Judge Aims to Halt FDAs E-Pedigree

While the ruling does not impact RFID specifically, it is expected to slow down adoption in the pharmaceutical industry.

The Prescription Drug Marketing Act set to go into effect in January 2007 that would require a prescription drug "pedigree" or electronic paper trail on distributed pharmaceuticals, has hit another snag.

A federal lawsuit filed by eight pharmaceutical wholesalers against the FDAs Department of Health and Human Services, has been answered with a preliminary injunction issued Dec. 8.

The result: The FDAs pedigree mandate has been stayed, potentially for years, as the courts work through the legal claims of the wholesalers.

The ruling, while it may not cause huge ripples in the pharmaceutical industry itself—many distributors are already complying with state pedigree mandates—could have a chilling impact on the proliferation of RFID in the pharmaceutical industry.

While it has not mandated a specific technology that companies have to use to determine a drugs pedigree, the FDA strongly supports the use of RFID.

In its 2004 report "Combating Counterfeit Drugs," the FDA stated that the 2007 expiration of PDMAs stay—which had been enacted several years after its 1988 introduction—should coincide with the widespread adoption of RFID for track and trace in the pharmaceutical supply chain.

That prediction was overstated, by a long shot, given that there are still a number of issues to overcome with the use of RFID.

Standards, including a universal frequency for reading RFID data, have not been clearly defined; and the big three pharmaceutical distributors—McKesson, Cardinal and AmerisourceBergan—are still in early pilot phases with RFID.

/zimages/1/28571.gifClick here to read more about RFID in the pharmaceutical industry.

With the lack of a mandate pushing further RFID pilots, adoption could slow down substantially.

"We knew it was going to be an ongoing struggle to get to where RFID needed to be in the pharmaceutical industry, and hopefully the case will resolve quickly. But it could take years," said Michael Liard, research director at ABI Research in Oyster Bay, N.Y.

"Were going to have further delays in the market in terms of adoption in the overall market—supply chain as it relates to pharmaceuticals."

Laird pointed out that there is still a chance that companies may move ahead with individual initiatives.

"We are going to miss the opportunities with those that had to move forward to meet the mandate."

In her brief outlining the case—and granting the injunction—Judge Joanna Seybert of the United States District Court, Eastern New York, pointed out that for the most part, both authorized and unauthorized wholesale distributors already provide pedigree information back to manufacturers (primarily through bar-code initiatives).

The injunction then "simply maintains the status quo and the current practice in the industry," until a trial is held.

But it also backs up the plaintiffs stance that the PDMA mandate, if implemented now, would cause irreparable harm.

The issue is that those distributors forced to comply under the mandate would not be able to meet their obligation as the act is currently written.

The concept behind the PDMA is to protect against drug counterfeiting and other egregious drug proliferations by showing where wholesale distributors are obtaining their drugs. But the mandate only requires unauthorized distributors to provide a drug pedigree back to the manufacturer.

Authorized distributors (who receive authorization from the manufacturers) are not required to trace a drugs source. Since secondary distributors often purchase from authorized wholesalers, thousands of unauthorized distributors would, in effect, be unable to comply with the mandate, according to Seyberts brief.

"To allow the rule to go in effect may prevent over 4,000 smaller, unauthorized distributors from distributing drugs to their customers, and may put them out of business," Seybert wrote.

She said it could also "drastically change the way prescription drugs are distributed in this country and ultimately affect the cost to the consumer in terms of insurance premiums and prescription drugs."

As an attorney representing pharmaceutical companies, Jayne Juvan, with Benesch Friedlander Coplan & Aronoff LLP, has been following the PDMA situation closely. She said she believes the case could be a long time in the making.

"Weve seen cases like this take years," said Juvan, in Cleveland, Ohio.

"The state could put more pressure on the FDA to change. A lot of factors come into play. It depends on the way the FDA views [the injunction]. If they feel the plaintiffs have a strong likelihood of success, they could introduce new legislation.

"Or it could go through the district court level and be decided relatively quickly. But then there are appeals. From there it could make its way up to the Supreme Court, but I dont know that the court would take the case. It all takes several years to play out."

The companies that filed the suit against the FDA include: RX USA Wholesale, Surgical Co., Biologicals, Services, Hygen Pharmaceuticals, Medical, Mika Pharmaceuticals and Stat Pharmaceuticals.

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