McClellan Moves to Block Counterfeits and Require Barcodes Before Leaving FDA

April 1, 2004
Jill Wechsler
Jill Wechsler

Jill Wechsler is Pharmaceutical Technology Europe's Washington Editor, jillwechsler7@gmail.com.

Pharmaceutical Technology Europe

Pharmaceutical Technology Europe, Pharmaceutical Technology Europe-04-01-2004, Volume 16, Issue 4

FDA relies on e-chips to thwart bogus products, and drops paper pedigrees and unit-of-use packaging.

The US Food and Drug Administration (FDA) is proposing a multifaceted approach to halt the spread of counterfeit drugs in the US that centres on establishing an electronic tracking system able to ensure product integrity. At the same time, FDA is requiring drug manufacturers to add linear barcodes to containers and packages of drugs going to hospitals (see sidebar "FDA requires barcodes on hospital drugs"). The barcode initiative aims to promote patient safety, but could delay efforts to adopt e-chip tracking technology. Moreover, the voluntary nature of the anticounterfeit initiative has raised complaints that it is inadequate to ensure the safety of the nation's drug supply. Ironically, successful implementation of this plan to identify and block distribution of bogus medicines could remove obstacles to broader importing of lower-cost prescription products.

McClellan departs

The task of implementing these policies will fall to others at FDA, following the appointment of commissioner Mark McClellan to be administrator of the Centers for Medicare and Medicaid Services (CMS) in the Department of Health and Human Services (HHS). A top priority for the Bush administration has been to name a knowledgeable and credible individual to begin implementing the Medicare prescription drug benefit and quell complaints from seniors before the November elections.

A physician and economist, McClellan knows a lot about drug pricing and reimbursement and their impact on biomedical innovation. He shaped health policy for the White House as a member of the Council of Economic Advisors before coming to FDA in late 2002 and advised the administration in crafting the Medicare bill.

In shifting McClellan to CMS, the administration also calculated that FDA could weather the change. Deputy commissioner Lester Crawford served as FDA acting commissioner before McClellan's arrival, a period that saw him launch FDA programmes to modernize good manufacturing practices (GMPs) and consolidate biotech therapies with drugs. Recently, he has been heading up food and animal safety and antibioterrorism initiatives - prime HHS concerns.

McClellan made the smart move last autumn of detailing Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER), to the Office of the Commissioner (OC) to help implement many of his risk management and strategic plan initiatives. Now Crawford has asked Woodcock to remain as one of three acting deputies instead of returning to CDER in April as planned. Woodcock will be deputy for operations; Murray Lumpkin deputy for special programmes; and Amit Sachdev deputy for policy.

Woodcock says she can extend her OC stay because CDER is in good hands under acting director Steven Galson. The main priorities for Galson are to continue integrating biologics staffers into CDER, plan for the centre's move to new offices next year and to deal with the constant lawsuits related to generic drugs. Among many initiatives, Woodcock remains in charge of GMP modernization, developing guidance on protein characterization, and crafting a policy for generic - or follow-on - biologics, which is expected this spring.

FDA requires barcodes on hospital drugs

Although FDA will continue to function well, McClellan's departure leaves a big hole at the agency. An outspoken and highly visible commissioner, he advocated for policies to spur medical innovation and gain more equitable global drug pricing. He did not shy away from controversial issues, as seen in his campaign to block drug importing and illegal Internet sales. He leaves FDA with a mountain of unfinished business, but with its drug approval and oversight systems in good shape. He also sets a high standard for future commissioners who want to leave a mark on FDA and the pharmaceutical industry.

No magic anticounterfeit bullet

FDA's report, "Combating Counterfeit Drugs," combines incentives for adopting new product authentication and tracking technologies with proposals to stiffen legal authorities and expand educational efforts to stem the flow of bogus drugs into the US supply system. The centrepiece of the plan is to encourage manufacturers, distributors and pharmacists to adopt a new drug "track and trace" system in 4 years. The envisioned system would use embedded radio frequency identification (RFID) chips that would record data on a drug product's movement from plant to pharmacist and ultimately to the patient. In addition to thwarting illegal operators, the e-tracking system could improve inventory control programmes for all parties and make it easier to recall products that develop safety problems.

FDA sidesteps some of the more controversial issues that arose at its October 2003 open meeting on drug counterfeit proposals (Pharm. Technol. Eur. 15(12) 22–24 [2003]). Most notably, the agency is not requiring manufacturers to put finished dosages in unit-of-use packaging, as advocated by some pharmacists and providers. FDA officials acknowledge that such a change could enhance patient safety, but decided that it would not control counterfeiting enough to warrant the cost for manufacturers. For now, FDA is encouraging manufacturers to analyse the costs and benefits of unit-of-use packaging, starting with newly approved drugs, injectibles and the products most likely to be counterfeited. FDA also supports independent efforts to develop standards on the size, shape and organization of unit packaging that could reduce costs.

Similarly, FDA is not requiring manufacturers to adopt any specific anti-tampering packaging or product authentication systems, such as holograms, coloured labels and chemical markers. Such approaches may be helpful in preventing counterfeiting, but FDA believes that there is no one "magic bullet" able to foil illegal operators sufficiently to justify specific mandates. Moreover, agency officials fear that recommending any one product authentication technology would only alert counterfeiters to industry practices, and could also stifle further innovation. Manufacturers, instead, should explore the range of anticounterfeiting technologies to determine which best fits the specific product and dosage form and the company's capabilities.

To spur adoption of new technologies for existing products, FDA says it will review its policies on postapproval manufacturing changes. The agency plans to issue guidance on how companies can adopt anticounterfeit packaging and labelling changes without the need to obtain prior FDA approval, possibly through a changes-being-effected supplement or notification in an annual report.

Chips not paper

The prospect of establishing a national electronic tracking system for all prescription drugs in four years is prompting FDA to once more postpone plans to implement the paper pedigree system required by the Prescription Drug Marketing Act (PDMA) of 1987. After several delays because of high costs and technical difficulties, FDA was scheduled to launch the paper pedigree system on 1 April. Instead, the agency is backing this new electronic approach as a better way to meet PDMA objectives, but will reassess in 2006 whether industry is progressing sufficiently to keep paper pedigrees on hold.

Counterfeit or just illegal?

Manufacturers and wholesalers have begun feasibility studies of RFID systems, notably a pilot test by wholesaler McKesson for Wal-Mart. RFID tracking involves inserting tiny electromagnetic chips with unique mass serialization numbers that carry an electronic product code (EPC) in drug labels and packages. When incorporated into systems with data readers and computer information bases, the chips automatically authenticate and track products moving through the distribution system, creating a de facto electronic drug pedigree. RFID chips can hold much more data than barcodes and do not have to be read manually by scanners.

Next year, FDA expects that manufacturers will begin applying RFID chips to pallets, cases and packages of pharmaceuticals most likely to be counterfeited, and that wholesalers, chain drug stores and some hospitals will begin acquiring and installing information systems able to read and use this tracking information. An FDA timeline calls for these actions to be extended in 2006 to more products, pharmacists and hospitals so that there is a full RFID tracking system in place in 2007.

During this process, FDA will examine whether it needs to revise rules for labelling, electronic records and adherence to good manufacturing practices (GMPs) to accommodate new technologies. Another task is to ensure that any electronic tracing system complies with patient privacy protection policies. FDA and manufacturers are also examining whether RFID systems present any pharmaceutical safety issues. Researchers are conducting stability tests on drugs with labels or containers that have chips and will test if frequency emissions from chips could affect sensitive biotech products.

In announcing the anticounterfeit plan, McClellan noted that the private sector - and not FDA - should establish and maintain the e-tracking database. FDA expects all stakeholders will help develop standards for unique mass serial numbers to identify a pallet, case or package; protocols for reading tags; and compatible software requirements to ensure system interoperability. Manufacturers should also work with FDA and other members of the supply chain to address regulatory and economic issues that could delay adoption of the RFID tracking approach.

Sticks and carrots

In addition to encouraging technological innovation, FDA proposes changes in laws and policies to further deter production and distribution of counterfeit products. These include

  • Stiffer criminal penalties. FDA is asking the US Sentencing Commission to increase jail terms for drug counterfeiters. Currently, making a counterfeit drug brings only a 3 year maximum sentence, compared with up to 10 years for counterfeiting a drug label.

  • Stronger state wholesaler regulation. The National Association of Boards of Pharmacy (NABP) has issued revised model rules for wholesalers that FDA would like states to adopt.

  • Broader input on counterfeit activity. A counterfeit alert network will collect reports on counterfeit incidents from national health organizations, consumer groups and industry, and disseminate FDA alerts to members and subscribers.

  • Identification of likely counterfeit targets. Some states and organizations are developing lists of those high-priced, high-volume and scarce products most likely to attract counterfeiters. Pharmacists and providers feel that such lists should also include therapies likely to cause the most harm if counterfeited, such as AIDS and cancer treatments and injectibles. FDA supports compilation of a national list by NABP and other stakeholders to avoid redundancies and to help the public identify suspect products, but prefers that private organizations lead this effort.

  • Heightened security. FDA is promoting secure business practices and expects to develop guidance for industry on securing facilities and production sites. FDA also plans to increase site inspections of drug re-packagers, which have served as an avenue for counterfeits to enter the supply chain. FDA advises firms to name a high-level individual or team to co-ordinate anticounterfeiting activities and to check the legitimacy of suppliers and other business partners.

  • International co-operation. FDA also plans to collaborate with international organizations in identifying counterfeiters and establishing tracking systems. The agency is supporting efforts headed by the World Health Organization and will work more closely with the Permanent Forum on International Pharmaceutical Crime and the Interpol Intellectual Property Crimes Action Group to implement worldwide anticounterfeit drug strategies.

Information and imports

Another FDA goal is to increase public information on the dangers of counterfeit drugs. The agency plans to issue more advisories on buying drugs safely through the Internet, an activity that also supports its campaign to halt the sale of illegally imported drugs through the Internet.

While not all illegal imports are counterfeits, Internet purchasing opens the door for bogus products to enter the US market (see sidebar "Counterfeit or just illegal?"). The surge in shipments of unauthorized drugs to US customers has prompted an FDA crackdown. An agency "sting" operation in January netted evidence of counterfeit and misbranded products being mailed to Americans and led to actions against Texan importers. The tension heated up in February when several state and local governments launched new efforts to help citizens obtain drugs from Canada. Members of Congress threatened to block McClellan's appointment to CMS until he explained his anti-import stance.

Data from IMS Health shows that sales of prescription drugs reimported from Canada to the US topped $1 billion in 2003 compared with $500 million in 2002. The growth trend may level off as manufacturers limit sales to Canadian mail order pharmacies shipping products to the US. Pfizer informed several Canadian firms in February that it would cut off supplies, similar to earlier action by GSK.

While Congress debates drug import proposals, FDA analysts are examining what resources the federal government would need to make drug reimporting safe, as required by the new Medicare reform legislation. HHS established a drug import task force to examine these issues publicly. A main argument against importing is that FDA has no way to ensure that a product from Canada is genuine and has been shipped and handled correctly, and an electronic tracking system could reduce this concern.