Last week, the National Association of Boards of Pharmacy (NABP) named 79 online pharmacies that are not safe for patients. Rather than a general “watch out” message, the NABP actually listed the web addresses for these rogue sources.

Kudos to for naming names! I hope the NABP has a good firewall to repel the disgruntled spammers.

According to NABP, a site got on the bad guy list for one of the following three illegal activities:

• Does not require a valid prescription (71 sites)
• Foreign or non-FDA-approved drugs (35 sites)
• A physical address outside of the US (36 sites)

NABP has accredited 15 legitimate online pharmacies though the Verified Internet Pharmacy Practice Sites™ (VIPPS^®) program. In contrast, the 79 non-recommended sites are non-accredited through the Fake Online Outlets League™ (FOOL^®) program. (NABP doesn’t seem to allow direct links. Go to NABP and click “Internet Pharmacies” to find the list.)

Fans of buying “Canadian” drugs should take note: Twenty-two of the sites on the NABP list have “Canada” in the company name.  You have been warned.

McKesson (MCK) announced a settlement with the Drug Enforcement Administration (DEA) that temporarily suspends distribution of two controlled substances from two of its distribution centers. This latest settlement reflects the DEA’s aggressive strategy for controlling diversion by pursuing actions against wholesalers. However, I presume that McKesson has learned some lessons from Cardinal Health’s (CAH) troubles so the marketplace impact should be less severe.

A DEA press release describes McKesson’s alleged interactions with online pharmacies:

“Three McKesson distribution centers received and filled hundreds of suspicious orders placed by pharmacies participating in illicit Internet schemes, but failed to report the orders to DEA. They did so even after a Sept.1, 2005, meeting at which DEA officials met with and warned McKesson officials about excessive sales of their products to pharmacies filling illegal online prescriptions…As a result, millions of dosage units of controlled substances were diverted from legitimate channels of distribution.”

McKesson resolved its claim with the DEA for $13.25 million, an expected outcome given the company’s previous disclosures. For the record, I will remind you that “the settlement agreement is neither an admission of liability by McKesson nor a concession by the United States that its claims are not well founded.” Florida got $7.5 million of the $13.25 million in civil penalties, ensuring that the state retains its infamous reputation.

This Reuters story notes that McKesson must also temporarily suspend distribution of two drugs from two of its distribution centers. Competitor Cardinal Health (CAH) has struggled with the customer service issues associated with similar suspensions, but the impact should be smaller for McKesson. (See Cardinal Health’s Customer Problems Deepen from my Drug Channels blog).

The movement to make the pharmacy supply chain safer just took a huge step forward with Friday’s introduction of H.R. 5839 Safeguarding America’s Pharmaceuticals Act of 2008. The bill is co-sponsored by Representatives Steve Buyer (R-IN), Gene Green (D-TX), Jim Matheson (D-UT), and Mike Rogers (R-MI).

I enthusiastically support this bill, which finally offers Federal preemption of the multiple disorganized, uncoordinated, and underfunded state-level mandates. Ultimately, patients will be the biggest beneficiaries of a more secure supply chain.

KEY POINTS

Federal Preemption with Uniform National Standards – “no State or political subdivision of a State may establish or continue in effect any requirement with respect to statements of distribution history, manufacturer packing lists, unique standardized numerical identifiers, or drug identification and tracking systems for prescription drugs that is different from, or in addition to, any requirement under this subsection.’’ Got that, States? The bill also establishes new Federal minimum standards for wholesale licensing.

Phased Implementation – The Bill sensibly requires earlier compliance for “High-Risk Drugs.” The precise timing will depend on when the bill becomes law, but it looks like High-Risk Drugs would not have to serialized until mid-2011. (I touted a risk-based approach last July.) There are many places in the bill where the speed of implementation will be based on sensible factors such as “operational and technical feasibility.”

Support for “Independents” – A truly closed-loop, interoperable track-and-trace system based on serialization will require a massive infrastructure upgrade at the 150,000+ points of pharmacy dispensing in the U.S. The bill permits grants for technology upgrades to a “small pharmacy,” which is defined as “a pharmacy which is not owned (or operated) by a publicly traded company.” Of course, some privately-held pharmacies can be quite large (um, Duane Reade?), so this language will need to be cleaned up.

And the pedigree starts with… The bill also clears up a major area of disagreement between various state and federal definitions of pedigree: Where does pedigree begin? According to H.R. 5839, it begins with the Authorized Distributor of Record (ADR) that purchased directly from the manufacturer, a.k.a. “Direct Purchase Pedigree.”

OBSERVATIONS

H.R. 5839 Safeguarding America’s Pharmaceuticals Act of 2008 is only a bill, just sitting there on Capitol Hill. Nonetheless, here are a few implications if this bill becomes a law.

Amateur hour will be officially over. Today’s crazy patchwork of pedigree regulations creates uncertainty for everyone involved in the pharmacy supply chain. These decisions need to be made in a structured, logical, and public manner. Supply chain security regulations are too important to be left to the personal whims of a few volunteers at an underfunded state agency. Yes, I’m thinking about you, California State Board of Pharmacy!

Serialization will not be optional. The momentum for serialization is now inescapable, which is one reason that I joined the Advisory Board of Secure Symbology. Track-and-trace at the unit level only becomes possible with serialization, which is complex and must begin with the manufacturer/packager. At a minimum, serialization with pedigree requires: affixing a unique number during the packaging process; capturing and managing petabytes of data; adding pedigree information as the product moves down the supply chain; and then making these data easily (but securely) accessible. It also requires substantial lead time since serialization must happen during the drug packaging process, which can be months (or longer) from the time that the product is dispensed to a patient.

The pharmacy lobby will oppose national standards. I warned in December that pharmacists do not want pedigree. State Boards of Pharmacy – composed mainly of independent pharmacists – don’t want to lose local control (read: influence, power) and want to avoid any additional burdens on pharmacy operations. In fact, before the text of H.R. 5839 was even posted online, Steve Anderson of NACDS leapt into action with this statement asking Congress to “refrain from mandating serialization, e-pedigrees or track and trace requirements, since they are still experimental and will prove extraordinarily costly for pharmacies and other supply chain operators.” Unfortunately, pharmacies must close the loop if we are all to benefit from complete track-and-trace and ensure that pharmacy purchasing is not the weak link in the supply chain. Plus, wouldn’t a single national standard lower compliance costs for NACDS members such as CVS Caremark or Walgreens (WAG)?

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All in all, a very promising start for reducing counterfeits in the legitimate supply chain. Now, we just need to convince consumers to stop buying from shady online pharmacies.

Note: Cross-posted from the Drug Channels blog.

Dora Nkem Akunyili, a true hero in the fight against global counterfeits, spoke in Washington, DC. last Tuesday. Dr. Akunyili’s experience shows that the fight against counterfeits can be won, although the efforts must be multi-pronged and consistent. Her Nigerian strategy also suggests some new ideas for our attempts to secure the U.S. pharmacy supply chain.

Dr. Akunyili is the director general of Nigeria’s National Agency for Food and Drug Administration and Control (NAFDAC). When she took over NAFDAC in 2001, she estimated that 41% (!) of drugs in her country were fake or sub-standard. Today, the Nigerian national average has reportedly dropped to a still-troubling 15%.

In an interview to accompany her speech, Dr. Akunyili describes the many steps that NAFDAC has taken to stop counterfeits, starting with education:

“We realized that the first step in solving a problem is to sit down and accept that there is a problem; to tell people that there is a problem so that people will stop being deceived; to sensitize people to be vigilant about what they buy, what they use, and what they eat.”

NAFDAC has also focused on “mopping up what is already in circulation, especially counterfeits from (where else) India and China, which required a zero tolerance policy for pharmacies: “[W]e found that some people when we find fake drugs in their shops, they give us fake receipts, and that’s made it impossible for us to trace who imported it, who produced it. So we put up a guideline that if such receipts were ever given by any shop, everything in that shop would be evacuated and destroyed. That is how we were able to find the thirty Indian and Chinese companies and one Pakistani company that we banned from importing drugs into Nigeria.”

Naturally, any potential problems with counterfeit drugs in the U.S. pale in comparison with the Nigerian situation. Yet the Nigerian experience raises some intriguing questions for the U.S. supply chain:

• How can we better educate consumers to the dangers of purchasing from unsafe sources such as importation and online pharmacies?
• What can we do to ensure that pharmacies are not a weak link in guarding the U.S. supply chain against counterfeits and diversion?
• How can pharmacies signal to consumers that all drugs were purchased from a legitimate supplier who provided a valid pedigree?
• How could drug makers partner with dispensing pharmacies in the U.S. to help consumers identify and validate legitimate pharmacies that practice “safe sourcing?”

No easy answers, but at least the questions are getting clearer.