Tag Archives: pedigree laws

Terminology: Track and Trace, and Pedigree

I don’t get paid for endorsements.  I don’t sell my opinion.  No one has my thoughts under their control.  So when I tell you that the Healthcare Distribution Management Association’s HDMA Track and Trace Seminar is my favorite pharmaceutical industry serialization and pedigree seminar every year, you should know that’s my honest opinion.  This year, the event will be held on November 8-10 in National Harbor, MD (just south of Washington DC).

BTW, This opinion wasn’t solicited and I am paying full (member) price to attend the event.  This isn’t an advertisement.  It’s what I believe.

It’s an event that is intensely focused on Continue reading Terminology: Track and Trace, and Pedigree

Before You Participate in The GS1 US 2015 Readiness Program, Read This

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.

GS1 US is dedicated to expanding the adoption of GS1 Global’s standards for supply chain interaction in the U.S. market.  Almost every country in the world has a GS1 “Member Organization” (M.O.) that is dedicated to the same thing within their borders.  With the local M.O.’s primary focus on driving adoption, their most valuable tool is that country’s government.  If they can get the government to reference GS1 standards in their laws, their work is much easier.

This isn’t unique to GS1, or course.  All standards organizations know this and they all have various approaches to getting the attention of each country’s government.  There is nothing wrong with this.  In fact, it makes perfect sense since, unlike standards organizations themselves, countries always have very large enforcement wings.

But what happens when those governments are too big to sway easily?  What if it costs too much and takes too long to get them to see the light?  This is when a standards adoption organization needs to get creative.  In my opinion, that’s what has led GS1 Healthcare US to create the “2015 Readiness Program”.  It was out of frustration with the California State Government and with the U.S. Food and Drug Administration (FDA) and their, so far, unwillingness to create laws and regulations that mandate the use of GS1 standards.  Let me explain. Continue reading Before You Participate in The GS1 US 2015 Readiness Program, Read This

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 Continue reading The “Normal Distribution” Concept

The Modern Pharmaceutical Wholesaler and the Approaching Transformation

Photo by Rafael Vila

The modern pharmaceutical supply chain is an amazing thing.  No other supply chain handles the combination of volume, variety, value and complexity, and does it as efficiently and accurately as the U.S. pharmaceutical supply chain.  And it does it on an overnight order-to-delivery cycle from wholesaler to pharmacy.  Wholesalers are the key to the efficient operation of the pharmaceutical supply chain, and that’s why I am personally drawn to that segment.

The heart of the modern drug wholesale business—the thing that makes it live, kicking or screaming—is the modern pharmaceutical distribution center (DC).  That magical combination of people, processes, data and automation produces a dance every night across the country where individual drug packages are picked from cases and combined with other individual drug packages to fulfill the orders of pharmacies everywhere.  It is musical to watch and understand, and the crescendo occurs around 10:30pm every night local time at every pharma DC.  Today’s successful wholesalers have figured out how to deal with this specific complexity by organizing their people, processes, data and automation in a stabilizing way to make it all manageable, repeatable and very efficient, and thus making it possible to carve out a thin but well-earned and reliable profit.

Over the last 20 years only a few companies have found a way to surf this traditional complexity to profitability.  But faced with the supply chain transformation that will occur soon as the result of widespread serialization and pedigree requirements, the complexity these companies face seems likely to  Continue reading The Modern Pharmaceutical Wholesaler and the Approaching Transformation

Innovation and the “Authenticating Wholesaler” Idea

I have my own theory of innovation.  Almost everyone agrees that innovation is a key ingredient in growth and prosperity but in our current times, few companies are able to cause it to happen.  I think that’s because people misunderstand innovation, and particularly how to get it going.  With all the belt-tightening going on as the result of lean times, innovation could not be more essential, but at the same time, seemingly more out of reach.

In my view, there are three main stages to innovation:  experimentation, enlightenment and transformation.   Experimentation is the most assured pathway to innovation but it is also one of the first things to get cut when belt-tightening occurs.  It requires an organization to spend time on lots of things that eventually get discarded because they end up never taking root.  To an accountant, experimentation looks a lot like “play-time” activity that isn’t needed.  Innovation can occur without an experimentation stage, but reliance on “bolts-out-of-the-blue” to kick-start innovation will ensure that you will almost never actually get there.

Enlightenment is nothing more than an improved understanding of reality.  It occurs when a series of experiments from the experimentation stage are accepted by a group as having special significance because they reveal a part of reality that was previously hidden from view.  Enlightenment is the removal of blind-spots.  Once the blind-spots are removed, easier or more profitable paths become more obvious—or at least one of them becomes less foggy.

To actually benefit from enlightenment, and thus achieve the final stage of innovation, transformation, you need Continue reading Innovation and the “Authenticating Wholesaler” Idea

The Deputized Supply Chain

Several people I know from the traceability solution provider community like to tout the similarities between the food supply chain and the pharmaceutical supply chain.  They see similar track and trace regulation in the futures of both chains.  After all, both supply chains are regulated by the same agency (FDA, although food is also regulated by the USDA) and they see them as having similar problems.  But I don’t buy all that.  My friends see the use of common tools (their products, of course) and I might give them that, but these two problems only seem similar on the surface and so, if track and trace regulation is needed for both, the two regulations ought to have only high-level similarities.


The increasing frequency of the scariest problems in the food supply chain are related to accidents—like unintended contact with surfaces or organic matter that contaminate the food with nasty things like E. coli or salmonella—or food that has spoiled as the result of improper storage somewhere in the supply chain—like refrigerators or freezers that aren’t doing their job.  Consumers would benefit from the use of food track and trace in situations like these only when the contamination or spoilage isn’t detected until after the product is split up and distributed down multiple paths.  The track and trace system would improve the speed of the recall and the confidence in its completeness.

Generally, food is distributed to retail outlets inside containers that are packed by the manufacturer or processor.  I’m not an expert here so those of you who are, please correct me, but I don’t think food distributors normally break down cases and ship individual saleable units to retailers.  I think they normally ship full cases, bins and pallets.  For this reason, item-level serialization is not critical to end-to-end track and trace.  However, container-level serialization-based track and trace would be a major benefit to this supply chain.

There is one more thing about the food supply chain that I think is significant for this discussion.  Many of the trading partners at the start of the supply chain are small, independent and technically unsophisticated.  Most of the trading partners at the end of the supply chain are just the opposite:  large corporations with big IT budgets.


On the other hand, the scariest problems in the pharmaceutical supply chain Continue reading The Deputized Supply Chain

The California Pedigree Law

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.The original California Pedigree Law was passed back in 2004 and it was subsequently modified by the State Legislature in 2006 and again in 2008. In all three instances, I understand that members of the legislature and the Governor’s office worked closely with the State Board of Pharmacy to develop the final content and language.

I heard that one of the goals was to create a better law than the one in Florida. Did they succeed? In order to find out, let’s take a closer look at how they compare.

The law that is currently on the books in California differs from the Florida Pedigree Law in the following ways:

  1. It is fully electronic (it is NOT paper-based)
    The law and all of the discussion of the law by the Board of Pharmacy make it clear that the only acceptable form of a pedigree is electronic. This make it much more reasonable to implement because supply chain members can make use solely of computers to exchange, store and validate pedigrees, without fear that their trading partners can only handle paper pedigrees.
  2. Pharmacy returns must be reflected on pedigrees
    This was an original requirement of the Florida Pedigree Law too, but it was removed under pressure from lobbyists before the law went into effect. So far, it remains intact in California, but the law is not yet in effect. What it means is that when a pharmacy buys drugs from someone and they return those drugs, regardless of how little time has transpired, they must provide a pedigree update so that subsequent buyers of those drugs can see their purchase, and return transactions. This is no different from the requirements faced by all other segments.
  3. It starts with the manufacturer
    In Florida the first wholesaler started the pedigree. In California, the pedigree must be started by the manufacturer or it is not valid. If you are looking to expose the full history of package of drugs, how could you not start with the manufacturer? I even think the manufacturers generally agree with that notion.Interestingly, the Law doesn’t actually require anything of the manufacturers directly. It is directed at wholesalers who are licensed to operate within the state. Distribution of a drug without a pedigree that was started by the manufacturer is illegal and subject to penalties, but it is the wholesaler who violates the law and is punished, not the manufacturer. Thus, if a given manufacturer fails to provide California wholesalers with serialized product and compliant pedigrees by the time the law goes into effect, it will be up to the wholesaler to decide not to distribute those drugs within California in order to avoid violation of the law and avoid the associated penalties. The only risk a manufacturer takes on is that their drugs may no longer reach patients in California (and the subsequent PR firestorm that would follow).
  4. It requires item-level serialization
    California is very clear that they consider the concepts of “electronic track and trace” and “item-level serialization” as being inseparable. That is, if you have one but not the other, then you don’t have a pedigree system. Every drug package must have a unique identifier on it, applied by the manufacturer or repackager, and that UID must be included in the pedigree (the electronic record). This is a substantial difference from the Florida law which has no such requirement.
  5. No holes designed to accommodate special interests
    I’m not aware of any special treatment in the Law for any particular segment of the supply chain. Florida opened several holes that seriously compromise the intent of their law. So far, California has resisted opening holes, unless you consider pushing back the effective date to 2015-2017 a “hole”. 😉

Attentive readers will notice that I have listed these differences in the same order as my list of failures of the Florida Pedigree Law in my earlier post about the Florida Law. This is my way of showing that California has, so far, created a pedigree regulation that does not have any of the major failures of the Florida regulation.

These are the major differences, but what about the common characteristics? Here are the key things that the California Law has in common with the Florida Law:

  • Reliance on Digital Signatures
    Florida allows a pedigree to be created, stored and passed in electronic form, though they don’t require it. But if a Florida pedigree is in electronic form, digital signatures are required for the same purpose as a hand-executed signature on a paper document. The digital signature legally binds the signing person or entity to the content of the electronic document. Florida identified some specific standards that ensure that the digital signatures possess the all-important quality of non-repudiation. The California Pedigree Law does not, itself, specify any standards for digital signatures, but the Board of Pharmacy’s Q&A (see their Q72) calls out the fact that the California Code of Regulations identifies the specific characteristics that must result from a compliant digital signature architecture for electronic documents. The digital signature standards that are compliant in Florida would also be compliant in California.The fact that California included the use of digital signatures is significant because it ensures that each pedigree can stand on its own as a self-contained, self-secure package. This maximizes the value of the entire pedigree architecture because the security mechanism that prevents tampering goes with the package itself. No one has to rely on the access security of a given server or group of servers to prevent tampering. And, if tampering does occur, it can be easily detected, unlike tampering of pedigree approaches that rely solely on server access security. In that case, if server security is breached, you can’t tell which pedigrees were modified and which were not, rendering them all suspicious.
  • It distributes responsibility for monitoring supply chain security to all supply chain participants
    This is the one genius concept of the Florida Law and California retained it, thus qualifying those involved for genius status as well. It’s a regulatory approach that is relatively new but is likely to become much more common in the face of perpetual budget “crises” in state and federal government agencies. Instead of requiring trading partners to simply keep records of their own buying and selling history for each drug so that they can be audited by an inspector at some later date, these laws require them to check the validity of the full pedigree at the time of each purchase transaction, in near real-time.Notice the difference. In the first instance, it is up to the State Board of Pharmacy inspector to detect suspicious activity in the supply chain. But how often will a state inspector visit, and how many records will they be able to review? It’s inconceivable that this approach would result in the detection of illegitimate activity.But when every purchase of a drug as it passes down the supply chain requires the buyer to run a validity check on the full transaction history of that specific bottle, it greatly increases the odds that most suspicious transactions will be detected. And for most suspicious events in the history there will normally be multiple opportunities for detection. Here, digital signatures are the enabling technology. They allow all of this supply chain monitoring activity to occur reliably and automatically inside computers that are distributed throughout the supply chain, without human intervention and without slowing the movement of drugs.

So did California succeed in creating a better law than Florida? I propose that there is almost no comparison so the question may be moot. The California Pedigree Law is so much more far-reaching than the one in Florida. While Florida focused on disrupting some very troublesome practices being performed by a few nefarious licensed and unlicensed wholesalers, California’s law is designed to cause a major reorientation of the pharmaceutical supply chain approach to security, monitoring and policing (see also The Deputized Supply Chain). This has major implications that go well beyond those of the Florida law.

Faced with that, it is not surprising that it was necessary to push out the effective dates to 2015-2017. Transformation this big takes time to implement.

Dangerous Doses

If you have chosen to read this blog but you still haven’t read Dangerous Doses by Katherine Eban, you have made the wrong choice. The book is a great read. It documents the events in the early 2000’s that led the State of Florida to pass the first state pedigree law in 2003. You can draw a straight line between those events and all of the state pedigree laws that came after it. The book is a detailed accounting of crimes that occurred after a few criminals realized that law enforcement and the courts would not take seriously any drug crime that did not involve illegal drugs. But a small group of detectives and a lone prosecutor took them on and eventually brought them to justice. The book alternates between narratives of the crimes, the pursuit of the criminals by the detectives, and Eban’s explanation of how the pharmaceutical supply chain worked back at that time.

But that’s just it. The book was written at a time when things were different than they are now in some very important ways. As I understand it, back then, you could have spent less money on a license to distribute pharmaceuticals than you would if you obtained a license to open a bar. As a consequence, there were thousands of drug wholesalers licensed in Florida. But in 2003 the state toughened its licensing laws, greatly increased the cost of the licenses and increased the penalties for crimes related to wholesale distribution of pharmaceuticals. The HDMA cataloged the significant changes to Florida’s drug distribution regulations as the result of those changes. The number of licensed wholesalers plummeted to only a few hundred in the following years.

Oh, and they passed a pedigree requirement too.

I have to admit that I don’t have a good window into what exactly is going on in the Florida crime scene today but given the heightened awareness in the press of counterfeiting and diversion stories, I have to think that there is not nearly the problem that there was back in 2002, or we would hear about it.

So that pedigree requirement really worked, right? Maybe, but I have to think that the increased licensing fees and other requirements, the increased penalties and the increased interest by the courts are the things that really caused criminals to think twice about getting into that business.

Dangerous Doses is a great book and I still highly recommend it to anyone, especially those like me, who are responsible for working on pedigree, serialization and track & trace systems for companies in the supply chain. But as you read it try to keep in mind, that era doesn’t exist anymore. Since that time many other states have taken comparable steps to strengthen their licensing and toughen penalties. And many of them have also passed some type of pedigree law. Stay tuned for more about some of those laws in later posts.

Do drugs still get counterfeited and sold in the U.S.? Probably, but the criminal activity seems to have moved from the supply chain to the internet where criminals can hide just across the borders. Check your spam folder for the evidence.