State laws have done lit­tle to con­trol gray mar­ket for drugs

Con­cerns raised over sec­ondary drug dis­trib­u­tors

Modern Healthcare - - MODERN HEALTHCARE - Jaimy Lee

Drug pedi­gree laws in place in 29 states have done lit­tle to de­ter a largely un­reg­u­lated gray mar­ket in which sec­ondary dis­trib­u­tors sell drugs in short sup­ply to hos­pi­tals and health sys­tems.

Phar­ma­cists and health­care ex­ec­u­tives say that pa­tient safety re­mains a con­cern, de­spite the re­quire­ments that sec­ondary dis­trib­u­tors be­come li­censed, such as by a state phar­macy board, and that they track the sale, pur­chase and trade of a drug.

Sec­ondary dis­trib­u­tors mar­ket drugs in short sup­ply—which in­clude chemo­ther­apy drugs such as dox­oru­bicin and propo­fol, an anes­thetic—to hos­pi­tals that are of­ten faced with the choice to stop pa­tient care, find an al­ter­na­tive prod­uct or buy from a gray-mar­ket ven­dor at of­ten 20 times the price of a con­tracted drug or more.

Ac­cord­ing to the Univer­sity of Utah Drug In­for­ma­tion Ser­vice, there were 210 re­ported drug short­ages as of Sept. 26, com­pared with 211 for the full year of 2010. In the past month, the Food and Drug Ad­min­is­tra­tion and a Se­nate sub­com­mit­tee have held hear­ings on the short­ages, and Sen. Michael Ben­net (D-Colo.) urged the FDA to es­tab­lish a uni­form pedi­gree stan­dard that would track drugs through the U.S. sup­ply chain.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion’s Roslyne Schul­man said dur­ing a Sept. 26 FDA meet­ing that while rec­om­men­da­tions for ad­vanced no­ti­fi­ca­tion of short­ages would be help­ful to hos­pi­tals, so would additional in­for­ma­tion about drugs sold by sec­ondary dis­trib­u­tors. “If hos­pi­tals and other providers are forced to pur­chase drugs off-con­tract from sec­ondary dis­trib­u­tors—and I’m not just talk­ing about gray mar­ket, I’m talk­ing about le­git­i­mate sec­ondary dis­trib­u­tors—what would be ex­tremely help­ful would be some additional trans­parency about where those drugs came from and whose hands they had been in,” Schul­man said.

Buy­ing drugs from al­ter­na­tive sup­pli­ers that do pro­vide pedi­grees still raises con­cerns about price-goug­ing, sec­ondary dis­trib­u­tors’ prac­tice of not re­turn­ing drugs as tra­di­tional whole­salers do, and fal­si­fied pedi­grees, Bona Ben­jamin, di­rec­tor of med­i­ca­tion-use qual­ity im­prove­ment for the Amer­i­can So­ci­ety of Health-Sys­tem Phar­ma­cists, and Joseph Hill, the as­so­ci­a­tion’s di­rec­tor of fed­eral leg­isla­tive af­fairs, said an in­ter­view.

Wil­liam Shaw, di­rec­tor of statewide phar­macy pur­chas­ing and lo­gis­tics for In­di­ana Univer­sity Health, said fears about whether a drug was stored or han­dled prop­erly, or if it was coun­ter­feited, still ex­ist even when sec­ondary dis­trib­u­tors pro­vide a pedi­gree.

In­di­ana and Florida were the first states to en­act pedi­gree laws, in 2006. FDA reg­u­la­tion re­quires unau­tho­rized dis­trib­u­tors to main­tain pedi­grees that can be traced back to the man­u­fac­turer or the last au­tho­rized dis­trib­u­tor of record—the agency pro­posed in July to re­move a reg­u­la­tion that would re­quire a more de­tailed pedi­gree af­ter it was sued by sec­ondary dis­trib­u­tors in 2006.

Florida’s law, which mainly aimed to pre­vent coun­ter­feit drugs from en­ter­ing the sup­ply chain, re­quires a whole­saler to be au­tho­rized to re­ceive and dis­trib­ute a drug and tracks drugs by the lot, said Martin Dix, a share­holder in the law firm Akerman who rep­re­sents drug whole­salers. The law also pre­vents a whole­saler from be­ing li­censed at the same ad­dress as a health­care provider, mean­ing that Florida hos­pi­tals can­not sell drugs to other whole­salers, which is one way that drugs have en­tered the gray mar­ket (Sept. 5, p. 8).

Dix said it’s un­der­stood that smaller busi­nesses with shady prac­tices went out of busi­ness af­ter the law was en­acted, and the process re­mains chal­leng­ing for li­censed par­tic­i­pants. “It’s a com­plex pa­per­work process and even so­phis­ti­cated dis­trib­u­tors can make mis­takes with it,” he said.

Cal­i­for­nia’s law, which goes into ef­fect in 2015, is ex­pected to be one of the most strin­gent pedi­gree laws. It will re­quire the in­di­vid­ual dose or vial of a drug to be tracked.

The mass se­ri­al­iza­tion of in­di­vid­ual doses and vials is where the fed­eral chain-of-cus­tody stan­dard should be, ac­cord­ing to Bill Wood­ward, a se­nior di­rec­tor of phar­macy con­tract­ing at group pur­chas­ing or­ga­ni­za­tion No­va­tion. He said he en­cour­ages No­va­tion mem­bers to buy only from sec­ondary dis­trib­u­tors that will pro­vide a pedi­gree and then to au­then­ti­cate the pedi­gree, a task that he says is cum­ber­some be­cause some pedi­grees can in­clude up to 10 dis­trib­u­tors. “Pedi­grees don’t nec­es­sary pro­tect the cus­tomer un­less some­one val­i­dates them,” Wood­ward said.

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