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Pharmaceutical Manufacturing and Packing Sourcer

Debate Reignited

Fake Avastin entering the US has brought the track-and-trace debate into the foreground, and regulators may be able to look to the EU for a new unit-level approach.

The US FDA announced in February that counterfeit vials of Roche/Genentech’s cancer drug Avastin were sold to a number of medical practices across the country. While the exact sources of the phoney drug remain a mystery, authorities traced the fake batch through several distributors throughout Canada, the UK, Denmark and Switzerland, only to find an unlicensed supplier in the Middle East as the possible culprit. When tested, the phoney batch did not contain any bevacizumab, the active ingredient in Avastin, which was substituted with salt and starch. Along with fake batch numbers, the drug packaging was also counterfeit, bearing Roche’s name, with French labelling, instead of the authentic Avastin packaging, which imprints Genentech’s name and has English labelling.

Making matters worse, in April the FDA issued a second warning that it had discovered a brand new batch of counterfeit Avastin circulating throughout the US, under the name Altuzan, the brand name for Avastin marketed in Turkey, which is not approved for use in the US. The FDA stated that nearly 50 physician practices in the US, mostly in California, bought the fake Avastin from supplier Ban Dune Marketing. This was quite interesting considering that authorities shut down the La Jolla-based distributor in August 2011. The company’s founder and president, James Newcomb, was indicted by the US Attorney’s Office in St Louis for selling counterfeit versions of Herceptin, Neupogen and Rituxan; other expensive cancer drugs. While that case didn’t specifically mention the sale of fake Avastin, these other counterfeit drugs that were shipped by Ban Dune had similar Turkish labelling, creating an obvious connection. Meanwhile, these other fake cancer drugs still remain in the supply chain. Genentech, Roche’s US subsidiary, has stated that it was not sure if patients were administered the fake Avastin, and up to this point the company has not received any reports of adverse side effects. Counterfeit drugs are nothing new to the industry. It is estimated that global sales from fake medications have doubled from $42 billion in 2005 to approximately $85 billion in 2011. However, the case of fake Avastin reveals a disturbing shift in this underground activity – from counterfeit pills of Viagra and Oxycodone, to fake versions of expensive injectable cancer therapies. Not surprisingly, these reports have ignited recurring fears about the safety and traceability of the US drug supply.

Track and Trace Legislation

The timing couldn’t be more unexpected. As news of the counterfeit Avastin broke, US Congress were reconciling the reauthorisation of the Prescription Drug User Fee Act (PDUFA). The so-called ‘mustpass’ legislation will fund the FDA for another five years and will give the agency broader enforcement powers. The version which passed the US House of Representatives would allow the FDA to inspect the manufacturing facilities of foreign companies, or reject their products if they refuse inspection. Also, the law would give the FDA the right to inspect these foreign companies’ active pharmaceutical ingredients and to block their importation if they fail to meet US standards. Certainly, these powers will give the FDA added power of enforcement, but for over a decade now the agency has been pushing for more stringent drug tracking. The FDA wanted the PDUFA bill to include language requiring a more robust, nationwide system to ‘track-and-trace’ individual units across the entire supply chain, from manufacturing facilities to pharmacies to patients. However, the industry has continuously pushed back, stating that to meet such a requirement is unrealistic and too expensive. In June, after a last-ditch effort, US lawmakers failed to agree on details of a national plan for drug tracking, foiling efforts to protect the US supply chain from the threat of counterfeit drugs. The PDUFA bill was due to be submitted for approval to President Barack Obama in early July. While lawmakers may try to introduce the ‘track-andtrace’ measure as a stand-alone bill later this year, partisan gridlock in a divided Congress during a presidential election year will most likely trump any attempt of political courage.

Current legislation, the Prescription Drug Marketing Act (PDMA) of 1987, prevents Americans from receiving counterfeit or expired drugs. However, the PDMA only put in place an initial framework of conditions, requiring that all medicines sold in the country must be marked with an identification number that shows dosage and name. This requirement is essentially useless because it says nothing about the drug’s pedigree – who or which distributor sold the drug and to whom, where it went or how long it took to get there. Due to the inadequacy of the PDMA, state governments could not wait for a federally-mandated drug tracking law to make its way through Congress, forcing many states to adopt stricter drug tracking laws. In 2004, the California State Legislature passed SB-1307, referred to as the California ‘e-Pedigree’ Law, as an attempt to prevent counterfeit medicines from entering the supply chain in California. The law requires the distribution history and the location of every medicine pack in the supply chain to be determinable in real-time through a barcode or RFID chip. This chainof- custody would trace information including the drug’s description, place of origin and expiration, as well as each drug’s sale or trade, the dates of the transactions, and the names and addresses of all parties involved. While over 30 states have passed their own drug pedigree laws, only California’s law is enacted at the unit-level. However, under incessant pressure from the industry, the California Board of Pharmacy, the regulator tapped for enforcing SB-1307, delayed implementation three times, declaring that the law was overly burdensome and that the industry needed more time to comply.

SB-1307 is expected to take effect in 2015, escalating fears in the industry that other states will adopt similarly strict drug tracking laws. This may lead to a disparate patchwork of requirements with no uniformity across state lines. However, California’s e-Pedigree law does include a provision allowing it to be superseded by federal law – opening the door for lobbying groups to push for alternative approaches. One coalition, the Pharmaceutical Distribution Security Alliance (PDSA), is promoting a counterproposal to the ‘track-andtrace’ language at the unit-level that the FDA wanted to include in the PDUFA legislation. The group is promoting the Pharmaceutical Traceability Enhancement Code Act (RxTEC), legislation that would give the federal government the power to track drugs in ‘lots’, but only when they reach distributors. However, this proposal is inherently flawed because it does not include real-time, mandatory drug verification as the product moves through every link in the supply chain. Only unitlevel tracking would provide the necessary granularity that would allow regulatory and enforcement bodies to validate the serial numbers of suspicious drugs, trace them back to their source of origin, and prevent patient exposure in the first place.

EU Initiatives

While the US Congress failed to put a national traceability framework in place, the EU has embarked on its own track-and-trace system to impede counterfeit drugs entering the supply chains of its 27 member states. Between 2006 and 2009, European customs officials seized an estimated 7.5 million counterfeit drugs at points of entry into the EU. In 2009, this number increased to more than 11 million adulterated medicines snatched at these countries’ borders. While most of these drugs would have been sold online by illegitimate pharmacies, some of the medicines would have found their way into legal distribution systems such as hospitals, putting patients at serious risk. In February 2011, the European Parliament took a major step in combating the importation of fake drugs with the approval of the Falsified Medicine Directive. The law, which becomes effective in 2014, requires unique serialisation of drugs at the unit-level, allowing pharmacists to check whether a pack with that distinct serial number had been previously dispensed – a requirement that could be disruptive and challenging to implement across the some 150,000 drugstores that comprise the pharmacy network in Europe. The law goes even further, granting authorities the power to monitor internet sales from illegal online pharmacies. General acceptability of these measures does not mean this issue has been resolved, however. There is still debate among EU lawmakers and players in the European pharmaceutical industry about how to pay for the traceability framework and who will govern the system.


It remains uncertain whether a similar unit-level system that is being implemented in Europe would effectively prevent all counterfeit drugs from entering the US market. Indeed, such a system would not prevent doctors and patients who wanted to buy drugs from unlicensed distributors outside the legitimate supply chain or from online pharmacies. Moreover, RFID and barcoding can be circumvented – the retail industry has been using RFID tags for decades, yet counterfeit apparel still remains rampant. However, the adoption of a unit-level system would have, at the very least, sounded the alarm much earlier when a licensed distributor in the US tried to scan a drug from an unknown supplier in the Middle East. The PDSA contends that RxTEC is a tenable, interim position that would improve the traceability of drugs without being too costly to implement. However, the RxTEC proposal has a provisional compliance date of 2020, a longer timeline which might not sit well with US lawmakers in light of the counterfeit Avastin reaching patients in recent weeks.

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Adam M Dion is lead benchmark analyst in the Healthcare Industry Dynamics Team at GlobalData. Adam is the primary author of GlobalData’s Benchmark Reports and also provides coverage of trends in the healthcare IT space, including mHealth and cloud computing. Prior to joining GlobalData, Adam was an Analyst with Technology Business Research. In this role, he was responsible for coverage of the leading blue-chip hardware, software and BPO companies such as Dell, HP, Apple, Toshiba, SAP, Acer, Wipro and Tata Consultancy. Adam has also been involved in a number of primary market studies in the consumer space analysing the market penetration of tablets, Netbooks, e-readers and mobile devices. His analytical commentary has been quoted by leading sources, such as the Wall Street Journal, Forbes, ComputerWorld and eWeek. Adam received his BSc in Neuroscience from Merrimack College, MA, and his MSc in Marketing from the University of New Haven, CT.
Adam M Dion
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