What is the fundamental goal of today’s drug pedigree laws? Certainly it has something to do with making it harder for criminals to introduce illegitimate drugs (counterfeit, stolen, diverted, up-labeled, improperly stored, adulterated) into our legitimate drug supply chain. But exactly how they are to accomplish that is sometimes hard to see. Like most of our laws, pedigree laws seem to suffer from design-by-committee and then they are contorted beyond comprehension by lobbyists. If a lobbyist can’t prevent new regulations from being enacted in the first place, the next best thing seems to be to ensure that the law that is passed is so twisted that it doesn’t entirely make sense.
The Florida pedigree law is a case in point. Well intentioned, but apparently designed by people who were not entirely familiar with the massive number of drug packages that pass through distribution centers and on to pharmacies in our modern pharmaceutical supply chain. This law centered around a paper document for every transaction. The proposed law went through many modifications on its way to being enacted, and even then, the legislature continued to modify it as multiple lobbies convinced state senators and representatives of their particular dislike for various requirements. The law that eventually went into effect on July 1, 2006 had a number of strange provisions.
- It’s paper-based
The final law had been modified to allow an electronic representation of a pedigree, but it remained essentially a paper pedigree. Though you could store it and transmit it electronically—they required very secure FIPS standards (Federal Information Processing Standards) for the electronic version—when an inspector wanted to inspect it, the very secure electronic document had to be printed out and presented on paper. A secure electronic pedigree that is printed out onto paper loses all of its security and can be faked very easily.
- Pharmacies could return within 7 days without updating the pedigree
Shortly before the law went into effect, the legislature and governor passed a modification that allows pharmacies to purchase drugs from a wholesaler and then return them to the wholesaler without providing an updated pedigree, as long as both transactions are completed within 7 days. This allows drugs to be re-introduced into the supply chain with pedigrees that legally do not reflect all of the transactions that have occurred, thus hiding potentially important transactions.
- Primary wholesaler invoice statement
Also shortly before the law went into effect a provision was inserted that allowed primary wholesalers to create a “pedigree” by simply printing on their customer’s invoices a statement that asserts that the drugs on the transaction were purchased directly from the manufacturer. Any wholesaler who cannot purchase directly from the manufacturer must purchase their drugs from one of the primary wholesalers. Those drugs must come with a fully documented pedigree that the primary wholesaler created (not the kind with the simple invoice statement). A fully documented pedigree is much harder and much more expensive to generate and maintain.
- No manufacturer requirements
In Florida, the manufacturer of each drug is not involved in the creation and maintenance of drug pedigrees. The first wholesaler to purchase the drugs from the manufacturer must start the pedigree to reflect that purchase. They must then update the pedigree to reflect the sale of the drug to their customer. All of this is necessary whenever the drugs are sold to another wholesaler. If they are sold directly to a pharmacy, the simple invoice statement “pedigree” is sufficient, as described above.
- No serialization
The Florida law requires careful tracing of every package of drugs from first purchase from a manufacturer until distributed to a pharmacy, but without the benefit of a serial number attached to each unit. This is hard to do without costing a lot of time and money because each shipment of a given drug has a different history. It must be traced separately from all other shipments of that same drug. Without serialization, the processes necessary to do it must be performed carefully and exactly. Any mis-step can cause a break in the trace which results in drugs that cannot be sold in the state.
- Allows information to be redacted
Finally, a bizarre late addition allows certain information to be redacted (removed) from a pedigree document if the information is considered sensitive. But when pedigrees are held electronically using the required FIPS standards, any modification will cause the pedigree to be broken. That is, it will appear as though someone has tampered with it—the very condition that would lead a buyer to fear that the drugs may be counterfeit or otherwise illegitimate. The provision that allows redaction is in total conflict with the provision that requires use of FIPS standards.
So with the addition of these strange provisions, what is the Florida pedigree law really accomplishing? I don’t think it is having the effect that was hoped by the original creators. As far as I can tell by reading the original version, it appears that the goal was to force each buyer of drugs to actively verify that the supply chain history shown on each drug pedigree was accurate.
In this way, the responsibility for detection of criminal activity was distributed to all participants in the supply chain, rather than remaining solely with the few inspectors from the Florida Department of Health. This is the one piece of genius in the otherwise flawed law.
Considering the original proposed law and the six strange provisions listed above, a summary of the primary failures of the Florida Pedigree Law would have to include the following:
- It’s paper-based
- It doesn’t involve the manufacturer
- It doesn’t rely on package serial numbers
- It is full of holes designed to accommodate special interests
I’m afraid this pedigree law is so flawed that it has simply resulted in higher costs with little or no additional protection from criminals; nearly the worst possible outcome. Why have pharma supply chain crimes apparently decreased in Florida since the law was enacted? In my opinion, it’s entirely because the same law greatly increased wholesaler licensing requirements and the penalties for crimes.
With the development of the Florida law as backdrop, California stepped up with the intention of creating a better pedigree law. Were they successful where Florida failed? I’ll discuss their attempt soon.
The California pedigree law will have a surprising influence on how the pharmaceutical supply chain operates in another state. I’ll get to that in a minute, but first, the law will change some things about the way the supply chain operates in all states. Prescription drug manufacturers who want to continue offering their products to patients within California after 2015-2016 must add unique serial numbers to each drug package and start an electronic drug pedigree.