[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
SECURING OUR NATION'S PRESCRIPTION DRUG SUPPLY CHAIN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
APRIL 25, 2013
__________
Serial No. 113-35
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
CORY GARDNER, Colorado BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas PETER WELCH, Vermont
ADAM KINZINGER, Illinois BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Health
JOSEPH R. PITTS, Pennsylvania
Chairman
MICHAEL C. BURGESS, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
ED WHITFIELD, Kentucky JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan LOIS CAPPS, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee JIM MATHESON, Utah
PHIL GINGREY, Georgia GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey JOHN BARROW, Georgia
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
H. MORGAN GRIFFITH, Virginia KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Joseph R. Pitts, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 1
Prepared statement........................................... 2
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 2
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 3
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 6
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, prepared statement.............................. 7
Witnesses
Janet Woodcock, Director, Center for Drug Evaluation and
Research, U.S. Food and Drug Administration.................... 8
Prepared statement........................................... 11
Answers to submitted questions............................... 129
Elizabeth Gallenagh, J.D., Vice President of Government Affairs
and General Counsel, Healthcare Distribution Management
Association.................................................... 38
Prepared statement........................................... 41
Answers to submitted questions............................... 131
Christine M. Simmon, Senior Vice President, Policy and Strategic
Alliances, Generic Pharmaceutical Association.................. 48
Prepared statement........................................... 50
Answers to submitted questions............................... 135
Michael Rose, Vice President, Supply Chain Visibility, Johnson
and Johnson Health Care Systems, Inc........................... 60
Prepared statement........................................... 62
Answers to submitted questions............................... 138
Tim Davis, R.Ph., Beaver Health Mart Pharmacy, on Behalf of
National Community Pharmacists................................. 66
Prepared statement........................................... 68
Answers to submitted questions............................... 142
Allan Coukell, Deputy Director, Medical Programs, The Pew
Charitable Trusts.............................................. 75
Prepared statement........................................... 77
Carmen A. Catizone, R.Ph., D.Ph.................................. 82
Prepared statement........................................... 84
Walter Berghahn, Executive Director, Health Care Compliance
Packaging Council.............................................. 89
Prepared statement........................................... 91
Submitted Material
Statement of LaserLock Technologies, submitted by Mr. Whitfield.. 107
Statement of the National Association of Chain Drug Stores,
submitted by Mr. Pitts......................................... 117
Letter of November 7, 2012, from EMD Serono, Inc, submitted by
Mr. Pallone.................................................... 121
SECURING OUR NATION'S PRESCRIPTION DRUG SUPPLY CHAIN
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THURSDAY, APRIL 25, 2013
House of Representatives,
Subcommittee on Health,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:01 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Joe Pitts
(chairman of the subcommittee) presiding.
Members present: Representatives Pitts, Whitfield, Shimkus,
Murphy, Blackburn, Gingrey, Lance, Cassidy, Guthrie, Griffith,
Ellmers, Upton (ex officio), Pallone, Dingell, Capps,
Schakowsky, Matheson, Green, Butterfield, Barrow, Christensen,
Castor, Sarbanes and Waxman (ex officio).
Staff present: Clay Alspach, Chief Counsel, Health; Paul
Edattel, Professional Staff Member, Health; Sydne Harwick,
Legislative Clerk; Robert Horne, Professional Staff Member,
Health; Carly McWilliams, Professional Staff Member, Health;
Andrew Powaleny, Deputy Press Secretary; Chris Sarley, Policy
Coordinator, Environment and Economy; Heidi Stirrup, Health
Policy Coordinator; Tom Wilbur, Digital Media Advisor; Jean
Woodrow, Director, Information Technology; Alli Corr,
Democratic Policy Analyst; Eric Flamm, Democratic FDA Detailee;
Elizabeth Letter, Democratic Assistant Press Secretary; Karen
Nelson, Democratic Deputy Committee Staff Director for Health;
and Rachel Sher, Democrat Senior Counsel.
OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Pitts. Ten o'clock having arrived, the Subcommittee
will come to order.
The Chair will recognize himself for an opening statement.
There is an echo.
Members of this Subcommittee have been interested in
securing our Nation's pharmaceutical supply chain for many
years. While some supply chain provisions were included in
Title VII of last year's FDA user fee bill, the Food and Drug
Administration Safety and Innovation Act, FDASIA, a
comprehensive track-and-trace package has yet to be finished.
Today's hearing will focus on the importance of securing
the downstream pharmaceutical supply chain, which includes
manufacturers, wholesale distributors, pharmacies, repackagers
and third-party logistics providers.
In order to ensure that counterfeit or stolen drugs do not
enter the supply chain and harm patients, States have passed
laws that require, or will require, those involved in the
downstream supply chain to keep pedigrees or transaction
histories of drugs.
Some believe that these differing State requirements should
be replaced with a reasonable, practical and feasible federal
policy.
On Monday, Representative Latta and Representative Matheson
released a discussion draft to enhance the security of the
pharmaceutical distribution supply chain and prevent
duplicative or conflicting federal and State requirements.
I would like to thank all of our witnesses for being here
today. I look forward to hearing their thoughts on the draft.
[The prepared statement of Mr. Pitts follows:]
Prepared statement of Hon. Joseph R. Pitts
The Subcommittee will come to order.
The Chair will recognize himself for an opening statement.
Members of this Subcommittee have been interested in
securing our nation's pharmaceutical supply chain for many
years.
While some supply chain provisions were included in Title
VII of last year's FDA user fee bill, the Food and Drug
Administration Safety and Innovation Act (FDASIA), a
comprehensive ``track and trace'' package has yet to be
finished.
Today's hearing will focus on the importance of securing
the downstream pharmaceutical supply chain, which includes
manufacturers, wholesale distributors, pharmacies, repackagers
and third-party logistics providers.
In order to ensure that counterfeit or stolen drugs do not
enter the supply chain and harm patients, States have passed
laws that require, or will require, those involved in the
downstream supply chain to keep pedigrees or transaction
histories of drugs.
Some believe that these differing State requirements should
be replaced with a reasonable, practical and feasible Federal
policy.
On Monday, Rep. Latta and Rep. Matheson released a
discussion draft to enhance the security of the pharmaceutical
distribution supply chain and prevent duplicative or
conflicting Federal and State requirements.
I would like to thank our witnesses for being here today. I
look forward to hearing their thoughts on the draft.Thank you.
At this time, I would like to request unanimous consent for
Congressman Latta to participate in the subcommittee hearing.
Without objection so ordered. I now yield the remainder of my
time to Rep. Latta.
Mr. Pitts. At this time I would like to request unanimous
consent for Congressman Latta to participate in this
subcommittee hearing. Without objection, so ordered.
I now yield the remainder of my time to Representative
Latta.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Well, thank you very much, Mr. Chairman. I
appreciate you having this legislative hearing today on this
important issue of securing our Nation's pharmaceutical supply
chain. I also appreciate the subcommittee for allowing me to
participate in the hearing today.
This is an important issue that was brought to my attention
when I was first elected to Congress over 5 \1/2\ years ago by
concerned stakeholders in Ohio, and I have been working on it
ever since. I am pleased the subcommittee is holding a hearing
on the issue, and I am honored to be leading the effort in a
bipartisan effort in this Congress.
The pharmaceutical supply chain touches every part of our
health care system. It is imperative that we get the structure
and the segments of it connected in a safe, secure and
effective manner that provides the best protection for
patients. This draft legislation Mr. Matheson and I have
released on Monday is a commonsense, practical approach to
making improvements to the current supply chain while
facilitating continued collaboration among all parties before
taking the next steps toward the additional requirements.
To protect patient safety, this bill would replace the
patchwork of multiple State laws and create a uniform national
standard for securing the pharmaceutical distribution supply
chain, therefore, preventing duplicative State and federal
requirements. It would increase security of the supply chain by
establishing tracing requirements for manufacturers, wholesale
distributors, pharmacies and repackagers based on--Mr.
Chairman, should I just continue on without the mike?
Mr. Pitts. Go ahead.
Mr. Latta. Thank you. It would increase security of the
supply chain by establishing tracing requirements for
manufacturers, wholesale distributors, pharmacies and
repackagers based on changes in ownership. The bill also
establishes a collaborative, transparent process between the
Food and Drug Administration and stakeholders to study ways to
further secure the pharmaceutical supply chain.
The timeline put forth in this bill is reasonable and would
allow enough time for stakeholders to comply with these new
national standards and ensure that through feedback from these
stakeholders that the next phase of the process is done
efficiently and effectively.
There has been significant work done on this issue over the
years, and I appreciate all the feedback and suggestions I have
received on this bill draft. While this bill is still in draft
form, Mr. Matheson and I intend to introduce it in bill form in
the coming weeks, and we fully understand that California law
relating to implementation of an e-pedigree system is quickly
approaching. It is imperative that we move this bill swiftly
through the committee and then to the House Floor.
I look forward to working with our Senate colleagues on
this legislation along with the FDA and all the other
interested stakeholders, and I urge the support of this draft
legislation soon to be in bill form.
Thank you, Mr. Chairman, and I yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the ranking member, Mr. Pallone, 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. FRANK PALLONE JR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Chairman Pitts. I am pleased that
we are having this hearing today because drug distribution
security is critical to public health and safety. The public
deserves the piece of mind that the prescriptions they pick up
contain quality ingredients and were handled throughout the
supply chain by licensed companies adhering to strong safety
standards so that the final products they receive are safe and
effective drugs.
U.S. companies providing drugs to other international
markets have already begun to serialize their products to
comply with these countries' track-and-trace requirements, and
the American people should be afforded the same protections.
Last summer, we had meaningful bipartisan bicameral
conversations about this topic. While we were ultimately unable
to reach an agreement, the discussions with our Senate
counterparts and a number of stakeholders certainly
demonstrated our commitment to the issue. As we revisit drug
distribution security, there is a lot at stake, and that is why
I am disappointed that we were not given the opportunity to
work with our Republican colleagues on the draft bill that was
released earlier this week. I am also concerned that this draft
seems to me to not reflect where our discussions left off last
year. Mr. Chairman, as we move forward, I urge the subcommittee
to make sure we get this proposal right and that we work
together to get there.
Now, some States such as California have already begun to
address drug distribution security to ensure the safety of
their patients. It is crucial that if we are going to preempt
these State efforts, that we must have a strong federal
standard. This standard should serve as a true building block
to track drugs at the unit level so that each and every product
is authenticated at the lowest unit of sale before they reach
patients and counterfeit or contaminated products are
eliminated. We cannot rely on Congress to revisit this issue in
10 years. The time to establish this path forward and set up
phase-in requirements is now.
It is also important that everyone who is part of the
system including the manufacturers, the repackers, the
wholesale distributors, third-party logistics providers and
dispensers play a role in tracing the safety of the Nation's
drug supply.
In addition, I believe that in order to establish the most
effective drug security system, it is critical that we include
strong national license standards for distributors and third-
party logistics providers so that only reliable companies are
handling the Nation's drug supply, and FDA has immediate access
to needed company information in the event of a drug recall or
other public health threat.
I want to thank our witnesses here today including the FDA
for all your hard work throughout this process. Many of you
contributed to the discussions last year in a productive way to
educate us on the supply chain process, and I look forward to
better understanding what you believe is critically important
to any bill that moves forward, and I want to extend a special
welcome to Mr. Michael Rose, who is here testifying from
Johnson and Johnson, which is headquartered in my district. I
look forward to J&J and all the stakeholders as well as my
committee colleagues to achieve a reasonable solution that will
safeguard the public health.
I would like to yield the remaining 2 minutes of my time,
Mr. Chairman, to our chairman emeritus, the gentleman from
Michigan, Mr. Dingell.
Mr. Dingell. Mr. Chairman, I thank you for these hearings.
I commend you and also my dear friend, Mr. Pallone. I want to
commend Mr. Latta and Mr. Matheson for their leadership on
this, which has been a long thorn in the side of this
committee, being very, very difficult to achieve our purposes.
I would observe that we have before us an opportunity where
the two parties are working together, where the House and
Senate are working together, and I am delighted to see that
that is happening because there is no real Democratic or
Republican way of protecting the American public.
We have to work with all the stakeholders, and I have to
observe that the pharmaceutical industry and the stakeholders
have been most helpful in the matters as they have gone
forward, and I want to thank again Mr. Latta and Mr. Matheson
for their work on these matters. I am hopeful that we will be
able to move forward toward legislation that will be accepted
and acceptable to all parties, and I note that the industry has
been working closely with us as has the Senate. It is my hope
that we will understand that 10 years on some things within
this matter might be a bit long, and I think that while we do
need to see to it that Food and Drug has clear instructions
from the Congress, we don't want to get to the point where we
are micromanaging things and having meetings set up by Food and
Drug which may or may not be of value to the country and to the
industry and the consumers.
Having said those things, I would return 22 seconds to my
dear friend from New Jersey, who has been so gracious as to
yield to me.
Mr. Pitts. The Chair thanks the gentleman and now recognize
the chairman of the full committee, Mr. Upton, for 5 minutes
for opening statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well, thank you, Mr. Chairman, and hopefully the
mic will work long enough before our helium bill gets to the
floor.
I appreciate today's hearing, and that is for sure, on
securing the prescription drug supply chain. Keeping our
prescription drugs safe is certainly a bipartisan issue, and we
have the world's safest drug supply, but that doesn't mean we
can't make it even better.
I would like to thank the discussion draft's authors for
their bipartisan leadership on this very important issue.
Earlier this week, as has been noted, a comprehensive
discussion draft was released that would increase the security
of the supply chain for America's patients while at the same
time preventing duplicative Federal and State requirements. The
draft also sets forth a collaborative process so the Food and
Drug Administration and supply chain stakeholders could work
together in an effort to better understand how and when to move
to unit-level traceability.
We spent a significant amount of time working on this issue
as we successfully moved the Food and Drug Administration
Safety and Innovation Act through the legislative process in
2012 and our efforts continued beyond enactment. During that
process, we also sought input from stakeholders like Pfizer and
Perrigo, two important companies in my district in Michigan, as
well as our small pharmacies. This hard work allowed us to
better understand the issue, and the bipartisan discussion
draft reflects that understanding. Now it is time to move this
legislation down the field and across the goal line. We have a
lot of good friends in the Senate that agree with us on that
sentiment, and it is certainly a priority for this committee to
get this done, and I look forward to embarking on that, and I
yield to Dr. Gingrey and then to Ed Whitfield.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
Thank you for holding today's hearing on securing the
prescription drug supply chain. Keeping our prescription drugs
safe is a bipartisan issue. We have the world's safest drug
supply, but that does not mean we cannot make it even safer.
I would like to thank the discussion draft's authors for
their bipartisan leadership on this very important issue.
Earlier this week, a comprehensive discussion draft was
released that would increase the security of the supply chain
for America's patients while at the same time preventing
duplicative federal and state requirements. Their draft also
would set forth a collaborative process so the Food and Drug
Administration and supply chain stakeholders could work
together in an effort to better understand how and when to move
to unit-level traceability.
We spent a significant amount of time working on this issue
as we successfully moved the Food and Drug Administration
Safety and Innovation Act through the legislative process in
2012 and our efforts continued beyond enactment. During the
process, we also sought input from stakeholders like Pfizer and
Perrigo in Michigan, as well as our small pharmacies. This hard
work allowed us to better understand the issue, and the
bipartisan discussion draft reflects that understanding. Now it
is time to move this legislation down the field and across the
goal line. I believe my good friends on the Senate side agree
with that sentiment.
Because of the hard work that already has been put in on
this issue, I am confident we can get a product to the
president's desk by the August recess. I commit today that I
will do all that I can to make it happen, including marking up
the legislation in the Committee in May.Thank you. I yield to
Mr. Latta.
Mr. Gingrey. I thank the gentleman for yielding.
Mr. Chairman, I am pleased that there has been generally
bipartisan acknowledgement that a secure pharmaceutical supply
chain is not only necessary for patient safety but becoming
obtainable and tracking technology continues to improve, and I
would hope that the legislation that is ultimately the result
of this hearing today will balance both the reality of today's
emerging technologies with the flexibility to change as the
result of innovation. It is also necessary that we provide a
clear and a concise list of expectations and directives to all
companies up and down the supply chain. Steady industry
progress toward increased drug security should not be impeded
by a lack of clarity from Congress as to the ultimate goal of
this legislation for both the sake of innovation and security
and for the patients who may be adversely impacted from
counterfeit or stolen drugs.
Thank you, and I yield the balance of my time to the
gentleman from Kentucky, Mr. Whitfield.
Mr. Whitfield. Well, Dr. Gingrey, thanks so much, and thank
you all for having this hearing today, and we certainly
appreciate the witnesses being here.
Last week, I attended a forum over at Georgetown University
with the title of ``Combating the Threat of Counterfeit
Pharmaceuticals'', and I really was taken aback by the amount
of money being made by organized crime and other groups and
entering into the supply chain counterfeit prescription drugs.
Another point that came out, and I am delighted that Mr.
Latta and Mr. Matheson have introduced legislation at the
federal level because we know individual States are moving
forth, California, I guess out in the front right now, and I
think we need to set a federal standard in this issue because I
heard a lot of concerns about individual States moving in this
area, which can create real problems for the manufacturers, but
we want to do it safely, and I really look forward to the
testimony of the witnesses today.
I would also ask unanimous consent to simply submit into
the record a statement from a company called Laser Lock
Technologies, if that is acceptable. They are an anti-
counterfeiting company.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. And with that, I would yield back.
Mr. Upton. I just want to end by saying that this is a
priority. We intend to start the markup process next month,
May, and our goal will be to try and get a bipartisan bill to
the President before the August recess. So we are going to work
very hard and we appreciate all those that are here to help us
achieve that goal.
Thank you. I yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the Ranking Member of the Full Committee, Mr.
Waxman, 5 minutes for an opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
Today's hearing will examine ways to improve the integrity
of our drug supply chain. The entry of falsified and
substandard drugs into our drug supply chain poses a grave
public health threat. Time and again, we have read stories
about patients getting drugs that were unsafe or ineffective
counterfeits or that were stolen and not stored properly, so no
longer worked. Without action, this is a problem that is likely
to grow.
Today, there is a regulatory void at the federal level
because the United States does not have laws requiring the
tracking and tracing of pharmaceuticals. So some States have
stepped in and enacted their own laws. My State, California,
has a law that would mandate one of the most robust pedigree
systems in the country. Many have suggested there is a need for
a single federal system that would preempt these State laws. I
believe having a system at the federal level makes sense, if
done correctly. But I have grave concerns about preempting a
strong State law like California's and replacing it with one
that is not as effective at the federal level.
Our fundamental goal in establishing a federal system
should be to prevent Americans from being harmed by counterfeit
and substandard medicines. If we cannot assure the public that
legislation would accomplish that goal, then it is not worth
doing.
Throughout last year, members on a bipartisan, bicameral
basis engaged in extensive discussions about how best to
protect our supply chain. I was part of this group, as was
Chairman Upton and Representatives Pallone, Dingell, Matheson
and Bilbray. We heard loud and clear from FDA, Pew and others
that if we want a secure drug supply chain, we need an
electronic, interoperable unit-level tracking system that can
identify illegitimate product in real time so that it does not
end up in the patients' hands. We also heard that creating this
kind of system is doable. In fact, it is already being done in
China, as we will hear today from one of our witnesses.
Last fall, the bipartisan, bicameral group issued a
proposal that although far from being complete, reflected
agreement about the need for assuring that we ultimately get to
a unit-level electronic system. And just last week, the Senate
distributed a draft bill built upon that proposal and made a
concerted effort to address issues that were raised on both
sides of the aisle throughout last year's discussions.
Unfortunately, the House discussion draft under
consideration here today doesn't take that approach. The bill
does not require an electronic, interoperable unit-level
system. Instead, it provides that in ten years, FDA and GAO
would make recommendations to Congress about what legislation
should be enacted to better secure the supply chain. And even
though we never get to a unit-level electronic system, the
House bill would preempt State law on day one. That is
unacceptable to me as a California member, but it should be
unacceptable to all members. We know how long it has taken
Congress to act thus far. The discussion draft preempts strong
State laws and puts a weak federal program in its place. That
is a step backwards for public health. There simply is no
reason to wait to put enforceable standards in place. We have
been told repeatedly, and I am confident we will hear today,
that in order to secure our drug supply chain, we need to track
products at the unit level using an interoperable, electronic
system. We fail to protect the Nation's public health if we do
not take this step. I yield back the balance of my time.
Mr. Pitts. The Chair thanks the gentleman. That concludes
the opening statements of the members.
We have two panels before us today. On our first panel, we
have Dr. Janet Woodcock, Director of the Center for Drug
Evaluation and Research at the U.S. Food and Drug
Administration. Welcome. Thank you for coming today. You will
have 5 minutes to summarize your testimony. Your written
testimony will be placed in the record. You are recognized now
for 5 minutes.
STATEMENT OF DR. JANET WOODCOCK, DIRECTOR, CENTER FOR DRUG
EVALUATION AND RESEARCH, U.S. FOOD AND DRUG ADMINISTRATION
Dr. Woodcock. Thank you, and good morning Mr. Chairman,
Ranking Member, members of the subcommittee and authors of the
discussion draft.
We are all seeking the best way to protect patients from
medicines that aren't what they pretend to be. That is why we
are here. Or that may cause harm to them without providing the
help that they expect from their medicine, and that is the goal
we want to achieve mutually. So I thank you for continuing to
work on this program. We hope to do this by strengthening the
safety net that we currently have in place for medicines so
that counterfeit drugs can't get in the drug supply because
right now there are some loopholes where they can enter the
drug supply, and they are. Diverted or stolen drugs can't
reenter the drug supply after being perhaps taken by criminals
and stored in unsafe conditions, and suspect products that
happen to get in can be rapidly identified and removed from the
drug supply before they get to patients. And additionally, we
need to be able to find drugs wherever they are in the supply
chain. If dangerous products have been dispensed to patients,
we want to be able to find them and get them out of the hands
before the patients are harmed.
And why do we need this? Well, as people have already said,
the problems with counterfeits are well documented and actually
growing. Around the world, criminal networks are counterfeiting
drugs at a growing rate and many countries, their patients in
their countries are exposed to very dangerous drugs and even
some of the organisms, the resistance problems that we are
seeing with drug resistance, are partly driven by these
counterfeits because people are taking drugs that actually are
subpotent that are counterfeit drugs. And we are seeing this in
the United States where often expensive, lifesaving medicines
are targeted. I can't imagine what it is like for a person
battling cancer to hear that they have been receiving a fake
therapy or their cancer or for a diabetic to lose blood sugar
control because their insulin came from a stolen batch that was
improperly stored, and these things actually have happened in
our country.
And there are other equally compelling reasons to
strengthen drug track and trace that we haven't really
discussed as much, and that is to enable recalls of FDA-
approved drugs. This is really a non-trivial problem. Over the
last 5 years, there have been over 6,500 drug recalls in this
country. Over 400 of these have been class I recalls, and a
class I recall is where our doctors at FDA have determined that
there is an immediate risk to health if people would take these
drugs, serious risk. And we need to be able to find these
recall drugs, as I said, and get them out of the hands of
patients rapidly. For example, this has happened, there could
be a label mix-up and what is labeled as an innocuous drug,
perhaps a pain reliever or something, could actually have a
dangerous drug such as a blood thinner or cancer chemotherapy
drug in that vial, and so if that type of thing happens, we
need to be able to rapidly identify the patient who may have
these drugs and get them right down to the patient level.
So right now, we have a great deal of difficulty finding
which patients got these drugs, particularly at the lot level.
What we may end up doing is recalling the entire drug, and
sometimes these drugs are lifesaving drugs that we don't want
to remove completely from the patients; we only want to get the
tainted lots. So this is a large and growing problem, and good
track and trace would help the entire health care system,
people taking care of these patients to secure these products
as soon as possible and avoid further harm.
And finally, I think and most importantly, I want to say,
whatever is put in place by Congress should not fray or weaken
the existing safety net. A recent investigation conducted by
your colleagues' Ranking Member Cummings of the House Oversight
and Government Reform Committee and Chairman Rockefeller and
Chairman Harkin in the Senate identified a gray market of
business that was capitalizing on the way drugs can move
through the system to buy up drugs and resell them, perhaps at
1,000 times markup that were in shortage, and desperate
hospitals, saying caring for children with cancer had no choice
to buy these drugs at this markup because they had to treat
their patients. So the existence of that paper pedigree, as
noted in the report, enabled them to track back each
transaction and figure out the markup and document what
actually happened with these shortage drugs. So this paper
pedigree right now is a mainstay of us figuring out where those
drugs have been, not always followed but that is the law that
they should have that pedigree and we mustn't weaken that, so I
really ask you that any system that you put in place not
diminish our ability to figure out where these drugs have been.
It was astonishing if you read the Cummings report the Murphy
trail these drugs followed and their successive markup as they
went through multiple hands, none of whom, arguably, had a real
interest in getting these drugs to patients. They were simply
marked up at each step.
So we really ask that we not lose the ability to figure out
where drugs have been. That is critical, and we recognized that
changes will not happen overnight and a stepwise process is
needed, but it should be expeditious. There are technologies
available in various industries that can track things. I order
a lot of things online so many of you do too and they are
tracked throughout the system.
So we have to make sure we strike the appropriate balance
between the need to establish a secure system that protects the
public health and the costs and feasibility of such a system
and we need to make sure we put something in place, I think,
that evolves over time to a common goal that we all have is a
system that prevents criminals from taking advantage of our
patients, prevents people from diverting drugs and marking them
up, prevents us not being able to identify recall drugs and
actually people being harmed while we are doing investigations
and trying to figure out where these drugs ended up.
Mr. Pitts. Could you please conclude?
Dr. Woodcock. I am sorry. So our ultimate goal, as yours,
is to protect the public from counterfeit, stolen, diverted or
unfit medications and make sure that we establish a meaningful
and enforceable track-and-trace system. Thank you.
[The prepared statement of Dr. Woodcock follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The Chair thanks the gentlelady and we will now
have questioning, and I will recognize myself for 5 minutes for
that purpose.
Dr. Woodcock, if the FDA has a particular concern that a
drug could cause an immediate threat to individuals and the
sponsor refuses to take action, what would the agency do? Do
you believe that the agency's persuasive authority is strong
enough that sponsors will take corrective action? Does today's
regulatory regime seem adequate given the increase in quantity
and sophistication of counterfeiting?
Dr. Woodcock. Well, we have authorities to--seizure
authorities and other authorities that require judicial actions
to do. We also, though, usually will go public with our
concerns rapidly and start notifying the health care system. It
is uncommon but does happen that firms argue with us over
recalling drugs or removing them. It is uncommon but can occur.
Mr. Pitts. Will national uniformity increase the security
of the supply chain and improve patient safety? Please explain.
Dr. Woodcock. An effective system will help secure the
supply chain from the incursions that we have seen that
probably are a growing threat over the years by criminals, so
that will protect patients and probably prevent harm that we
have seen.
Mr. Pitts. Is it important to preserve the States' ability
to license and enforce national standards?
Dr. Woodcock. Obviously, national standards are useful
because of the uniformity because most drugs move across State
lines. So I think it is important that both the federal
government and the States have the ability to enforce
appropriate laws.
Mr. Pitts. Will product serialization increase the security
of the supply chain and improve patient safety? Please explain
with your answer.
Dr. Woodcock. All right. So companies make batches or lots
of drugs, OK, and those are large amounts of a same drug. It
might be a thousand, it might be a million units would be made.
Those are packaged into crates or whatever and sent to
distributors, who then send them around the country. At some
point those are broken up and then sent to pharmacies and, you
know, all around to hospitals and so forth. At that point
that's when incursions by counterfeiters can come in if they
simply use the same lot number. The criminals are becoming very
sophisticated so they can get a few vials of that lot, they can
copy the label and put something that is totally fake into the
system. So a serialization procedure coupled with some
verification at the various levels of distribution would enable
us to rapidly identify incursions like that of fake parts of
the lot and remove them quickly, and I believe that's why the
manufacturers, the pharmaceutical manufacturers, as I think you
will hear later today, are moving towards serialization.
Mr. Pitts. Will data exchange and systems between
participants in the supply chain increase the security of our
drug supply and improve patient safety? Please explain.
Dr. Woodcock. Well, I think it is necessary. It gets to
what we were talking about earlier about the pedigree. If we
don't know the chain of custody of the product, and if we have
to reconstruct that later when--say some defective product,
dangerous product is found out there in the hands of a
consumer, or worse, they have a side effect which happens, we
have to deal with that, and we get a report of serious side
effects, then we want to know where did it come from, how many
are out there, is it real drug and so forth. And so unless we
have that pedigree and we know what hands it moved through, and
if we have to reconstruct that later by querying people, that
will cause great delays. So if you intend to replace the paper
pedigree system, it needs to be replaced by something that has
capacity to do that tracking back. So we can rapidly identify
other people at risk if we get, say, adverse events or report
of a substandard drug, we can rapidly identify where that came
from and how it happened.
Right now, we have instances where we get adverse-events
report, people die, and we get a large number of reports like
this every year for various reasons but some of them might be
related to substandard drugs, and we have a very difficult time
tracking that back from the patient to the pharmacy and
figuring out what the patient actually got. So we would really
ask that that pedigree, that whatever is established is at
least equivalent in performance to the pedigree we have now.
Mr. Pitts. So finally, would a national track-and-trace
standard increase the efficiency of product recalls?
Dr. Woodcock. Absolutely. That would be a tremendous tool
for us.
Mr. Pitts. Thank you. The Chair now recognizes the ranking
member of the subcommittee, Mr. Pallone, 5 minutes for
questions.
Mr. Pallone. Dr. Woodcock, your written testimony lays out
a disturbing series of cases illustrating the risk to our drug
supply chain posed by counterfeit and stolen or diverted
products, and it is not a new problem. We tried to address all
the way back in 1987 with the Prescription Drug Marketing Act
but for a variety of reasons that didn't work. You described
the fact that we need a robust track-and-trace system. I know
there are a variety of ways this could potentially, be done and
the summary of the House discussion draft indicates that it
would require lot-level tracing. Other proposals set up a
system that would track at a more granular level at the
packaging or unit level. You talked about this with questions
from the chairman. Can you describe the differences? I mean, I
know you basically have described the differences between the
two types of systems but tell me the benefits to a unit-level
tracking system that cannot be achieved by the lot level.
Dr. Woodcock. Right. Well, to reiterate because I think
this is sometimes unclear, all right, having a unit-level
tracking means that fake units couldn't be put in, and often
there are thousands of them that would be made by a
counterfeiter right down to the lot number and inserted into
the supply chain somewhere and then distributed to patients. By
having that verification down at the unit level, we would know
that those were extra, those were illegitimate and they could
be rapidly identified and removed. And also it would help us, I
think, in determining what patients got, what lot they got.
Mr. Pallone. I mean, it sounds like the lot level would
certainly be better nothing but that the gold standard is the
unit level, but it seems to me in order to have an effective
unit-level system, it simply has to be an electronic one in
which information is exchanged quickly and is available in real
time. And I don't think it makes sense over the long term. We
would not move beyond a relatively primitive system in which
this information is maintained and passed with pieces of paper
going back and forth.
So I recognize that creating an electronic system is no
small feat, a lot of technology, time, I am sure, investment.
But I think we need to ensure that we allow time for an
electronic interoperable system be set up. So let me ask you
this: do you agree that an electronic interoperable system is
ultimately the goal so as long as we allow for enough time to
get that kind of a system set up?
Dr. Woodcock. I agree, because that would provide the
greatest protection for our patients.
Mr. Pallone. Now, my concern is that the House discussion
draft does not even set up the goal of an electronic
interoperable unit-level system. It merely requires that the
FDA and GAO report back to Congress in 10 years on ways to
enhance the safety and security of the pharmaceutical
distribution supply chain. If we all agree that our goal should
be an electronic interoperable unit-level system, we need to
spell that out. We need to require that it be the end game and
set a date certain when it must be implemented. Congress can
play an important role in driving the technology, and as I
said, we need to allow for sufficient time for it to develop
and we don't want to set it up with unrealistic expectations,
but I think we do need to set requirements or it will never
happen. So again, Dr. Woodcock, do you agree that it would be
important for Congress to require that this system ultimately
be set up?
Dr. Woodcock. The goal is ultimately to protect patients
and make sure the drug distribution system as drugs are
distributed through the system is not porous at different
points and has holes or gaps where counterfeits or other things
can be inserted. So to reach that goal, ultimately you want to
have an electronic system that can identify down to the unit
level. However, there obviously are logistic and timing issues,
but I think we all mutually share that goal of patient
protection.
Mr. Pallone. But I am just trying to get you to say--I
mean, don't you think we should require this at some point,
that Congress should require it at some point?
Dr. Woodcock. Articulating that goal would certainly
probably speed achievement of the desired end, which is to have
a system that is capable of preventing these incursions.
Mr. Pallone. I appreciate that. I mean, look, you know me.
I have been around here for a while, and I just can't say there
is a phase I and hope for the best. If Congress wants a phase
II, I think they should say. Otherwise we are not going to get
phase II because inertia unfortunately often characterizes this
place unless you spell something out. So I really hope we can
work together with our colleagues to improve upon the bill. I
think we all share the same goal. We need to better safeguard
our Nation's drug supply but we need to make sure whatever
legislation we enact actually achieves that goal, it doesn't
just give people the hope that someday we will achieve it. That
is my concern, Mr. Chairman.
Mr. Pitts. The gentleman's time is expired. The Chair
thanks the gentleman and now recognizes the gentleman from
Louisiana, Dr. Cassidy, 5 minutes for questions.
Mr. Cassidy. Listen, you explained as well as anybody as I
have heard it the need for serialization today so I am going to
ask some things to explore, not to challenge. As I gather,
California has pushed for a more rapid implementation, but as I
gather, they have had to delay this, correct? They have had to
delay the implementation of their law. Is that true?
Dr. Woodcock. I am not familiar with what California has
done. I am sorry.
Mr. Cassidy. I have learned to say what I have been told,
not what I know, but that is what I have been told, which
suggests to me that even in a market as large as that that
there could be problems with rapid implementation of this
serialization.
Dr. Woodcock. Well, I think some of your other witnesses
may be more familiar with the pragmatic aspects of this.
Mr. Cassidy. Yes, I think really what is a key here is not
the goal which we should go to serialization, it sounds, but
the question is, how do you track supply chain, how do you have
in one sense an in-the-cloud inventory where someone is not
gaming it to figure out that they need to suddenly purchase
because it is about to go in shortage. Fair statement?
Dr. Woodcock. There is one issue. That is right.
Mr. Cassidy. And as I gather, those issues have not been
entirely worked out?
Dr. Woodcock. No.
Mr. Cassidy. And so putting a date certain that has to be
done in a year presumes that they will be worked out within a
year but that is clearly not--that is imagining, that is not
necessarily knowing that that will occur.
Dr. Woodcock. Right. Well, clearly there should be a
stepwise approach, but whatever is built now should enable the
attainment of the ultimate goal, and there should probably be,
as Mr. Pallone was saying, some kind of time frames put so that
everyone's mind is focused on the ultimate goal.
Mr. Cassidy. I accept that. There is nothing like a
deadline to sharpen a man's mind. I totally get that. On the
other hand, I think we have seen with some things like the
exchanges in the Affordable Care Act just putting a date
certain doesn't mean that it is going to smoothly happen, and
so knowing everyone is impatient to protect patients from
criminals, we still have to recognize there are issues to
resolve.
Dr. Woodcock. Yes.
Mr. Cassidy. Let me change gears a little bit and talk
about drug shortages. You have written a paper. I have had to
look over it, the state of the art about the economic factors
involved with that, and it seems--no offense--you give a little
bit of a short shrift to the role of price competition. Knowing
that you know this paper like the back of your hand, in figure
two you have a little bubble saying price competition as a
factor. But it makes sense to me that if you have declining
margins and a 6-month lag so ASP plus six, the provider can
only be reimbursed which was the price 6 months ago if it has
hit this low point, you can try and raise the price, but if the
provider is only getting paid the lower price from 6 months,
she cannot afford to pay for the higher price. Fair statement?
Dr. Woodcock. Yes, but I am sure you appreciate, I can't
really comment on federal----
Mr. Cassidy. I understand that, but you can observe that,
as your paper does, that lower margins may decrease the ability
of a company to invest in manufacturing redundancy, quality,
etc. Is that a fair statement?
Dr. Woodcock. That is a fair statement, and we feel that
there is only competition on price because quality is non-
transparent to the buyers.
Mr. Cassidy. Now, theoretically, though, FDA is going to
ensure that there is adequate quality to ensure safety,
correct?
Dr. Woodcock. That is our job.
Mr. Cassidy. Yes, it is your job, and so if I am the
purchaser, really, as long as I know that it at least meets my
minimum standard, why not.
Dr. Woodcock. Yes, except--and this is what we try to raise
in the paper--there is another aspect to quality, which is
reliability, which any of you purchase a car or electronic or
anything realize is true, and some of that is reliability of
supply.
Mr. Cassidy. But if you have concentration of
manufacturers, you are down to five, six or seven, really, it
is not as if you can go someplace else.
Now, let me ask you just in the interest of making this--I
understand the numbers of shortages are now down.
Dr. Woodcock. Yes, a 50 percent decrease.
Mr. Cassidy. Are these shortages down because we have
actually addressed these issues of lack of redundancy or
because we are allowing more foreign product to be introduced?
Dr. Woodcock. Primarily because of actions we have taken.
We thank the Congress for your leadership in dealing with
shortages in the Safety and Innovation Act that was passed last
year. We have intervened. We have earlier notification.
Mr. Cassidy. I got 26 seconds. And so is it from more
product coming overseas or is it the ability to work out things
domestically?
Dr. Woodcock. I don't think the domestic supply has
improved.
Mr. Cassidy. So it is actually more product coming from
overseas?
Dr. Woodcock. Yes.
Mr. Cassidy. Let me toss out one thought. I just spoke to a
man who has got extensive contacts with foreign pharmacies. He
suggests that you put an RSS feed on your Web site. He says
that my guys elsewhere have to constantly monitor what is in
shortage. They really can't do that. If there is an RSS feed,
look, boom, propathol is going on shortage, and it would feed
out to them, then they would be able to come to you and
solicit. So can our office follow up with you regarding that?
Dr. Woodcock. I would be happy to do so.
Mr. Cassidy. It just seems like a great idea.
Dr. Woodcock. Yes, good suggestion.
Mr. Cassidy. OK. I yield back. Thank you.
Dr. Woodcock. Thank you.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the Ranking Member Emeritus, Mr. Dingell, 5 minutes
for questions.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
Dr. Woodcock, you know that there is a lot to be done here
so I will ask that you respond with a yes or no to my
questions. Do you agree that a traceability system would help
to better secure our drug supply chain from counterfeits, theft
and intentional adulteration? Yes or no.
Dr. Woodcock. Yes.
Mr. Dingell. Do you agree that a traceability system would
help identify and detect illegitimate pharmaceuticals? Yes or
no.
Dr. Woodcock. Yes.
Mr. Dingell. Do agree that a traceability system would help
to ensure the safety of pharmaceuticals for patients and
consumers?
Dr. Woodcock. Yes.
Mr. Dingell. Do you agree that a traceability system would
improve the efficiency and effectiveness of recalls or returns?
Dr. Woodcock. Absolutely.
Mr. Dingell. It also must be fair, must it not? Yes or no.
Dr. Woodcock. Yes.
Mr. Dingell. And we have to see to it that it is of course
workable?
Dr. Woodcock. Right.
Mr. Dingell. And not impose undue burdens on anybody if we
could possibly avoid it? Yes or no.
Dr. Woodcock. Yes.
Mr. Dingell. Do you agree that a federal traceability
system should include participation from everyone in the supply
chain?
Dr. Woodcock. Yes.
Mr. Dingell. Do you agree that a federal traceability
system should take a phased-in approach, meaning the first
phase would implement lot-level tracing and the second phase
would implement unit-level tracing? Yes or no.
Dr. Woodcock. Yes.
Mr. Dingell. And there are reasons for differences in the
different parts of the system for manufacturing and delivering
the commodities to the ultimate consumer. Is that right?
Dr. Woodcock. That is correct.
Mr. Dingell. And those make it necessary that we should
consider not only the differences but to phase in because of
the different levels of difficulty that Food and Drug will
confront, right?
Dr. Woodcock. Yes.
Mr. Dingell. Now, do you agree that a federal traceability
system with a phased-in approach should include clear
requirements and a clear time frame for a second phase? Yes or
no.
Dr. Woodcock. Yes.
Mr. Dingell. Do you agree that the goal of any federal
traceability system should be unit-level tracking? Yes or no.
Dr. Woodcock. Yes, an ultimate goal.
Mr. Dingell. Ultimate goal but very, very difficult to
achieve?
Dr. Woodcock. It should be the goal.
Mr. Dingell. Well, and it will also cause a lot of
difficulty to get everybody together on this.
Dr. Woodcock. Absolutely, because there are tradeoffs here.
Mr. Dingell. Do you agree that traceability legislation
should avoid placing undue burdens on FDA so that the FDA can
focus on proper and efficient implementation of this particular
program and all of the others which we have been loading Food
and Drug down with lately?
Dr. Woodcock. Yes.
Mr. Dingell. And with which we have not been giving you
enough money? You may not want to comment on that, but that is
my feeling.
Dr. Woodcock. It is difficult. We try our best.
Mr. Dingell. I know you do, and it is an enormously
difficult task. Do you believe that the traceability
legislation should ensure adequate systems are in place to
trace prescription drugs before current pedigree requirements
are eliminated? Yes or no.
Dr. Woodcock. Absolutely.
Mr. Dingell. Now, this traceability system and the phase
related to it must also focus very carefully upon imports. Is
that right?
Dr. Woodcock. Yes.
Mr. Dingell. Particularly imports that are components of
pharmaceuticals ala the situation which we had with heparin but
other examples of this, and of course, as a matter of fact,
also with regard to food and other things that you have to
contend with. Is that right?
Dr. Woodcock. Yes. Well, I think the components of drugs is
different, and the supply chain issue is different than the
distribution chain but equally important to keep substandard
ingredients out.
Mr. Dingell. And I am not here to sell foods at this
particular time but we have to look at that and other things
too.
Now, Doctor, do you agree that traceability legislation
should provide FDA with adequate enforcement authority to
ensure stakeholders comply with the intent of Congress? Yes or
no.
Dr. Woodcock. Yes. Can I say, we don't want to be a paper
tiger on this?
Mr. Dingell. I sure don't want that. It is also fair to
observe that Food and Drug has been working very carefully with
Members of Congress, House and Senate, Democrats and
Republicans, but also that you have been working with the
industry to try and see that we get something with which
everyone can work and to do so comfortably. Is that right?
Dr. Woodcock. That is correct.
Mr. Dingell. And of course, that would be the goal of Food
and Drug, as it would be of everybody, I think, in this room.
Mr. Chairman, I return 19 minutes. Thank you.
Mr. Pitts. Seconds. Thank you.
Mr. Dingell. Nineteen seconds.
Mr. Pitts. The Chair now recognizes the gentleman from
Illinois, Mr. Shimkus, 5 minutes for questions.
Mr. Shimkus. Thank you, Mr. Chairman.
Dr. Woodcock, welcome. Glad to have you back.
Dr. Woodcock. Thank you.
Mr. Shimkus. I am going to do a kind of intro and then go
to my specific question on a specific item.
We have seen many instances in recent years of how
technology can help us modernize and create efficiencies in
communications, and I am referring to stuff that we moved,
actually signed by the President in my other subcommittee,
which is a hazardous-waste issue, and we were able to through
legislation kind of relieve the burden of paper copies
throughout the supply chain all the way to the fact when the
President signed the law, and we know in the old days carbon
copies, triplicate papers, they are stored throughout the
entire chain, that can be costly. We also have recently seen
where the EPA has on their own with some prodding from us now
is able to notify water users--the water plants can notify the
users of the water on changes based upon email notifications
versus mailing paper copies of changes and the like.
So that leads me to this whole debate that Ranking Member
Pallone is also very interested in, the e-labeling requirements
reflected. There are some reflected in this discussion draft
with more standardized electronic approach that will increase,
we believe, patient safety and provide significant quality
improvements and cost reductions to patients and industry. This
is something that, as I mentioned, that we have been following,
and Ranking Member Pallone has also been leading on this. Do
you support this e-labeling policy?
Dr. Woodcock. I have long supported this. We have worked
with the National Library of Medicine. We have something called
Daily Med, and Daily Med has, I think, 24-hour update so at the
National Library of Medicine you can get any drug label, the
actual on-time, real-time label with any safety updates within
a day of FDA changing that label. So that should enable easy
electronic access from almost anywhere.
Mr. Shimkus. So with respect to this proposed legislation
and what the bipartisan members are trying to work out, there
is obviously some language that deals with this. I guess we
would be concerned as to where are you at as an agency in
issuing guidance and moving forward on your own?
Dr. Woodcock. My understanding is, this requires
rulemaking. The fact is that we are planning to issue a rule is
on our agenda, and we plan to issue a rule this year, we would
hope, a proposed rule.
Mr. Shimkus. So I guess from the cosponsor of the
legislation and the committee and ranking member would have to
look and see the time, your time frame as rulemaking sometimes
takes a long time and a decision made of whether we want to add
that in legislative language, but you are really supportive of
the overall process and principles, it seems like.
Dr. Woodcock. For drugs, all the pieces of this are in
place so there is a labeling repository. We do all our reviews
electronic at the agency at CDER and so everything is in place
to enable electronic access from anywhere to the real-time drug
label.
Mr. Shimkus. And the real-time drug labeling is the key
because things can change pretty rapidly, and you can get it
electronically versus something stuffed in a box that gets
transmitted forward. So I appreciate your response and I
appreciate you being here, and Mr. Chairman, I yield back my
time.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Texas, Mr. Green, 5 minutes for
questions.
Mr. Green. Thank you, Mr. Chairman. Track-and-trace is an
important issue, and I want to thank my colleague and neighbor,
Representative Matheson, for his leadership on our side on this
issue. Finding bipartisan agreement on any issue is difficult,
and on more complex issues, such as supply chain for
pharmaceuticals, remains even more elusive. However, I do have
some concerns about the Latta-Matheson. Most importantly, the
bill never really gets us to an interoperable electronic unit-
level system. In fact, it prohibits FDA from moving ahead with
interoperable electronic system in absence of new legislation,
which we won't on until 10 years after the enactment. I
understand the concerns that market participants have problems
moving too fast toward such a system. We should be sensitive to
this and make sure the law we pass is workable. But we have an
opportunity to move the ball further down the field, and it my
understanding that quite a bit of necessary technology already
exists. Pharmaceutical companies, large and small, have stated
they can work on a shorter timetable. We can do more to ensure
the safety and security of our drug supply, and I think we
should. But instead of moving toward requiring an enhanced
system, the bill only requires the FDA to conduct one or more
pilot projects and conduct public hearings and report back to
Congress on the result within 10 years. I am concerned that
these pilot projects do not seem to be designed to test the
electronic interoperable unit-level system that everyone seems
to agree we need.
My question is, if the goal is to get to an electronic
interoperable unit-level system, which I thought was based on
last fall's draft with indeed a shared goal, wouldn't it make
sense for the legislation to explicitly direct the FDA to
conduct the pilot program, testing out whether such a system
could be established, and instead of just mentioning in vague
language about better securing the supply chain. Would you like
more definitive black-letter law and guidance instead of come
back to us every 6 months and in 10 months from now we might
get to this?
Dr. Woodcock. As I said earlier, I think within the
standards world where people are being asked to conform to a
standard over time and they have to change processes, they have
to make investments to do that, clarity is critical and
predictability so that people know what is going to happen and
they can plan for it and plan their investments, plan their
programs. So I think to the extent that there is a shared goal
that Congress can provide clarity on where we are going as a
country and where we plan to end up, that would be beneficial
to all the stakeholders, even those who feel right now that
this is a tremendous burden to provide clarity of a path would
be extremely helpful.
Mr. Green. And we authorize legislation and sometimes
Congress doesn't reauthorize, we just kick the can down the
road, and telecom is a great issue. The 1996 Telecom Act, I
think it was outdated when we passed it but it is well outdated
now. So my worry is that we won't continue to oversee it.
My next question is my concern about, it requires the FDA
to conduct a public hearing every 6 months until FDA submits a
report to Congress, which could be up to 10 years from
enactment. Transparency is important. I agree that open and
public hearings of these issues with interested stakeholders
makes sense, but twice a year for 10 years seems like it is a
little much. Can you talk about all that is involved in setting
up a public meeting? Do you have any sense how much these
meetings may cost over the 10 years twice a year for 10 years?
Dr. Woodcock. These meetings often cost, maybe up to
$20,000, depending on how they are structured, but I think the
opportunity cost is the cost we are really talking about here.
Don't forget, we are trying to work with patient groups, and
they are extremely excited about having meetings about their
disease and how we can better study it, and under PDUFA that
you all passed, we agreed to have 20 of these meetings over the
next 5 years. Now, we would like to have more. We have heard
from so many patient groups that they aren't maybe on the list
and they are really concerned about their disease. So it is
really important. We also have pediatrics and how we develop
drugs in children. We have many other pressing issues that have
immediate impact on patients that we need to have various
public meetings on. So there is a tremendous opportunity cost
there if we are having--if we meet on a certain subject
excessively.
Mr. Green. I only have about 30 seconds left, and I would
like to match our chairman emeritus in giving time back. I
think the bill is a good step, but I don't think it goes far
enough and it fails to give us an interoperable electronic
unit-level system before 10 years, and frankly, I think
industry may be ready much earlier than that, and we don't want
to tie our hands where we can't do it.
So Mr. Chairman, I appreciate the hearing today and
hopefully we will provide some more flexibility. Thank you, and
I yield back my time.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Virginia, Mr. Griffith, 5 minutes
for questions.
Mr. Griffith. Thank you, Mr. Chairman.
Dr. Woodcock, I appreciate you being here today, and I have
heard a number of folks say this is not an issue where there is
one side or the other, and that is true. I do have some
concerns.
I represent a very rural district, and we have a lot of
community pharmacists tucked in various nooks and crannies of
my community. That being said, people are used to going to
those pharmacies. They like those pharmacies. And I am just
wondering as we go forward, you know, these folks have a lot of
competing issues that they are facing already from other
issues. As we go forward in looking at this, while we all want
to make sure our supply chain is safe, can you describe what
efforts the FDA has taken into account to accommodate and
incorporate the small community pharmacies and make sure that
they are not overly burdened by any system that we put into
place?
Dr. Woodcock. Well, we talked to all stakeholders about
this. As I said earlier, developing standards and implementing
that in a stepwise way is probably the best approach to not
impacting small entities excessively so they know what is
coming and they can plan for it over time, and if Congress were
to establish that plan, then vendors will come in and develop
solutions over time and they can be adopted somewhat earlier by
a larger chain, say, and would be affordable for smaller
groups.
So I think we need to--if Congress decides to put forth a
plan, I think that would be very helpful in having everyone
understand where we are going and then getting the power of
commerce and entrepreneurialism and invention to develop the
technologies that will make this or actually craft these
technologies to this situation in a way that will make it
affordable.
Mr. Griffith. Well, I have to say that makes sense to me.
If you give people time to respond and to figure things out and
there is enough time to come up with new ways of doing things,
I do believe that vendors will come forward. Of course, the key
is, as I have heard from some folks, they want to do things
faster, and we have to find that sweet spot, which is why we
have draft language to talk about as opposed to an actual bill
at this point. But I do appreciate the sponsors who brought it
forward for us to at least have something to work on, and I
appreciate you being here today.
You also mentioned in your testimony a track-and-trace
public workshop held in February of 2011. Can you just speak
generally about feedback you received, and keeping in mind my
community pharmacies that are a big concern? It is not that I
don't care about the big chains but they are in a much better
position to adapt quickly to the changes that may be coming.
Dr. Woodcock. We understand the concerns of the community
pharmacists, and there testimony today that I read that was
submitted and last year also, so we understand and certainly we
have talked to that community and heard at our public meeting
about these concerns--logistical concerns, time concerns, the
fact that they feel stressed already between various demands on
them. There is other competition. But it is really important in
these rural communities to have a pharmacy there. So we
understand all that, and I guess what I am saying is that
putting in the goal and predictability over a time frame I
think would be very helpful for everyone because they get their
mind around what is going to happen in the future.
Mr. Griffith. Yes, ma'am. I appreciate that. It makes sense
to me as well.
Mr. Chairman, with that, unless somebody wants my time, I
will yield back.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from Virgin Islands, Dr. Christensen,
for 5 minutes for questions.
Mrs. Christensen. Thank you, Mr. Chairman, and I look
forward to this discussion because I have a specific issue that
I wanted to discuss, and of course, the issue of altered,
counterfeit, substandard or tampered-with medicines entering
the drug supply is a real concern and it is a very important
issue for FDA and this subcommittee to address, but I want to
raise a consequence that may or may not be intended but it is
not warranted, and I hope that the proposed legislation can
help or that there is something that FDA can do about it.
In the efforts to keep substandard drugs out of the U.S.
marketplace, re-importation from a foreign jurisdiction is
prohibited. The U.S. Virgin Islands, as the name indicates, is
a part of the United States. Our pharmacists are U.S. trained.
They have U.S. licenses. Our pharmacies are regulated by U.S.
law, and our pharmacies including our hospitals only order
medication from U.S. distributors. As a provision of the treaty
that was signed when the United States bought the Virgin
Islands, we are outside of the U.S. custom zone so for shipping
only we are international. Again, we are totally domestic
except for shipping, and because of that, our pharmacies have
been unable to ship back their medication that might have been
oversupplied, spoiled, expired. They are unable to ship it back
to their supplier, and it incurs costs and those costs are
passed on to the patients. So we have met on this in the past
in the past Administration. I have legislation to try to
address it. But we are willing to work on anything that can be
worked on and maybe, you know, we want to work with our
colleagues on the committee but maybe there is something that
FDA would be able to do.
So if this national track-and-trace system in place, would
that be a way to help us fix that, do you think?
Dr. Woodcock. Probably, but I can't opine on the legal
aspects because it would require analysis. You raised this
issue with me last year, and we agreed that your staff would
talk to our folks, and I had thought this had been resolved or
improved. So I would also urge you to talk to FDA staff again
and raise this issue. We can follow up with you. But I do
believe obviously things can be put into legislation that would
remedy a situation like this as well.
Mrs. Christensen. But you would not oppose it, would it, if
we were----
Dr. Woodcock. No, I think----
Mrs. Christensen [continuing]. Only shipping back to the
distributor?
Dr. Woodcock. Well, a track-and-trace system would actually
enable this because we would know what the drugs were.
Mrs. Christensen. And I thought it was resolved also. They
were shipping by FedEx and it wasn't being checked but now it
is back to square one. So thank you very much, and I don't have
any further questions, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentlelady from North Carolina, Ms. Ellmers, 5
minutes for questions.
Mrs. Ellmers. Thank you, Mr. Chairman, and thank you, Dr.
Woodcock, for being here today.
I have a couple of questions on the basically moving
towards the electronic access for, you know, data for patients,
which now of course are the package inserts that accompany
medication. I do believe that the real-time access is very,
very important but I am concerned about our seniors and their
ability to have that information right there for them. I have
heard from many seniors who--as a nurse, I know how important
it is for them to have that information. So what exactly is the
push there? I mean, I understand the technology, the ability to
access it online is very important, but there again, many of
our seniors are not Internet savvy, and I am concerned that
maybe we are moving a little quickly with this. So what are
your thoughts on that?
Dr. Woodcock. Well, what we are talking about is package
inserts, and many physicians have trouble with the package
insert.
Mrs. Ellmers. Well, it is a lot of information.
Dr. Woodcock. Yes, so we are also working an initiative we
call Patient Medication Information, all right, and we have
been working on that for some time, and we are about the only
country in the world that doesn't give patients a leaflet about
their drug in patient language. So we are moving to do that,
and it would be a combination of electronic and paper,
depending on what the individual desired.
Mrs. Ellmers. OK.
Dr. Woodcock. Yes. And it would be one page probably with
access to more if people wanted more information or
instructions on how to get more information.
Mrs. Ellmers. So that wouldn't automatically come with the
medication is what you are saying?
Dr. Woodcock. It would.
Mrs. Ellmers. It would automatically come?
Dr. Woodcock. Yes.
Mrs. Ellmers. Because I am thinking a combination approach
is definitely the way----
Dr. Woodcock. For consumers.
Mrs. Ellmers [continuing]. That we should go, and, you
know, certainly, again, the package inserts do come with more
than enough information obviously for different reasons. So you
do favor more of a combination approach?
Dr. Woodcock. For the patient.
Mrs. Ellmers. For the patient?
Dr. Woodcock. That is right. We feel that people who
prescribe drugs or dispense them, all of them are going to have
electronic access.
Mrs. Ellmers. Right, and availability. So the electronic
access is more for the physicians?
Dr. Woodcock. Technical.
Mrs. Ellmers. OK. Thank you for clarifying that for me
because that was definitely an area I was very concerned about.
Now, I do want to talk a little bit about--oh, I only have
a few moments. But the track-and-trace as far as, how do you
basically figure out which things would be tracked and traced
based on drugs and based on other things like saline or
additives, things that mix drugs? I mean, will that also be
included in track-and-trace?
Dr. Woodcock. They are drugs, so obviously whatever is
included is up to Congress, but we would feel that anything
that goes into a drug should be. So we regulate saline bags and
so forth as pharmaceuticals now. They have their own code, they
have lot numbers and so forth, and often we have to recall
those.
Mrs. Ellmers. OK. So you are looking at anything that is
considered a drug?
Dr. Woodcock. Yes.
Mrs. Ellmers. Thank you very much.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the Ranking Member of the Full Committee, Mr.
Waxman, for 5 minutes for questions.
Mr. Waxman. Thank you, Mr. Chairman.
Dr. Woodcock, as you know, California has a law that once
completely implemented will require that all transfers of
ownership of prescription drugs from the manufacturer through
to the final pharmacy dispenser be accompanied by a so-called
pedigree that maintains a record of each successive transfer
and tracks information about the drug product at the unit or
package level. Under the law, these pedigrees must be
transferred electronically and the entire system will have to
be interoperable so that all the information on any
prescription drug will be readable and updatable by all members
of the drug distribution chain. This law is quite comprehensive
and ambitious and has been the subject of criticism by some
industry members as being too ambitious, either in its scope or
its time frame for implementation.
But I was glad to hear on your answers to Mr. Pallone's
questions that you agree that an electronic interoperable unit-
level system should be the goal here. I agree that we need to
allow enough time for the technology to evolve and for the
system to be put in place. We don't want to set unrealistic
expectations. But I think California had it right when they
insisted upon this kind of system, and I think this system is
ultimately the right one for the country.
As Mr. Pallone mentioned, the Latta-Matheson draft doesn't
even set this up as a goal even at some distant point in the
future, to create an electronic interoperable unit system. In
fact, they prohibit FDA from moving forward with this kind of
system ever. I think that is the wrong policy. The Latta-
Matheson bill also doesn't require any kind of tracing of drugs
until 5 years after enactment at the earliest. But perhaps even
more concerning to me is that on day one, as soon as this bill
would be passed, it would preempt State law even though they
never created an effective alternative at the federal level. On
day one, all State laws on the subject are wiped out, and to be
clear, this is not just California's law. According to the
Health Care Distribution Management Association, at least 11
States have laws requiring distributor licensing and pedigree
requirements. Some States like Florida have a requirement that
a pedigree be passed with most drug transactions, and you
mentioned this in your testimony, but last year Representative
Cummings and Senator Rockefeller issued a report detailing
their investigations of the gray market in drug trade in the
United States and some of the dangers it poses, and they
discussed the importance of pedigrees for law enforcement in
these cases. But the very law requiring these pedigrees would
be erased under the House's bill on day one.
Again, you mentioned this in your testimony but I would
like to hear more. Can you tell us whether you think preempting
these State laws on day one makes sense when we never get to
the system you say we need? Please explain in more detail what
would be the consequence of wiping out currently existing
pedigree requirements? I am deeply concerned about preempting
not only California's law but the other States' laws that
clearly provide a benefit today, I agree that if we can't get
to a strong federal system, it might make sense to preempt
State laws. But the Latta-Matheson draft certainly does not
create a system worthy of broad preemption on day one. Would
you elaborate on this?
Dr. Woodcock. I think it is really important that whatever
is enacted does not lower the safety of the drug supply,
doesn't decrease or put bigger holes in the safety net. That is
really important. So the pedigree requirements now, as I said--
--
Mr. Waxman. Just for clarification, safety net----
Dr. Woodcock. Of tracking.
Mr. Waxman. We are not talking about poor people. That is
usually what----
Dr. Woodcock. Oh, I see. OK. Maybe I used the wrong term.
But the safety around drugs, of the drug supply, OK?
Eliminating the paper pedigree until we have something else in
place would be creating greater loopholes for insertion of
counterfeit drugs and substandard drugs into the distribution
chain because we wouldn't be able to track them backwards, all
right? And putting a law in place that eliminated States'
ability to require that tracking without providing something
comparable in its place would be lowering the safety of the
drug supply for whatever time it took.
Mr. Waxman. I agree. Let me ask you one other question in
the few seconds I have. California law also ensures that all
entities in the supply chain participate in the e-pedigree
system. One of the major issues we have confronted in the
context of this debate is whether pharmacies should be required
to be part of the system. Do you think it makes sense to exempt
pharmacies from a nationwide track-and-trace system?
Dr. Woodcock. I think ultimately if we want to know what
drug the patient got, OK, and several times in the last several
years that has been imperative for us to figure out what drug
each patient got because sometimes we hear about the problem
from the patient dying----
Mr. Waxman. So you think the pharmacies should be included
so we know what the patient got?
Dr. Woodcock. Eventually, that is the only way to know what
the patient got, and so we end up doing these elaborate
investigations to figure out which drug the patient got, and
yet often, as I said, we can't pull the drugs out of the
patient's hands because they may be lifesaving medicines. So we
may in the next several years get into a tragic situation
because of that. So I think the ultimate goal really ought to
be our ability to track down to that level.
Mr. Waxman. Thank you. Thank you, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Pennsylvania, Dr. Murphy, 5
minutes for questions.
Mr. Murphy. Dr. Woodcock, great to have you back here. I
always appreciate your candid testimony.
This may have been asked before, and I apologize if I am
asking it again, but I would like to know. So how are things
done now? How are you made aware that if there is a problem
with something that may be counterfeit, toxic, contaminated,
what is the process now by which we find out?
Dr. Woodcock. Well, there are a whole variety. We may be
alerted from the health care system. They may find it and they
look at it and they see something is wrong. We may be alerted
by whistleblowers who see, you know, this drug's label is in
Turkish, this can't be right, OK? We may--and the ones that we
are very concerned about is where we get harm, patient harm,
and so we get adverse-event reports, people are dying and we
don't know why, and then we have to go out and do a huge
investigation of what did they get and so forth.
Mr. Murphy. So right now it is towards the end of the
supply chain that you may find something by an adverse event or
someone----
Dr. Woodcock. Yes, and we feel with the law that was passed
last year, now manufacturers have to tell us if they get a
component that is falsified or substandard, they need to tell
us that now, but out in the world, usually it is sort of
voluntary. Pharmacists will call us, a nurse or whatever, and
we will find out about it that way.
Mr. Murphy. And this may be at the end of things. What
about in terms of the ingredients that go into these? Do you
pick up anything on that too, or is that the manufacturers on
their site testing the quality of their ingredients?
Dr. Woodcock. We ask them to test, and as I said, the
Innovation and Safety Act included additional provisions on the
supply side, the incoming side to make a drug, to strengthen
that, making them strengthen their controls on the supply chain
and the testing and so forth when they receive the components.
Mr. Murphy. So now if the FDA has a particular concern
about a drug that would cause an immediate threat to
individuals, what would the agency do?
Dr. Woodcock. We talk to the company and ask them to do a
recall or they may have instituted a recall themselves. We do a
risk assessment, which we call Health Hazard Evaluation, and we
determine the level of possible harm, and if it is a class I
recall, then we have to decide should it go down to the patient
level and be pulled out of the hands of the patients and then
we do-- the company is supposed to be in charge of that but we
audit that, the effectiveness, to make sure it is happening,
and if it is a really bad problem, we may collaborate with the
CDC or the public health departments in the States, you know,
to make sure this all happens.
Mr. Murphy. OK. Let me ask something. A witness on our
second panel, Walter Berghahn, notes in his testimony there has
been ``a tremendous amount of effort expended in the last 10
years to tighten up and secure the supply chain. Those efforts
certainly have closed many of the cracks and yet counterfeits
still appear, and the FDA has opened more investigations in the
last few years than ever before, more than 70 instances in 2010
alone.'' What do you attribute to these increased
investigations? Is it that the FDA is getting better at it or
the problem is getting worse?
Dr. Woodcock. Always hard to know, right? I think the
problem is getting worse. We know from our colleagues around
the world that in some parts of the world, 50 percent of the
drug supply is counterfeit, but those folks in that part of the
world don't pay a lot for their drugs, so our market is ideal
because the drugs are expensive and you get a lot of money for
them. And so we see more professional criminals getting
involved, racketeering, very high-level criminal elements,
conspiring to do this and penetrate the U.S. drug supply
because there is a lot of money to be made.
Mr. Murphy. We hear a lot about people who offer drugs
online. Your recommendations on whether or not people should
purchase anything when they go to a Web site and they say, oh,
here is my prescription, I will just get it from there, your
recommendation is should they or should they not purchase from
those?
Dr. Woodcock. There is a program called VIPPS, which offers
certified online pharmacies. Certainly some of the pharmacies
are fine. Many of them, we have looked, we have ordered, we
have done this. You can get counterfeit drugs very easily or
substandard drugs ordering from an online pharmacy that you
don't know anything about.
Mr. Murphy. So make sure you know who that online pharmacy
is. Finally, let me ask you this, and this relates to what I
was just asking about too. Could this legislation eventually
lead to less drug shortages or more because you are watching
more closely? What do you think the outcome will be?
Dr. Woodcock. I don't think it will have a huge impact on
drug shortages, frankly. I think that problem, as we discussed
earlier, has other root causes other than--obviously the
existence of shortages is another temptation for people to
introduce counterfeit because people are desperate to get these
medicines and they will pay a lot for them. But I don't that is
the root cause of shortages.
Mr. Murphy. Thank you very much. Yield back, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from Florida, Ms. Castor, for 5
minutes for questions.
Ms. Castor. Thank you, Mr. Chairman, and I want to thank my
colleague, Congressman Matheson, for bringing the discussion
draft to us, and welcome.
Dr. Woodcock. Thank you.
Ms. Castor. Dr. Woodcock, a critical part of an effective
drug supply chain is the ability to secure a stable supply of
medically necessary drugs, and I know this isn't a hearing on
drug shortages but there is a very serious issue and I feel
compelled to ask you about it, and that is the critical
shortages involved with babies in the NICUs right now, the
neonatal intensive care units in children's hospitals in NICUs
all across the country. We are talking about the calcium, zinc
trace elements, magnesium. I have been advised by some
children's hospitals that they have less than 2 weeks of
nutrients left, and this is already impacting their ability to
provide the top standard of care for the most vulnerable of
patients. I do understand that you have been very aggressive in
tackling this problem along with your drug shortage
professional staff, the children's hospitals and the
manufacturers, but it is so serious now that a medical director
at one children's hospital is calling is the worst crisis he
has ever seen in 30 years. What is happening on this now and
what is the outlook here over the coming months?
Dr. Woodcock. Well, we have worked with one manufacturer to
allow them to ship product along with filters to filter out the
product that is precipitating, because you can't give particles
in IV fluids. It can embolize into the lungs. So that should
provide some of the products. We are also working with
manufacturers outside the United States to make sure their
product is OK and bring it into the country. We recognize this
is a critical issue and it is reaching a critical stage, and we
need to get product out there for these babies. We understand
that.
Ms. Castor. So what is your time frame? Because they are
saying they only have the product for the remaining 2 weeks,
and what is happening is there are professionals are calling
all over the country trying to find the elements that they
need. Are they going to be able to see some relief here over
the next week or two?
Dr. Woodcock. We hope so. As I said, some of these products
are being shipped now with filters, all right, then others we
negotiating on importing some of those other elements into the
country, and once we can give the green light that we are
assured of the safety, then they can be made available pretty
rapidly.
Ms. Castor. OK. That is the short-term solution. What is
the longer-term answer?
Dr. Woodcock. The long-term solution appears to be some
structural problems, as we talked about earlier, in how these
drugs are manufactured and delivered to patients and the lack
of a robust supply. So if one manufacturer goes down in the
United States, they may be the sole source of some of these
life-maintaining products, and that is a really bad situation.
It is sort of outside of the scope of FDA, though, to figure
out how to have more manufacturers.
Ms. Castor. And drug shortages in general, have you noticed
a ramp-up in counterfeits that try to fill that void in the
market over the past few years?
Dr. Woodcock. In some cases people, unscrupulous people,
exploit the existence of a shortage to try to introduce
substandard products.
Ms. Castor. Which particular areas have you seen that?
Dr. Woodcock. We would have to get back to you on that as
far as all the details.
Ms. Castor. OK. Thank you very much. I yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from Utah, Mr. Matheson, 5 minutes for
questions.
Mr. Matheson. Well, thank you, Mr. Chairman. You know, this
is an issue that a lot of us have been working on for a number
of years, and I want to acknowledge some of the colleagues,
Congressman Boulier and Congressman Bilbray, who both worked on
this issue, and then I am pleased to be working with Mr. Latta.
And I think this year we have an opportunity to really get
something done, and I think we should all embrace that
opportunity to try to work together. We put out a discussion
draft. This is not a bill. It is an opportunity for us to
really start to dig into this issue and have a substantive
discussion, and I hope that is what we do, and this hearing is
the first good step in that process.
And I really want to thank Dr. Woodcock, who has spent a
lot of time on this issue, has been very open, has talked to me
on the phone about this issue before and been engaged for a
long time on it, and I know you have a strong desire to come up
with a national standard that sets the rules for everybody. I
think there is a need for preemption. I heard some questions
earlier concerned about timing of preemption but I think we all
know we need one set of rules in this country and not 50
different State rules, and I think you would acknowledge that,
but I do appreciate all you have done. You put your own time in
and your staff in offering resources on this.
In your testimony, you describe several situations or
instances of counterfeit drugs finding their way into the
supply chain. Many have been reported in the press reports. Can
you describe for us how the product was able to really get in
the supply chain, and you can talk about the emerging level of
sophistication that the bad actors are deploying right now to
do this?
Mr. Woodcock. Yes. We see a range of sophistication, and of
course, the ones we are most worried about are those who are
actually able to copy, really make a counterfeit. It looks like
the authentic product. It has the label of the authentic
product and yet it isn't. It may often have nothing in there,
or we have had that had regular water, which is very dangerous
to just give to people, say, intravenously. So they are
introduced at some point in the distribution chain. It may be a
secondary distributor level. It may be the pharmacy level. It
may be somewhere in between there. It may be where something is
shipped to a clinic and they buy from a distributor who
actually probably due to perhaps the amount of oversight that
we should have of some these licensed distributors, they are
sort of the launderers. They launder these products and then
put them into a legitimate chain, send them out to, say, cancer
clinics and then people use those drugs that are not effective.
Mr. Matheson. And it is safe to say with over a $300
billion annual prescription drug market in the United States,
this is pretty attractive.
Dr. Woodcock. That is right.
Mr. Matheson. The reason I ask this, I know this sounds
obvious to everybody but this is why we are doing this. I mean,
our current system is not necessarily structured where it can
best mitigate this challenge of counterfeiters, and I think
there are a lot of important issues, a lot of important details
in this discussion draft, but I think it is important we all
acknowledge why we need a national standard, why we have to do
something better than we have now because the bad guys are
getting smarter, more aggressive and there is just too much
money on the table for them not to want to do some bad things.
One other question, and then I will let you go. You touched
on this a little perhaps in other questions but can you walk us
through how moving forward with a robust track-and-trace system
would complement the work that this committee undertook last
year in the latest version of PDUFA, how that is going to
complement what that bill already gave you some authority to
do?
Dr. Woodcock. Absolutely. There are two sides to the whole
chain of medicines. One is the supply chain where you get all
the components, maybe the IV bags, the active pharmaceutical
ingredient and all other components. They go into the
manufacturer. That is one area where the Innovation and Safety
Act really addressed that supply chain and tightened up some
big loopholes that existed. Now this is a distribution chain,
OK, the manufacturer makes the product, but then as I
described, they send it out all over through a chain of
distributors and so forth down to the pharmacy or clinic or
hospital level, and that is the chain where there are big
loopholes still where these fake products can be inserted or we
just don't know where the products are going, and so once we
have an approach and a goal laid out for this distribution
chain side, then we will have a very intact system that we can
have much more confidence in.
Mr. Matheson. Thanks. Mr. Chairman, I yield back.
Mr. Pitts. The chair thanks the gentleman. That concludes
the questions from the members. I am sure they will have some
follow-up questions, some other questions. We will send those
and ask that you please promptly.
Dr. Woodcock. We will be delighted to work with you.
Mr. Pitts. Thank you very much, Dr. Woodcock, for your
testimony.
That concludes the first panel. We will ask the staff to
set up for the second panel. We have seven witnesses. We will
take a 2-minute break while they set up.
[Recess.]
Mr. Pitts. The Subcommittee will reconvene. On our second
panel today, we have seven witnesses, and I will introduce them
in order of their presentations. First, Ms. Elizabeth
Gallenagh, Vice President of Government Affairs and General
Counsel, Healthcare Distribution Management Association. Then
Ms. Christine Simmon, Senior Vice President of Policy and
strategic Alliances, Generic Pharmaceutical Association. Mr.
Michael Rose, Vice President of Supply Chain Management,
Johnson and Johnson Health Care Systems. Dr. Tim Davis, owner,
Beaver Healthmart Pharmacy on behalf of the National Community
Pharmacists Association. Mr. Allan Coukell, Director of the
Medical Programs of the Pew Charitable Trust. Dr. Carmen
Catizone, Executive Director, National Association of Boards of
Pharmacy. And finally, Mr. Walter Berghahn, President of
Smarter Meds for Life and Executive Director of the Healthcare
Compliance Packaging Council.
Thank you all for coming. You will each be given 5 minutes
to summarize your testimony. Your written testimony will be
placed in the record.
Ms. Gallenagh, we will start with you. You are recognized
for 5 minutes.
STATEMENTS OF ELIZABETH GALLENAGH, J.D., VICE PRESIDENT OF
GOVERNMENT AFFAIRS AND GENERAL COUNSEL, HEALTHCARE DISTRIBUTION
MANAGEMENT ASSOCIATION; CHRISTINE M. SIMMON, SENIOR VICE
PRESIDENT, POLICY AND STRATEGIC ALLIANCES, GENERIC
PHARMACEUTICAL ASSOCIATION; MICHAEL ROSE, VICE PRESIDENT,
SUPPLY CHAIN VISIBILITY, JOHNSON AND JOHNSON HEALTH CARE
SYSTEMS, INC.; TIM DAVIS, R.PH., BEAVER HEALTH MART PHARMACY,
ON BEHALF OF NATIONAL COMMUNITY PHARMACISTS; ALLAN COUKELL,
DEPUTY DIRECTOR, MEDICAL PROGRAMS, THE PEW CHARITABLE TRUSTS;
CARMEN A. CATIZONE, R.PH., D.PH; AND WALTER BERGHAHN, EXECUTIVE
DIRECTOR, HEALTH CARE COMPLIANCE PACKAGING COUNCIL
STATEMENT OF ELIZABETH GALLENAGH
Ms. Gallenagh. Good morning, Chairman Pitts, Ranking Member
Pallone and members of the subcommittee. I am Liz Gallenagh,
Vice President, Government Affairs, and General Counsel at
HDMA. Thank you for this opportunity to inform you about the
critically important issue of prescription drug pedigree,
traceability and supply chain safety. I would also like to
thank Chairman Upton, Congressman Latta and Congressman
Matheson for their leadership in this area as well as the hard
work and dedication of their staff.
The pharmaceutical distribution industry's primary mission
is to operate the safest, most secure and efficient supply
chain in the world. As part of this mission, HDMA's members
work to eliminate counterfeit and diverted medicines by
capitalizing on the technological innovation and constant
improvements in efficiency that are the foundation of our
industry.
Today, on behalf of our 33 members, I am here to express
HDMA's strong support for a national, uniform approach to
pedigree and the traceability of medicines throughout the
supply chain. I will speak with more detail later in my
testimony, but I want to state that we support the core
elements of the Latta-Matheson proposal and look forward to
working with you and your Senate colleagues on the final bill.
HDMA believes that any reform and modernization of the
supply chain should raise national wholesaler standards and
include a new federal ceiling for pedigree and traceability
requirements to improve safety and uniform and establish the
foundation for longer-term electronic solutions such as unit-
level serialization and product tracing. In addition to
fundamentally addressing counterfeit and diverted medicines, a
national approach may be a useful tool in discouraging gray
market activities associated with drug products in short
supply. More importantly, it will put the United States on par
with other countries around the world that are currently
beginning to engage in serialization and traceability efforts.
After many years of debate, it appears that we finally may
have an opportunity to enact federal legislation in this area.
This is in large part due to a broad consensus among supply
chain partners as well as growing support from Members of
Congress. While Congress, FDA, and industry have been working
at this diligently for several years, it is critical that
Congress act now due to the uncertainties faced by the
industry, the need for uniformity across the supply chain, and
to ensure patient safety.
Basic guidelines for pedigree were set forth 25 years ago
with the enactment of the federal PDMA. Since that time,
activity at the State level has varied with some enacting very
complex laws and others never going further than the original
guidelines. Based on our experience, the complexities of
dealing with multiple approaches in the States will only get
worse if we fail to solve this problem now at the national
level.
Since Florida's first foray into raising pedigree and
licensure standards in 2003, we have seen dramatic variations
across the country. This variation has occurred despite HDMA's
attempts to work in every State along with fellow stakeholders
to achieve more uniformity. Today, for example, 29 States have
acted beyond the federal PDMA standards. The States of Florida
and California are viewed as leaders in this area. However,
they take completely different approaches, California being the
most complex and forward-looking with track-and-trace and
electronic pedigree implementation beginning in 2015, and
Florida being the most stringent today in terms of what is
happening in the supply chain with pedigree requirements.
This patchwork not only creates operational challenges but
also leaves openings for bad actors shopping for more lenient
State rules, openings that could mean the difference between a
fake or diverted medicine being dispensed to an innocent
patient in need of important treatment. Because of this State-
by-State variation, we believe pedigree and traceability should
be under the purview of Congress and the FDA.
We have been a leader in this field and we are dedicated to
working with supply chain partners and stakeholders on a
consensus approach to pharmaceutical traceability. We are an
active member also of PDSA, the Pharmaceutical Distribution
Security Alliance.
The bipartisan discussion draft released by the committee
this week achieves these goals and captures the core consensus
elements that will significantly improve the integrity and
safety of the supply chain. Specifically, the proposal does
include national requirements for wholesaler licensing while
preserving a critically important role for the States; uniform
direct purchase and standard pedigree options; eliminating the
current 50-State patchwork, manufacturer serialization at the
unit level and case level, enabling unique identification of
prescription drug products for the first time in the United
States; the development of electronic systems and processes to
facilitate traceability and transaction data exchange to
provide additional efficiency and safety benefits within the
supply chain, and appropriate transition times and development
phases for the migration to traceability for each segment.
There is no single element that will protect the supply
chain from every threat but rather a comprehensive solution
should incorporate each of these elements. We applaud your work
and urge the committee to advance this important issue this
year. Now is the time for Congress to act to bring cohesion and
consistency to our national drug supply chain.
[The prepared statement of Ms. Gallenagh follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now
recognizes Ms. Simmon for 5 minutes for an opening statement.
STATEMENT OF CHRISTINE M. SIMMON
Ms. Simmon. Thank you. Good morning, Chairman Pitts,
Ranking Member Pallone and members of the Subcommittee. Thank
you for inviting me to testify here today on the important
topic of securing our Nation's pharmaceutical supply chain. I
am Christine Simmon, Senior Vice President of Policy at the
Generic Pharmaceutical Association. We represent the finished-
dose generic drug manufacturers and bulk pharmaceuticals and
suppliers to the industry.
For the past year, the effort to develop a national
solution to securing the supply chain received strong support
from key members in both the House and Senate but unfortunately
was not enacted into law. We applaud this Committee for taking
up this issue today, and we recognize and appreciate the
dedicated attention to this issue and leadership by Congressmen
Latta and Matheson.
GPhA believes that every patient in America deserves a safe
and secure prescription drug supply. For many years, GPhA has
worked closely with multiple stakeholders across the supply
chain to ensure just that. As the makers of 80 percent of
scripts dispensed in the United States, our industry is deeply
committed to preventing and detecting the distribution and sale
of counterfeit and adulterated medicines. We strongly supported
last Congress's historic Generic Drug User Fee Act, which
recognizes that while providing earlier access to medicines is
critical, FDA's central mission is ensuring drug safety. We
applaud the efforts of this Committee in enacting the user fee
program into law.
GPhA is a member of the Pharmaceutical Distribution
Security Alliance along with many others in the supply chain
and including others at this table. The group's primary goal is
to ensure patients have uninterrupted access to safe, authentic
FDA-approved medicine. So today I am going to share with you
our support for a system build on three core principles: a
uniform federal standard, technical requirements that support
achievability, and a building block approach to ensuring
orderly implementation and avoid unintended consequences.
It is vital to ensure that any supply chain security system
put in place is practical, focused, and uniform across the
country. California's drug pedigree model that will be
effective in 2015 would require implementation of full
electronic track-and-trace capabilities where the entire
distribution history and location of every unit in the supply
chain can be determined at any time. At present, the technology
to support such a system is unproven and the costs associated
would be billions. Any attempt to hastily implement such a
system could lead to confusion in the supply chain, aggravate
product shortages and dramatically increase costs for all
prescriptions including generic medicines.
In contrast, GPhA believes that a building block enables
the industry to attain interoperability in achievable steps all
the while applying the knowledge and experience gained over
time to refine the model. While the generic industry is still
reviewing recently released drafts, many elements are
consistent with our proposed approach.
Specifically, as outlined in Phase I of the Latta-Matheson
Discussion Draft, generic manufacturers have committed to
identifying individual saleable units of medicine with labels
and maintaining and managing data in their systems that would
associate the identifiers on individual bottles of medicine
with the lot numbers of the products. Verification that a
specific unit was serialized by a manufacturer within a given
production lot can provide information and security that is a
major step forward from current practices. The system would
help identify and prevent the introduction of suspect product
through full lot traceability and allow regulatory authorities
to validate the unique identifier of a product at the unit
level.
The stepped approach in the House draft would provide
immediate measures to increase supply chain security. The
system established under the proposals will improve the
efficiency and effectiveness of drug recalls and returns. In
planning for the future, it would provide critical building
blocks that can be expanded as public health threat standards
and technologies evolve.
Because American consumers today expect the convenience and
simplicity inherent in the digital transfer of information,
GPhA strongly supports the e-labeling requirement in the
discussion draft to provide more standardized electronic
prescription drug information that would increase patient
safety and provide significant quality improvements and cost
reductions through a more accurate, cost-effective, and
sustainable alternative to paper inserts.
In conclusion, Mr. Chairman, GPhA and the industry share
the concerns of the committee with regard to maintaining the
security of our country's drug supply. The development of a
uniform National system is needed to give regulatory
authorities another tool for enforcement, make it more
difficult for criminals to breach the supply chain, and enhance
the ability of the supply chain to respond quickly when a
breach has occurred. We believe the model proposed by the House
includes many elements to achieve these goals. We look forward
to working together with Congress to develop a consensus
measure on this important issue that can be enacted into law.
Thank you, and I would be happy to answer any questions you
may have.
[The prepared statement of Ms. Simmon follows:]
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Mr. Pitts. The Chair thanks the gentlelady and now the
Chair recognizes Mr. Rose for 5 minutes for an opening
statement.
STATEMENT OF MICHAEL ROSE
Mr. Rose. Thank you for your introduction, Mr. Chairman,
and thank you, Mr. Pallone. I work for and am representing
Johnson and Johnson Health Care Systems Inc. Johnson and
Johnson Health Care Systems Inc. is the principle supply chain
commercial entity within the Johnson and Johnson family of
companies in the United States.
Securing our Nation's supply chain is an important concern
for our company. We believe it is vital for the patients who
use our products receive our genuine products. We have already
taken steps to secure our supply chain and protect our
products. As a member of PhRMA and BIO and a participant in
PDSA, I will share with you our perspectives on serialization
and track-and-trace, our serialization experience and views on
the draft legislation.
Serialization regulations have become increasingly common
across many countries including the European Union, Turkey,
Argentina, China, India, and Brazil. In the United States, the
California law requires manufacturers to serialize and pedigree
all pharmaceutical products sold in the State of California 50
percent of our products by January 1, 2015, and the remaining
50 percent by January 1, 2016. Additionally, more than 50
percent of the States have pedigree laws with varying
approaches, that is, some require electronic pedigrees, others
use paper. Some start the pedigree at the primary distributors,
others will start it with the secondary wholesaler, et cetera.
This patchwork quilt of regulations leaves us with a
complicated, inefficient regulatory landscape creating
unforeseen gaps where bad actors can introduce illicit drugs
into the legitimate supply chain, thereby placing our citizens
at risk of counterfeit medicines.
While the risk of encountering counterfeit medicines may be
small within the legitimate domestic supply chain, when a
patient receives a counterfeit medicine, the effects can be
extremely dangerous, have long-lasting impact and can even be
life-threatening. Our company believes that Federal
Serialization and Track-and-Trace legislation is necessary to
properly secure our pharmaceutical supply chain by eliminating
varying and conflicting State regulations. Federal legislation
should help close the gaps where illicit drugs enter the U.S.
supply chain as well as provide additional mechanisms to help
authenticate the legitimacy of medicines distributed and
dispensed within the United States to help protect the patients
who use our medicines.
Next I would like to share our company's domestic
serialization experience. We are preparing our packaging sites,
distribution centers, business and information technology
systems to serialize and track and trace our products so that
we can comply with the California e-pedigree law. Here is an
example of the first product that we have serialized for the
U.S. market. This product is Prezista 600-milligram tablets.
For your reference, I have attached a label of serialized
Prezista 600 milligrams to my testimony.
Let me draw your attention to the product license plate on
the side of the label. This space is similar to the
prescription drug product identifier prescribed in the House
bill. We provide both machine and human readable forms for easy
and accurate identification. Similarly, we apply a standard
serialized barcode to every homogenous case to facilitate
handling during distribution. This identification space
complies with both the FDA's serial number identifier guidance
and the widely adopted international standards developed by GS-
1.
Additionally, we are establishing processes to exchange
serialized data with the distributors who distribute our
products and with the pharmacies that dispense our medicines to
patients who need them. We are required to provide this
information to the distributors and pharmacies so that they can
use it to help verify both the authenticity of the package as
well as the transactions related to the product.
Bottom line: While it is complicated work and a lot still
remains, we are doing our part to comply with the California
law. However, if any States were to adopt slightly different
regulations, the inconsistencies could compromise the integrity
of the supply chain, hence supporting the need for Federal
action now to secure our National security chain.
Lastly, I would like to comment on the proposed
legislation. In 2011, our company along with several other
PhRMA and BIO members, and other supply chain participants
helped form PDSA. PDSA's mission is to help enact a Federal
policy proposal for one unified national system enhancing the
security of the domestic supply chain for patients and to
define a migratory implementation pathway.
Johnson and Johnson Health Care Systems supports
Representatives Latta and Matheson for tackling this important
issue and making progress on a legislative solution. This
legislation incorporates many of PDSA's proposed provisions
including a uniform national standard with a phased
implementation. It is vitally important that both government
and the private sector work together to protect our national
drug supply in a manner that makes sense. We believe this
legislation will help us secure the domestic pharmaceutical
supply chain by providing additional protection to our
citizens, patients who depend on the integrity of our medicines
to treat their diseases and life-threatening conditions from
counterfeit medicines. Johnson and Johnson Health Care Systems'
commitment to patient safety is unwavering. We look forward to
Congress's enactment of this legislation and we are committed
to work with Congress, the FDA and our supply chain
stakeholders to implement it successfully. Again, thank you for
the opportunity to provide this testimony to the Committee.
Before concluding my remarks, I would like to recognize
Steve Drucker, an industry colleague from Merck, who passed
away last week. We will miss Steve's immense contributions,
commitment to patient safety and especially his humorous
insights. Our thoughts and prayers go out to Steve's family,
especially his wife Ann and the entire Merck team.
[The prepared statement of Mr. Rose follows:]
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Mr. Pitts. The Chair thanks the gentleman. Dr. Davis, you
are recognized for 5 minutes for an opening statement.
STATEMENT OF TIM DAVIS
Mr. Davis. Chairman Pitts, Ranking Member Pallone and
members of the Committee, thank you for conducting this hearing
and for providing me the opportunity to share my perspective as
an independent pharmacist and small business owner on the issue
of securing the pharmaceutical supply chain. My name is Tim
Davis of Beaver County, Pennsylvania, and I am the owner of
Beaver Health Mart Pharmacy and have been a practicing
pharmacist for over a dozen years. I am here today representing
the National Community Pharmacists Association, which
represents the pharmacist owners and employees of more than
23,000 independent community pharmacies in America. Our
pharmacies provide over 40 percent of all community-based
prescriptions.
It is my belief that the United States pharmaceutical
supply chain is largely safe and secure. Most pharmacists today
have a heightened awareness of counterfeit or diverted drugs
and therefore recognize the critical importance of purchasing
medications only from trusted trading partners. In addition,
pharmacists, as part of our training and daily practice,
carefully examine both drug packaging and the drug itself to be
sure there are no suspicious anomalies.
It has been my observation, though, that certain types of
prescription medications tend to be the target of
counterfeiters. Relatively expensive drugs that can be easily
produced and readily sold entice these bad actors. Some drugs
that I have personally seen are lifestyle drugs, such as
Viagra, and very costly injectable medications such as Procrit
or more recently Avastin.
In response to concerns about the safety of prescription
medications in the United States, over half of the States have
passed drug pedigree laws that require drug products that move
outside of normal distribution to be accompanied by a record of
prior transactions. However, the differences in each State's
laws has created a patchwork of activities across the United
States. As a result, there have been past discussions about the
practicality of a system that would track prescription drugs at
the individual unit level. Pharmacists have had significant
concerns about any system that would require each individual
unit of medication to be electronically scanned upon arrival in
a pharmacy due to the capital, time and labor costs associated
with such a system. Presently, the technologies required to
implement such a system are not fully developed, designed or
scaled to be feasible or affordable for use in individual
community pharmacies.
Of great concern is the California e-pedigree law that will
begin to be implemented in 2015 that will require the
electronic tracking and tracing of all drug packages in real
time. This well-intentioned system will require each individual
participant in the supply chain to scan each individual item to
capture the transaction information. With each successive
distribution, the e-pedigree must be updated with the newest
transaction data as it makes its way to our pharmacies. In
short, our pharmacies will have the unenviable task of
maintaining all drug pedigree data for all distributions and
must be able to access it on demand. The cost of compliance
with this law will be extremely high when factoring in both
initial implementation and ongoing expenses necessary to
maintain and access the data. Imposing these challenges,
particularly on community pharmacies, is not logical at a time
when the Nation is focused on trying to reduce health care
costs.
All of these factors bring us to a place in which we need a
uniform federal framework to provide further assurances of
supply chain security and that could be used to assist federal
regulators in instances of drug recalls or inquiries. We need a
reasonable, commonsense federal approach that will strike the
appropriate balance between enhanced patient safety and
minimizing unreasonable burdens on supply chain stakeholders,
particularly small business pharmacies like myself.
NCPA is a member of the Pharmaceutical Distribution
Security Alliance, a working group comprised of representatives
of all sectors of the pharmaceutical supply chain, which has
been collaborating over the past year and a half to address
supply chain security issues. This group has reached a
consensus around a number of topics. One is that of
establishing National requirements for wholesaler licensure
standards. Raising the standards for wholesaler licensure in a
uniform fashion would provide the community pharmacist with an
additional layer of confidence in the integrity of the
medications purchased. The second concept is that of attaching
a unique identifier to prescription drugs at the unit and case
levels. Products would be identified with a two-dimensional
matrix barcode including the serial number, lot number and
expiration date. The PDSA coalition has also built consensus
around being able to use the serialized identifier information
to track products at the lot level. NCPA is pleased to note the
inclusion of national wholesaler licensure standards, product
serialization and lot-level tracking in both the recently
released House discussion draft and the Senate draft. NCPA
believes that the proposed lot-level system is one that could
be built upon at some point in the future.
Community pharmacists take very seriously our role in
ensuring the safety of medications that we personally dispense
to our patients and we remain committed to working with our
colleagues in the supply chain as well as with State and
Federal authorities to make any needed improvements. Moving
forward, it is essential that all stakeholders make a concerted
effort to keep the lines of communication open so consumers can
continue to trust the integrity of the medications that we all
so depend on.
Thank you.
[The prepared statement of Mr. Davis follows:]
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Mr. Pitts. The Chair thanks the gentleman. Mr. Coukell, you
are recognized for 5 minutes for an opening statement.
STATEMENT OF ALLAN COUKELL
Mr. Coukell. Chairman Pitts, Ranking Member Pallone and
members of the Committee, thank you for the opportunity to
testify. My name is Allan Coukell. I direct drug and medicine
device work at The Pew Charitable Trusts, an independent
research and public policy organization.
Pew supports the creation of a strong national system to
protect American patients from the risks of counterfeit, stolen
and diverted drugs. We do so based on our analysis of the risks
to the supply chain and the feasibility of solutions. The
principles that I will outline today are supported by other
consumer, patient, public health and industry stakeholders, and
I ask that a number of statements be included in the record
with my written testimony.
There is general agreement on the need for a national
system and how it would work. Manufacturers would put a unique
serial number on each package of drugs. The drugs would be
tracked as they pass from hand to hand through the complex
distribution system and they could be checked to be sure they
are authentic. This approach would bring the United States into
line with other countries and individual States. Providing it
creates a meaningful advance in safety, a single national
system would be preferable to the current patchwork of State
laws.
A recent example demonstrates how verifying a serial number
on a drug package could have prevented a significant crime and
risk to patients. Last year, the U.S. Attorney in New York
charged 48 people in a large-scale diversion scheme to buy half
a billion dollars worth of medicines from patients on the
street, repackage them, sometimes with fake labels, and sell
them back into distribution through licensed wholesalers who in
turn sold the drug to pharmacies. This massive criminal
recycling of government-subsidized drugs--similar schemes are
well documented in other States--could be prevented if the drug
package had a serial number and the serial number was retired
after the drugs reached the pharmacy. This requires that
pharmacies and wholesalers purchasing the drugs check that
serial number. Without checking, the same serial, real or fake,
could be sold again and again without detection.
Manufacturers are already making investments in drug
serialization. To justify the expense and the preemption of
strong State laws, it is essential that any Federal law achieve
the following within a reasonable time frame: Participation of
all members of the supply chain. We need traceability of drugs
at the package level, not merely by lot, which can include
thousands or tens of thousands of bottles, and routine checking
of serial numbers. In a soon-to-be-released Pew Booz Allen
Hamilton report, supply chain stakeholders overwhelmingly said
that all sectors, manufacturers, distributors and pharmacies,
need to participate in a national system without exception.
The technology is feasible, and package-level serialization
and verification already exist or soon will in China, Brazil,
Turkey, Italy and across the EU. A system that does not track
drugs by the unit level would fail to catch unsafe drugs in
many scenarios. Take the example of a narcotic or any drug in
shortage that is sold illegally or in the gray market. Without
unit-level traceability, neither the purchaser nor an
investigator would have any way to know who had sold that
product or where it had come from.
Today, some companies are required to track a drug's
transaction history through paper pedigree. An electronic
system would be a welcome replacement, but Congress should
certainly not replace pedigrees, which are used by regulators
and law enforcement, with a structure that does less to capture
the chain of custody than today's systems. Regular checking of
drug serial numbers by supply chain partners is a powerful way
to ensure that illegitimate products do not enter distribution.
Take, for example, a truckload of insulin, 129,000 refrigerated
vials, that was stolen from a highway rest stop a few years
ago. After several months, some of that drug showed up on the
shelves of chain drugstores in Texas, Georgia and Kentucky,
having been handled by licensed wholesalers in at least two
other States. Nobody knows how much of that product was resold
but only 2 percent of it was recovered. We need a system that
can flag suspect of illegitimate and flag it automatically.
Recognizing the danger, some companies have already taken
steps. For example, the pharmaceutical company EMD Serono,
after its human growth hormone was counterfeited, put in place
a secure distribution program with unique serial numbers on
each vial that are checked by the dispensing pharmacy. The core
of that program shows how a national system can work.
Mr. Chairman, I thank you for this hearing and for your
commitment to this issue. The discussion draft released by this
committee a few days ago acknowledges the risks I have been
describing. We urge you now to refine it to achieve the
meaningful protections called for by patient, consumer and
public health groups and the others I have mentioned. Indeed,
we urge you to return to the bipartisan, bicameral, two-phrase
framework that you and your office and others on this committee
have spent much of the past year developing, an approach that
every organization represented on this panel has supported. It
has been 25 years since PDMA. The California law will begin to
be implemented in 2 years. The opportunity for a federal system
now is great. We would like to work with this committee to
improve this proposal to achieve a strong national system that
achieves what it must: meaningful protections for patients.
Thank you, and I would welcome your questions.
[The prepared statement of Mr. Coukell follows:]
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Mr. Pitts. The Chair thanks the gentleman. Dr. Catizone,
you are recognized for 5 minutes for an opening statement.
STATEMENT OF CARMEN A. CATIZONE
Mr. Catizone. Chairman Pitts, Ranking Member Pallone and
members of the subcommittee, I thank you for the opportunity to
be here today. The National Association Boards of Pharmacy
founded in 1904 and based in Illinois appreciates the chance to
share with you comments and input from the States who are
currently responsible for regulating this particular situation.
The issues before the committee are not new. In fact, the
timeline in trying to secure our Nation's prescription drug
supply extends far back than we care to admit. The activities
that have ensued since the enactment of the PDMA some 25 years
ago can best be characterized by two words: proposed and
delayed. The language found throughout multiple Federal
Register notices since the implementation of the PDMA read
similarly over and over. The proposals presented by the FDA and
supported by the States were continuously delayed and defeated
by pressure from the industry.
As some of you may be aware, NABP is intimately involved in
the oversight of wholesale distributors; as a result, our
verified, accredited wholesale distributors program. To date,
we have surveyed and accredited 552 wholesale distributors
across the United States. We have observed firsthand and
reported to the applicable State and federal authorities
breaches in and compromises to the prescription drug supply
chain. These breaches and compromises include the lack of a
pedigree, the lack of complete information, the absence of any
documentation, pedigrees or other transaction documents that
indicate a product passed through multiple entities, some
licensed and others not, multiple wholesaler companies located
in a one-room business office in a strip mall claiming some
form of common ownership, wholesalers receiving and storing
products under conditions that render the medications
adulterated or contaminated, and wholesalers and pharmacies
establishing as their sole business model the purchase and sale
of shortage drugs and inflating the price of these products by
a thousandfold, an unconscionable action when it comes to drugs
that are needed by patients suffering from life-threatening
diseases such as cancer.
The States are both the frontline and last defense in the
prescription supply chain. Together with NABP, they have forged
an effective public-private partnership. That partnership was
recognized by the Institute of Medicine in its report
``Countering the Problem of Falsified and Substandard Drugs.''
The report notes that crime and corruption drive the business
of falsified medicines and that medicines can change hands many
times in myriad countries before they reach patients.
One of the primary recommendations of the IOM that is
critical to the considerations before this committee and bears
noting this afternoon was a recommendation they made in regard
to NABP, and I quote: ``The IOM committee calls for
strengthening the drug distribution system in order to improve
the quality of medicine and protect consumers. Top among its
priorities is restricting the U.S. wholesale market to firms
vetted by the National Association of Boards of Pharmacy. This
action would tighten the American drug distribution chain and
build momentum for better controls on drug wholesalers in
developing countries.''
NABP supports the implementation of a national system for
the oversight and regulation of prescription drug supply chain
provided such system is comprehensive and does not discard the
protections already in place and ready for implementation by
the States, particularly California. It should take into
account the existing and successful public-private partnership
established between the States and NABP endorsed by the
Institute of Medicine and operating effectively at no cost to
the American taxpayers. NABP calls for no further delays. The
time has long passed for the continued delay in addressing and
resolving the challenges confronting our Nation's prescription
drug chain. NABP requests that all participants in the supply
chain be accountable. Exemptions should not be granted to
pharmacies. NABP supports the tracking and traceability of
products to the package level and made operational in 2015 and
2016 in order not to retreat on advances made by California and
the timeline already committed to by a growing number of the
industry. NABP supports pharmacies and wholesale distributors
being required to append and pass pedigrees or other equivalent
transaction documents within the next 2 to 4 years, and NABP
supports providing the Food and Drug Administration with the
full scope of authority and resources needed to implement and
enforce a national system.
We thank you for the opportunity.
[The prepared statement of Mr. Catizone follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The Chair thanks the gentleman. Mr. Berghahn,
you are recognized for 5 minutes for an opening statement.
STATEMENT OF WALTER BERGHAHN
Mr. Berghahn. Thank you, and good afternoon. Chairman
Pitts, Ranking Member Pallone, and members of the committee, I
appreciate the opportunity to be here and share my perspective
on this matter. My name is Walter Berghahn. I am the Executive
Director of the Healthcare Compliance Packaging Council, a
trade association dedicated to improving medication adherence
and patient safety through broad adoption of innovative
packaging. The HCPC represents packaging material and machinery
suppliers as well as contract packagers. The members serve as
pharmaceutical manufacturers and pharmacy both institutional
and retail. The HCPC supports California's SB 1307 and the work
of this committee, recognizing that we share the common goal of
a secure supply chain.
The U.S. pharmaceutical supply chain is primarily safe.
Drugs are produced, packaged and shipped according to FDA
guidelines. They travel through a complex supply chain and
arrive at the appropriate pharmacy, hospital and nursing home
mostly without incident. That sounds wonderful, but that is not
why we are here today. We are here because there are many
groups intent on selling counterfeit or gray market drugs into
the U.S. supply chain despite a tremendous effort over the last
10 years to secure the supply chain. Counterfeits are still
appearing. The FDA has opened more investigations in recent
years than ever before, more than 70 incidents in 2010 alone.
Some suggest that the cost to fix it is too high and the
supply chain is safe enough. I am betting that those people
have never had a family member ingest or inject a counterfeit
medication and suffer the health consequences.
It has been suggested that serialization and barcoding
technology is not mature or scalable enough for this task, and
yet barcoding has been used since the 1970s. It is found in
every store and pharmacy in America. Two-dimensional barcoding
required for serialization is newer but well established. The
Department of Defense issued a paper in 2005 outlining their
use and implementation of 2D barcoding for tracking valuable
items in both forward and reverse logistics. Every day, tens of
millions of packages are tracked by FedEx and UPS utilizing
serialized barcodes. Every day, 1\1/2\ million U.S. air
travelers board planes using 2D serialized barcodes. I am not
suggesting the process will be easy for pharmaceuticals but the
technologies employed are proven and they are widespread.
California led the way on serialization with SB 1307 with
initial targets in 2007 and subsequent delays allowing industry
time to comply. I am sure you are familiar with the timeline.
Pharmacy would be the last to comply in July of 2017, a full 4
years from today. The HCPC hopes that the federal legislation
will support SB 1307 and not undermine its progress.
The packaging machinery industry is prepared to help meet
these deadlines. Systems ranging from manual to fully automated
exist which apply, verify and aggregate 2D barcoded containers
to cases. Companies such as Systech, Optel, Seidenader, Omega
and numerous others are delivering these systems to branded and
generic pharmaceutical manufacturers today. Dozens of systems
have been installed in the United States in anticipation of
California's deadlines. Hundreds more are being planned,
ordered and constructed now. A larger number of systems have
already been deployed globally to meet international
requirements for serialization in countries like China, Brazil,
Turkey, India and a large portion of the EU.
All this work does wonders for securing the normal supply
chain but we would be remiss if we didn't consider the many
documented problems occurring outside normal channels. So how
do we detect those instances? In my opinion, the best way would
be to provide prescriptions the way most of the world does: in
the manufacturer's original container. This would accomplish
two things. It thwarts the introduction of counterfeit products
in pharmacy as well as dispensing of outdated and returned
product, all unfortunately well documented. Secondly, it would
allow the insurance industry to mandate the use of a serial ID
for reimbursement, not simply the NDC number. This practice
would greatly reduce prescription fraud. The government via CMS
and the Veterans Administration is the largest payer in the
United States and would see the largest benefit from this
practice.
This is relevant because even the physicians cited in the
recent Avastin counterfeit case in California need to submit
for reimbursement. Today, all they need is a valid NDC number.
In the future, requiring a serial number for reimbursement
could block illegally purchased items from being distributed.
California has documented cases where pharmacists have
illegally purchased product over the Internet and dispensed
them in pharmacies, submitting for reimbursement with a
legitimate NDC. Could lot-level tracking have stopped this?
In conclusion, I would like to address one of the major
differences between the proposed methodologies being
considered. The debate is item-level tracking versus lot-level
tracking. To be sure, lot-level tracking is less cumbersome on
industry players but one must question its effectiveness. Lot-
level tracking will provide tools for evaluating what happened,
why a counterfeit drug got in the supply chain. Item-level
track-and-trace will prevent it. The difference is staggering:
prevention versus detection after the fact. I would hope that
in considering which path to pursue, members will look at past
instances of counterfeiting and ask a simple question: would
lot-level tracking have prevented this product from entering
the supply chain?
Thank you for the chance to contribute to this.
[The prepared statement of Mr. Berghahn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Pitts. The Chair thanks the gentleman. That concludes
the opening statements of our second panel. At this time I
would like to request unanimous consent to place a statement
from the National Association of Chain Drugstores into the
record. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. You have a UC request?
Mr. Pallone. Mr. Chairman, I would ask unanimous consent to
enter into the record a letter from EMD Serono.
Mr. Pitts. Without objection, so ordered.
[The information appears at the conclusion of the hearing.]
Mr. Pitts. All right. I will begin the questioning and
recognize myself 5 minutes for that purpose.
I will start with Ms. Gallenagh. Talk a little bit about
the California model. Would the California model work on a
national level? Would you describe some of the consequences for
patients and industry and others? We will go down the line and
start with you, Ms. Gallenagh.
Ms. Gallenagh. Sure. Based on what we know right now, a lot
depends on the time frames that would be set forth on a
national level. The California dates currently, in my opinion,
would not be practical for a National model. Additionally,
there is a piece of the California law that is providing to be
particularly difficult in piloting, and that is the electronic
pedigree portion of the law that also goes along with full
track and trace of product electronically throughout the supply
chain. And these are right now, based on what we are learning
through experimenting with the processes and the technology
very difficult for industry.
Mr. Pitts. Ms. Simmon?
Ms. Simmon. Thank you. Yes, we would echo that. You know,
some of the necessary technology, speaking from a
manufacturer's point of view, just isn't really there yet.
Aggregation of units to cases and pallets is not ready to be
deployed with a high level of accuracy for the data that would
be required, and some of the interoperability standards for the
data are not yet solved. With the compliance dates only 2 years
ago, you know, we feel that is moving too quickly to avoid some
unintended consequences.
Mr. Pitts. Mr. Rose, would you comment on the consequences
for industry and patients?
Mr. Rose. Consequences on patients?
Mr. Pitts. Both industry and patients.
Mr. Rose. OK. For industry, we brought a sample of our
product where we have applied the 2D data matrix code with a
serial number on it.
Mr. Pitts. And would you point out what you said in the
testimony?
Mr. Rose. Right here we have the 2D data matrix code, and
then here we have human readable format where we have put the
serial number in there as well as the product code and
expiration date and lot, and you can read it human readable or
via machinery. This took a lot of work to get going. The next
phase we are working on right now is exchanging data with our
trading partners. Those standards don't exist. We don't have
guidance from California on those data standards, and we are
missing those. That is very important to have for us to be
fully compliant with the California law. So to achieve this
date, we need those standards to be put in place but then also
we have to put those systems in place to be able to exchange
that data with our trading partners.
Mr. Pitts. Dr. Davis, would you care to comment?
Mr. Davis. I think that from a community pharmacist's
perspective that it would be relatively difficult for us to
comply nationwide because of a couple of reasons. One would be
the ability to absorb and to maintain the costs associated with
the system, and two, to access and be able to implement the
technologies surrounding it. This is something external to all
of our current processes in the field of pharmacy, and we don't
want to necessarily lose the relationships and patient care
experiences that we have currently in place in lieu of trying
to comply by another national standard.
Mr. Pitts. Now, I posed several of these questions to FDA
earlier today, and I would like to get the opinion of actors on
the ground working to manufacture and distribute and dispense
our Nation's drug supply, so if you will please respond. Will
national uniformity increase the security of the supply chain
and improve patient safety, Ms. Gallenagh?
Ms. Gallenagh. Yes.
Mr. Pitts. Ms. Simmon?
Ms. Simmon. Yes, it would.
Mr. Pitts. Mr. Rose?
Mr. Rose. Yes, it would.
Mr. Pitts. Dr. Davis?
Mr. Davis. Yes.
Mr. Pitts. What about--is it important to preserve the
States' ability to license and enforce National standards?
Ms. Gallenagh. I would say yes, it is important so that
they have a role to partner with FDA.
Mr. Pitts. Ms. Simmon?
Ms. Simmon. Yes, we would agree as well.
Mr. Rose. Yes, we would agree as well.
Mr. Davis. Yes.
Mr. Pitts. Will product serialization increase the security
of the supply chain and improve patient safety?
Ms. Gallenagh. Yes, absolutely.
Ms. Simmon. Yes, we definitely favor product serialization.
Mr. Rose. We agree with product standardization.
Mr. Davis. And we agree with it as well in a phased-in
approach so that we can build our systems and our capabilities
without compromising patient care as it stands today.
Mr. Pitts. All right. Will data exchange and systems
between actors in the supply chain increase the security of our
drug supply and improve patient safety?
Ms. Gallenagh. Yes.
Ms. Simmon. Yes, it would.
Mr. Rose. Yes, it would.
Mr. Davis. Yes, it would.
Mr. Pitts. And finally, would a National track-and-trace
standard increase the efficacy of product recalls?
Ms. Gallenagh. Yes, it would.
Ms. Simmon. Yes, we believe it would.
Mr. Rose. Yes.
Mr. Davis. Yes, it would, sir.
Mr. Pitts. Thank you. I have gone over time. The chair
recognizes the ranking member, Mr. Pallone, 5 minutes for
questions.
Mr. Pallone. I just wanted to follow up on Mr. Pitts'
question going down the line, a yes or no because I have other
questions. So OK, 2 years you are saying isn't workable but
what about 10 years? Can the issues that we referenced here,
track and trace, unit level, can they be worked out by then
over 10 years? Yes or no, Ms. Gallenagh?
Ms. Gallenagh. I think that it is possible to get to a next
step. I think that----
Mr. Pallone. I am trying to get a yes or no, though,
because otherwise I am going to run out of time. Or if you
don't want to say yes or no, you can say maybe.
Ms. Gallenagh. I would say maybe.
Mr. Pallone. All right. Ms. Simmon?
Ms. Simmon. I would say maybe if it is a stepwise approach.
Mr. Pallone. All right. Mr. Rose?
Mr. Rose. Yes, it would.
Mr. Pallone. Dr. Davis?
Mr. Davis. And I agree with the phased-in approach as well.
Mr. Pallone. Mr. Coukell?
Mr. Coukell. Can I make a very brief response, Mr. Pallone?
Mr. Pallone. Please.
Mr. Coukell. The question was asked earlier, would
serialization----
Mr. Pallone. Yes, no or maybe. I am sorry.
Mr. Coukell. Yes.
Mr. Pallone. OK. Dr. Catizone?
Mr. Catizone. Two answers. Based upon existing technology,
yes. Based upon the history of the industry in this regard, 25
years has not been enough time so they will probably say 10
won't work either.
Mr. Pallone. All right. Mr. Berghahn?
Mr. Berghahn. Yes, I think it is possible.
Mr. Pallone. OK. I mentioned in my statement, I have a lot
of concerns with the Republican bill. We spent many months
engaged with members on a bipartisan, bicameral basis
discussing and learning about the problems associated with the
security of our drug distribution system, but to put it simply,
the draft just doesn't reflect where we landed at the end of
those discussions or anything close, in my opinion, and the
House Republicans, as I said, didn't consult with us before
putting the draft out so I am disappointed, to say the least.
But I would like to hear from some of you--I can't do
everybody--on what you think is lacking in the bill. So let me
start with you, Mr. Rose. What important aspects of a track-
and-trace system is lacking or need improvement in the House
draft?
Mr. Rose. What we really need at this point in time is
where are making our investments is a clear end game. We need
to know where the goalpost is fixed. If we are making
investments to put serialized numbers on our product and then
also to exchange data, we want to make sure that the other
parties in the supply chain are also using those numbers and
using that information to verify the product and the accuracy
and the veracity of that product and then also the transactions
associated with the product.
Mr. Pallone. All right. Same for you, Ms. Gallenagh.
Ms. Gallenagh. Yes, I think that is correct. In our
opinion, once we have serialization, there are many things that
are possible with this but the one thing that differs between
the past drafts is to not get to a clearly defined place or
year date certain for traceability. We do think, though, that
the bill draft does lay out the foundation to get there. The
core elements again, as we have mentioned, and beginning with
serialization and lot traceability, we do think that those are
important steps that have to be taken before you get to that
end phase.
Mr. Pallone. OK. Mr. Coukell?
Mr. Coukell. The current House draft immediately bans all
State pedigree laws and doesn't replace them with anything for
a period of many years, and it never gets to the second phase
that we need to get to. It is like building a set of steps to
your front door, building the first step now and having a plan
to come back and put the second step on some time later.
Mr. Pallone. Dr. Catizone?
Mr. Catizone. All the points that were previously made
except it should not preempt State laws at this point because
if it does so, there is no protection for the consumer. Two, I
am confused by the argument about clear standards. They are
needed. In 1998, NABP offered to develop national standards.
Some people sitting at the table said the industry would do
that. It is 25 years later. We still don't have those standards
so I am not sure the standards are the barrier. The standards
can be built and done so I believe clear direction, no delays,
an implementation timeline and standards should be developed as
quickly as possible.
Mr. Pallone. Thank you. And finally, Mr. Berghahn?
Mr. Berghahn. Yes, I think one of the main concerns is the
lack of the unit-level trace and the lack of requirements for
people in the supply chain to use it. Without that, you really
lose visibility on the product and you decrease safety.
Mr. Pallone. Well, thank you. I am sorry I couldn't get to
all of you but my time is limited.
I just wanted to reiterate that I am disappointed in the
bill. The Senate released a draft last week that was an obvious
attempt to address the views of Members on both sides of the
aisle. It represents a compromise, and I regret that the House
Republicans felt the need to sway so far from the good work
that so many Members have put into this issue throughout the
last year. So hopefully we can still come up with a good
product. I yield back, Mr. Chairman.
Mr. Pitts. The Chair thanks the gentleman and recognizes
the gentleman from Virginia, Mr. Griffith, 5 minutes for
questions.
Mr. Griffith. Thank you, Mr. Chairman.
Dr. Davis, as you may have heard earlier, I represent a
rural area with a lot of community pharmacists, and I want to
focus your questions in regard to the e-pedigree program in
California. How familiar are you with that program?
Mr. Davis. I have a cursory understanding of the specifics
of it but again, I understand the concerns of my colleagues in
that State as well through discussions.
Mr. Griffith. Well, let us talk about that. Do you know how
the small pharmacies, the small-town pharmacies in California
are dealing with that?
Mr. Davis. We are still a few years away from pharmacies
having to assume responsibility for their component of the
program. But that being said, there are concerns surrounding
the ability to absorb the costs and the labor associated with
such a system.
Mr. Griffith. Now, I understand you are not facing that,
but have your colleagues in California given you some idea of
what those costs would be for a small-town pharmacy?
Mr. Davis. Well, they range. Our problem is, our margins
continually shrink at this point, and we have less and less to
work with and still maintain our practices as our communities
expect them to be maintained. That being the case, the
estimates from colleagues range anywhere from thousands of
dollars to having to remove employees from their work staff to
replace them with this process. So the clear projections aren't
intact at this point but there is a significant impact that is
going to either impact the profitability and the ability for
that business to support its community, or the profitability of
the business being able to support its current employee
structure.
Mr. Griffith. And as a part of those concerns, are there
concerns that some of the small-town pharmacies won't be able
to survive with this cost?
Mr. Davis. Well, and that is always a question. I would say
99 percent of our technology costs over the past decade have
been to comply with regulations and maintain technology and
processes to comply by State and Federal regulations. That
being said, we are worried that sooner or later our spending,
our technology spending and our process spending, is going to
outpace our ability to absorb it, and there will be doors that
close unfortunately.
Mr. Griffith. OK. So there is some concern that some of the
pharmacies won't make it, and if that pharmacy happens to be in
a small town and the next town over is on the other side of a
mountain and 40 miles away, I am going to ask a question that I
already know the answer to, but how does that impact the
patient?
Mr. Davis. I come from a region very much like that, and
what happens is, we see that patients are always trying to seek
out the best care that they can at any given moment. That
limits the patient's access to care and access to the best care
that they can possibly get in their locations.
Mr. Griffith. And in many cases, it is not just getting,
you know, the prescription filled, it is that trust that has
been built up. Sometimes you have--in fact, my pharmacist is
the son of the pharmacist that we used when I was a child, and
that trust has built up and so a lot of times there is a
certain element of--am I doing the right thing heading down
this direction, or they will come in and they will just
chitchat about what is going on in their health care, and
particularly for senior citizens, they may be getting different
prescriptions from different folks and sometimes having that
resource is very valuable, is it not?
Mr. Davis. I agree, and most of my patients held me as a
baby, so when I look them in the eye and I dispense medications
or prescriptions to them, that is why this topic is so very
valuable to me. I need to know that I am taking care of their
families much like they took care of mine through patronage and
loyalty. So making sure that we provide safe, secure, and
efficient medications for them on a regular basis is paramount.
My dad always said always make the best decision for your
patient and you have made the best decision for your company,
and we are trying to do that in this day and age with this
particular topic as well.
Mr. Griffith. Yes, and I can't remember what the specifics
were but I do know that in regard to one of my children, we
went to get the prescription and the doctor looked at it and he
said but isn't he also taking this, let me call your doc, and
called the doc and they changed the prescription, and I think
that is very valuable, and in rural areas, if you eliminate
that community pharmacist, you have eliminated a valuable part
of that tool. And so that is why I think it is proper that we
move forward with a plan but also that we do it in a way that
the community pharmacists don't get left out of the formula.
Mr. Davis. Thank you, sir.
Mr. Griffith. I appreciate it, and yield back my time.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentlelady from California, Ms. Capps, 5 minutes
for questions.
Mrs. Capps. Thank you, Mr. Chairman.
Dr. Catizone, I would like to ask you about the role
wholesale distributors play in the integrity of the drug
distribution supply chain. I know that FDA has stated in its
reports on counterfeit drugs that counterfeit drugs are most
likely to be introduced as a part of a supply chain that
involves multiple wholesalers. That is correct, right?
Mr. Catizone. Yes.
Mrs. Capps. Because of widespread abuses in the early
2000s, many States have tightened their licensure requirements.
I believe Florida and California have especially strong
licensure requirements, which they adopted to address specific
problems that they had identified. However, there is, as you
know, a wide variation in the rigor of different State
requirements leaving many vulnerabilities in the system
nationwide. My question is whether you agree that there is wide
variation in State requirements for wholesale licensing and
what has been the public health effect of these varying State
requirements?
Mr. Catizone. There is variation but not as wide as I think
people have reported. As an explanation, the primary wholesaler
since the PDMA have done an outstanding job of cleaning up the
industry and making sure the supply chain has its integrity and
validity. We have seen problems with secondary wholesalers and
pharmacies entering the picture. The patchwork among the States
is being equalized through the accreditation program that we
have, which has become a de facto national standard, and for
States waiting to see what happens with California. If
California moves forward, other States would follow suit and
that would become a national standard across the board.
Mrs. Capps. OK. Given these differences, you say they are
not as wide as we have been led to expect. Do you see any role
for the FDA in setting federal standards for wholesale?
Mr. Catizone. Yes. What we talked about earlier, the need
for standards, the FDA's role is critical to this process
because the States have tried to put together a patchwork and
we need that overseeing nationally.
Mrs. Capps. I get you. So thank you. And now I would like
to get your views on the wholesale distributor licensing
provisions of the House bill. It does require FDA to set
licensure standards for all wholesale distributors. It also
requires wholesale distributors to report annually to the FDA
their name, address, dates in which they are licensed and any
disciplinary actions that have been taken against them. The FDA
would be required to publicly post the names of all wholesale
distributors and the States in which they are licensed on their
web page. However, the public would not be able to see the
disciplinary actions that have been taken against any
wholesalers that are on this site. In other words, that is not
required in the bill. States would also be prohibited from
having any licensure requirement except those established by
FDA. Essentially, the new FDA standards could be seen as both a
floor and a ceiling. Coming from a State like California with
strong licensure standards, naturally I am concerned about
that. So my question to you is whether you believe it is
appropriate or necessary for the bill to prevent States from
establishing or maintaining stricter standards or additional
requirements to address local problems a particular State may
have experienced. In other words, is this going to prevent
individual States from addressing their own situations? Is
there any public health benefit to the kind of system being
described?
Mr. Catizone. The answer is yes, it will prevent, and we
are sympathetic to the industry establishing some sort of
uniform process, so we would support that, but the States need
the discretion to act where there is a significant occurrence
within their State, and we believe the bill would address that
and even allow the States to be included in discussion. That
would be critical.
In regard to the posting of information in response to the
compounding issue, we will soon provide a listing of all the
pharmacies in the United States, where they are licensed, what
disciplinary action has been taken and whether or not they have
been inspected. We can put that same system in place for
wholesalers that we have accredited as well at no charge for
the public.
Mrs. Capps. Thank you very much. I just have a few seconds,
but Mr. Coukell, could you give us your opinion on these
provisions in the House bill? I know it is going to be brief.
Mr. Coukell. In the interest of time, I will second what
Dr. Catizone said. We think national standards are very
desirable. There is an important role for FDA to play there but
we don't want to tie the hands of States at being able to
respond to local conditions.
Mrs. Capps. I see a couple of heads nodding. Is this shared
by anybody else on the panel? Could you indicate?
Mr. Davis. We agree as well. National standards, I think,
would make it easier for pharmacists to be able to access and
purchase and manage prescription products throughout the United
States with some conformity.
Mrs. Capps. Thank you. Mr. Chairman, I yield back.
Mr. Pitts. The Chair thanks the gentlelady and now
recognizes the gentleman from New Jersey, Mr. Lance, 5 minutes
for questions.
Mr. Lance. Thank you very much, Mr. Chairman.
To Mr. Rose from J&J, I think New York recently proposed
supply chain security legislation similar to standards in
California. New York is obviously our neighboring State in New
Jersey, and in fact, many pharmaceutical companies in the
district I serve have employees from New York. If the
California law were fully enacted and if New York follows suit
we will have two highly populated States on opposite sides of
the country requiring a varying degree of standard by which the
entire industry from the manufacturer all the way to
pharmacists must comply. You cite in your testimony a patchwork
quilt of regulations, and I am interested in knowing how
exactly would establishing a uniform tracking system ensure
patient safety.
Mr. Rose. Thank you for that question. What it would do is,
it would give us security through the whole Nation. These
labels that we are putting on our product, this product is sold
throughout the State, or throughout the country, and we are
talking about interstate commerce here. When we manufacture it,
we don't manufacture for New York or California or Florida.
Mr. Lance. You do it for the entire Nation.
Mr. Rose. The entire Nation, and so as a result, we have
this system in place. The entire Nation would benefit from
this. All the citizens throughout the Nation would benefit from
this system. It would provide a veil and umbrella over top of
the supply chain, ensuring that we would keep counterfeit
products out of the supply chain. It would give us another
level of mechanism, another layer which we could prevent
counterfeits from getting in the supply chain throughout the
Nation.
Mr. Lance. Thank you. Your testimony reflects a strong
commitment to patient safety. How often are products
compromised? Under the current system if a product is
compromised, how is the manufacturer, J&J or others, alerted to
an issue, and how do you address the problem?
Mr. Rose. We are alerted to it in many ways. We may have
received a call from a patient. We may hear from a doctor or a
pharmacist. We have mechanisms in which we handle those calls,
and we receive it and then we do an investigation of whether or
not that is a counterfeit product or not. So we have mechanisms
which we put in place to verify the authenticity of that
product and then determine what the next steps might be.
Mr. Lance. Thank you. Would anyone else on the panel like
to comment on my questions? Yes, sir.
Mr. Coukell. Just briefly. I don't think we know how common
it is. There was a story in the newspaper this week. It was a
tiny story--I think it maybe only ran in Chicago--about a
pharmacist who had bought counterfeit drugs from China, I
believe it was, and was dispensing them to patients and had
been caught doing that. We don't know how common that is, and
that is not to tarnish the industry. You know, 99.99 percent of
them are good guys and the supply is generally safe but how
common are these problems? I don't think we know.
Mr. Lance. Would anyone else like to comment? Dr. Davis?
Mr. Davis. I think that again, the pharmaceutical industry,
specifically, independent community pharmacists, rely on the
rapport that we create with our patients, and it is very
important for us to maintain that position. That being said, we
take counterfeit medications, diverted medications and how we
access and purchase medications in the industry very, very
seriously. So that inherently adds a level of security that
exists today.
Mr. Lance. Thank you. Dr. Davis, let me say that I come
from a small town and from a small family law practice, and we
rely on a family pharmacy in a small town, and I know that
there are many across America who rely on the good work of
family pharmacies across this great country.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Utah, Mr. Matheson, 5 minutes for
questions.
Mr. Matheson. Thanks, Mr. Chairman, and I do want to thank
all the stakeholders, more than just for being here today but
there has been a lot of stakeholder involvement for a long time
on this issue. I appreciate everyone spending the time to try
to come up with a solution.
I have said it in my earlier comments: I think we need a
uniform standard in place, a national standard, and it is
really for two things. It is to ensure integrity of the drug
supply chain at a national level and also alleviate operational
burdens. It also is to prevent counterfeit or diverted product
from reaching consumers.
So my first question is to Ms. Gallenagh. I was wondering
if you could--you mentioned both the concern about operational
burdens for stakeholders and the problem with counterfeit
product hitting the market. Can you describe for me the
operational challenges that your member companies would face in
delivering product to their downstream partners across the
country in a situation with no national standard and as
different State laws go into effect?
Ms. Gallenagh. Absolutely. As you already know, HDMA
members are primary wholesalers, so they purchase directly from
the manufacturer in most cases and provide their products
directly to the pharmacy and providers. The challenge with a
50-State approach, particularly when we start talking about not
just pedigree but when we start talking about serialization and
traceability really is the great unknown. If we are working on
systems to be developed for California, for instance, that is
one thing, but we operate national companies, much like the
manufacturers. While we are not manufacturing product and we
are not actually serializing that product, we will have to have
the systems in place to be able to move it within our
distribution networks, not just for the State of California but
across the country. If we have a different standard for
California than, for instance, in New York, which is also
looking at this in their state legislature, then we have to
segregate product according to region, and it makes it very
difficult to know what types of systems we need to develop.
Mr. Matheson. Do you have thoughts or can you elaborate on
how a bad actor might circumvent more stringent State laws to
introduce an adulterated product into a supply chain that
doesn't have the national standard?
Ms. Gallenagh. Sure. I think one of the problems with
variation in State licensure was is one, the requirements. For
example, some States don't choose to inspect wholesaler
facilities when they are actually issuing licenses, and so then
you end up with sort of fly-by-night actors or maybe
substandard companies applying for and receiving licenses, and
this has been shown to be a problem in States like Florida
where when they did raise their licensure standards, they
eliminated hundreds of bad actors and really not legitimate
companies. I think that the other part of this, though, is also
not just the variation in requirements but the variation in
actually having to meet a standard bar. One kind of uniform set
of requirements so that a bad actor can't move to the next
State and get a license there, for instance.
Mr. Matheson. Mr. Rose, in your testimony you described
your company's experience with serialization of its products.
You know, this is something that has been included in this
discussion draft. Can you discuss the role that serialization
plays in strengthening the integrity of the drug supply chain
both in the near-term impact it could have as well as the role
it would play in the longer term?
Mr. Rose. Sure. In the near term, I think what it gives us
is a capability that would be available in our product if we
just looked at the discussion draft in its current form. You
would have a serialized number on there that could then be
verified, and that becomes important. I think what we would
like to see as an end game is where every party in the supply
chain is accountable for using that serial number and then also
the information that is passed along with it. So we really
believe that simple act of scanning that barcode becomes very,
very important to help verify that package and ensure that it
is the genuine package and then also the transactions that are
associated with that package that can verify those transactions
as well.
Mr. Matheson. Thanks. Mr. Chairman, I will yield back.
Mr. Pitts. The chair thanks the gentleman and now
recognizes the gentleman from Texas, Mr. Green, 5 minutes for
questions.
Mr. Green. Thank you, Mr. Chairman. I got back just in
time.
Mr. Coukell, I have some questions about the time frames
set up in the House bill. As you know, it doesn't require much
until about 5 years after the enactment. At that point it would
only require manufacturers to serialize their product and to
begin tracing their products by lot number, not unit level. I
understand that actually getting a unit-level interoperable
electronic system up and running, particularly on the federal
level, will take some time and has many complications, but I am
concerned the House bill doesn't start us on that path soon
enough. In fact, it actually prohibits FDA from going forward
with a unit-level electronic system in absence of new federal
legislation. My question is, can you comment on this? And I am
sure we can all agree that we want to ensure that industry has
a reasonable amount of time to comply with whatever federal
system we put in place but do we really need to wait until 2018
to even start on a lot-level non-electronic system?
Mr. Coukell. Thank you for that question, sir. We
absolutely share that concern as well as the view that the
appropriate approach is to phase this in in a reasonable time
frame that is something between California and what is proposed
in the House draft, and I think one of the big impediments to
this whole area moving forward has been the lack of regulatory
certainty. So leaving 10 years and still not having that
certainty is likely to delay the field a very long time.
Mr. Green. Mr. Berghahn, do you have any thoughts on that
too?
Mr. Berghahn. Well, I think that what would be important to
consider is that many of the pharma manufacturers and the
industry are already preparing today and putting systems in
place to serialize an aggregate as we speak, and certainly
allowing that to continue would be in the best interests of
everyone. It doesn't mean that we are going to get to a
National standard in anything resembling the timelines put in
place in California but it certainly means that the basis is
there. I mean, California is more than 10 percent of the
population of the United States, so we could say if we allowed
it to continue as scheduled that by 2017 10 percent of the
product in the U.S. supply chain would be serialized.
Mr. Green. Mr. Catizone, how about you on that question? I
am sure we all agree but do you really need to wait until 2018
even to get started on a lot-level non-electronic system?
Mr. Catizone. No, I think that is too long of a delay. I
agree with the prior comments but also the caution, if this law
preempts all existing State laws, there will be no oversight of
the distribution system and the problems that we are seeing now
will increase significantly so the medications you receive and
I receive and others receive will not be safe if the State laws
are all preempted.
Mr. Green. Well, I hope that we can work together to ensure
we don't have unnecessary delays in implementing a federal
system. Although I know that California may have 10 percent,
but for a fellow with my Texas accent, we might want to have
our own. But I do think we need across State lines regulation
as quick as possible. And again, like any other regulation, if
you know it is going to happen, you can capitalize it and
prepare for it over a period of years and it looks like the
bill may not be as aggressive as some of us would like. It
sounds like some of the witnesses share it.
Thank you, Mr. Chairman. I will yield back my time.
Mr. Pitts. The Chair thanks the gentleman and now
recognizes the gentleman from Ohio, Mr. Latta, 5 minutes for
questions.
Mr. Latta. Well, thank you very much, Mr. Chairman. Again,
thank you very much for allowing me to participate in the
hearing today. I really appreciate your willingness. And again,
I want to thank the witnesses that are here today for their
testimony today because we have to have input from everyone,
which we have been doing for quite a while now, meeting with
the stakeholders.
If I could start with Dr. Davis, and again, what we are
looking at here, what we want is safety for the patients out
there. We want to make sure that the supply chain is protected,
that nothing is adulterated out there, and that when someone
receives a medication, they know it is safe for them to take.
And I think the chairman was talking about it a little bit
earlier but if I could just ask you again, what is your view of
having this phased in over time instead of something happening
overnight? And I know that Mr. Griffith and Mr. Lance also kind
of alluded to that in their questioning, but if I could ask
you?
Mr. Davis. Again, I think our concern is of the level of
complexity that occurs at the patient-to-practitioner level. We
have a lot of very specific business rule questions surrounding
lot-level versus unit-level serialization and tracking. What
would happen if a patient had a prescription that we prepared
for them, they decided that it was too expensive and we had
already removed it from the packaging and the ability for it to
be traced any further? How do we get that back into our drug
supply? How do we take processes such as that to make sure that
our businesses remain profitable and don't waste dollars on
unused inventory, unreturnable inventory? How do we access the
information and utilize the information, and how do we insert
those processes in our current practices?
We are dependent. We are absolutely dependent on our
technology vendors to provide us with the capabilities, and
while we are wholeheartedly in to continue working with our
partners to create a system in the United States and to
maintain the system, we want to make sure that it is built in
an efficient, affordable manner for us to implement in our
communities.
Mr. Latta. Thank you.
Mr. Rose, in your testimony, you state that this
legislation incorporates many of PDSA's proposed provisions
including a uniform national standard with a phased
implementation. I am just kind of following up on that. How
important is that phased implementation?
Mr. Rose. We believe the phased implementation is
important. The California law in many regards goes from zero to
60 very quickly so you go from serialization to this
interoperable system. We really believe what is important here
is to make sure that we have an approach that allows parties in
the supply chain to prepare properly, to adopt these systems.
As Dr. Davis mentioned, the pharmacies have some work to do, so
do the wholesalers and the manufacturers. We still have a lot
of work to do, as I indicated in my testimony. We have to give
people some time to put those systems in place and make sure,
to work out the interdependencies between the different
stakeholders in the supply chain. That is where the real
phased-in approach is really required is, how do we exchange
data with the customers that we work with. It is very, very
critical to do this, and it is not just the forward supply
chain but it is also the reverse supply chain as well.
Mr. Latta. Let me follow up with that. In your estimation,
has California given you and the industry the guidance it needs
for that operational clarity on how that law is going to work?
Mr. Rose. We still are awaiting guidance on the
interoperable system. Also, I think as I recall, and I will
have to get back to you on this, but they have issued some
guidance around grandfathering and I think they issued some
guidance recently around inference, but we really do need to
have much more guidance from them about their interoperable
system, how that is going to work. That is a key piece right
now.
Mr. Latta. And I could turn real briefly, and I do mean
briefly, Ms. Gallenagh, I believe we all share the same goal of
improving the safety and the efficiency of the drug supply
chain, as I mentioned earlier, that we want to make sure that
everyone is safe out there. However, the argument has been made
that what has been proposed to date doesn't go far enough to
satisfy all the elements of a comprehensive system that some
had envisioned. Could you in practical terms talk about how the
elements of this proposal would create a platform upon which to
build future technologies?
Ms. Gallenagh. Absolutely. I think the intent of the bill,
first of all, starts with what we traditionally call an interim
pedigree step, essentially a direct purchase option and a full
pedigree option across the board so that would be uniform
across the country. It sets higher licensure standards to close
those gaps across the States, and I think what we are all
forgetting here when we talk about looking for the perfect
solution is that this draft requires serialization for all
products at the unit level regardless of where they are in the
United States. I think that that alone sets a great foundation
for what the industry can do with the product and with the
systems once they are built. The lot traceability as a phase-in
I think absolutely also lets us know how to work with that
product and the serial numbers in a measured, responsible way
and in a way that is practical for all of the supply chain
partners.
Mr. Latta. Thank you very much, Mr. Chairman, and my time
is expired and I yield back.
Mr. Pitts. The Chair thanks the gentleman. That concludes
the questions of our members. I am sure they will have
additional follow-up questions and we will send them to you. We
ask that you please respond promptly.
I would like to thank all of the witnesses for appearing
today, two excellent panels, a lot of good information, a very
important issue as we move forward, and I remind members that
they have 10 business days to submit questions for the record.
The members should submit their questions by the close of
business on Thursday, May 9th.
Without objection, the subcommittee is adjourned.
[Whereupon, at 12:49 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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