are too high, or because it fails to stop criminals from gaming the system.

But I think it is possible to craft a law that meets all of these challenges.  It’s just going to take a concerted effort.  What do you think?  Leave your comments below.


5 thoughts on “Impact of RxUSA v. HHS On Future Pedigree Legislation”

  1. Dirk, as always a good posting. Clearly the pedigree needs to be all or nothing else matters. Your comment “they buy almost exclusively from the manufacturer” says it all, especially the “almost” part. It is that one word that leaves open the opportunity for “bad” product to enter the chain, as we’ve seen in past instances. I’d have no problem if laws were such that an ADR could ONLY buy from the manufacturer, then a pedigree could start with the ADR, but that limits their ability to buy from whom they choose. Sort of a can’t have it both ways problem.

    On a different but related note: It seems this all begs the question: “Do we really need pedigree laws?” I ask because we’ve been debating this topic and tagging for over a decade (longer actually but seriously and rigorously for over a decade) and we still don’t have anything in place. Yet, has the problem we are trying to solve gotten worse, better or about the same as it was? I’m a huge fan of pedigree and a unique ID on each bottle. But it would seem that if this problem was serious enough the manufacturers would and could step up and make it happen, not to mention consumer demand. One life affected is too many, especially if it is yours or your family. I’m just not sure all the effort, debate and cost has gotten us anywhere. I’d welcome your thoughts!

    In the meantime, thanks for keeping us posted!

    1. Al,
      Thanks for the comments. You caught my intentional use of the word “almost”. If you look at the list of ADR’s for various manufacturers (just search for “Authorized Distributor of Record “) you’ll find that they can be quite long. I know of at least four U.S. drug distributors who have pledged to only buy directly from the manufacturers (except when a drug is only available through an exclusive distributor) but there are still some who have not made that pledge so that’s why I use that word.

      Your comments about whether or not “…we really need pedigree laws?” is an easy setup for me to advertise my RxTrace essay from last year that explored the identical thought: “Do We Even Need To Mandate Drug Pedigrees Anymore?“. More recently I discussed the problem of selecting an appropriate technology to protect the legitimate supply chain from criminals when the so few drugs are actually involved in “Illegitimate Drugs In The U.S. Supply Chain: Needle In A Haystack“.

      In my opinion these are really important and interesting ideas to think about right now with Congress considering new pedigree or track and trace legislation. We need to do something, but we need to be very careful to make sure that, whatever we do, it has a positive effect on the problem and doesn’t cost so much that it causes a significant increase in the cost of healthcare. Any valid solution needs to do both. If we get one but not the other we will have failed.


  2. Dirk – Excellent recap. Why not just make the requirement simpler to avoid unnecessary complication. The end point authentication model (GPhA, EFPIA) seems to do just that without alot of the complexity. I agree with Al above that effecting one life with diverted or otherwise tainted drugs is too many, but the California and FDA models just seem to be unnecessarily complex and difficult – and may not even get at the problem.

    1. Brian,
      Thanks for your comment. The EFPIA model for authentication at Point of Dispense (PoD) is an intriguing model, but it just depends on exactly what you are trying to do. If all you want to do is prevent a patient from ingesting an illegitimate drug, then PoD authentication is for you. Because of the complexity of the pharma supply chain in the EU I think PoD authentication is about all you can do there. In the U.S. I think an argument could be made that we benefit by preventing crime in general. If we don’t do anything to detect and deter crime we may find that costs goes up and one kind of crime leads to other kinds of crime. It may seem like an archaic argument in our lean times, but I think it has been one of the cornerstones of the criminal justice system in the U.S. for decades and some might argue that it is why we enjoy as little general crime as we do here. I’ll look into this theory and perhaps write an essay with references to show what I find.

      Thanks for the idea.


  3. Dear Dirk,
    Very interesting discussion and a way for those who do not go to conferences regularly to see what people, ie regulators, are thinking of doing and what users, ie Pharma companies, supply chain partners, think about that.
    Although the incidence of divertered goods may be presently low in the US, it will increase as the criminal side gets more organised and more global.
    If the US as a leading light in the world cannot formulate a pedgiree law, what hope have the rest of the world got, and especially in emerging markets where the percentage of falsified product is much higher (>30% in many African countries, for example).
    A working pedigree law then becomes a role model for other countries to follow.

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