California E-Pedigree Phase-In Bill Moving Through State Legislature

A bill is moving through the California legislature that would delay yet again the implementation of the state's electronic pedigree mandate, offering a phased implementation schedule with a requirement that all drugs come into compliance by 2015.

Instead of implementing the state e-pedigree rules by Jan. 1, 2011 - the current deadline set after the latest two-year implementation extension (¹ (Also see "FDA Begins Review Of E-Pedigree Options Just As California Delays Its Plan" - Pink Sheet, 31 Mar, 2008.), p. 20) - the new proposal sets a phased-in approach under which manufacturers self-select 20 percent of their product line to meet e-pedigree requirements by 2011, 50 percent by 2013 and all products by 2015.

The bill, S.B. 1307, is being sponsored by Sen. Mark Ridley-Thomas, D-Los Angeles. Ridley-Thomas has a history of championing health care issues focusing primarily on addressing the health care needs of the underserved as well as quality of care issues. This is his first foray into pharmaceutical legislation.

Should the bill be signed into law, as of Jan. 1, 2015 wholesalers will be prohibited from selling, trading or transferring a prescription drug without providing a pedigree and be prohibited from acquiring drugs without receiving a pedigree. Come July 1, 2015, pharmacies will be prohibited from selling, trading or transferring a prescription drug without providing a pedigree as well as be prohibited from acquiring prescription drugs without receiving a pedigree.

The percentage of products required for each implementation stage can be based, at the manufacturer's discretion, on either unit volume, product package type or drug product family.

Firms Can Select Drugs For Pedigree

Giving manufacturers the ability to self-select the product lines that would be covered runs counter to federal legislation that has been introduced by Reps. Steve Buyer, R-Ind., and Jim Matheson, D-Utah, which calls for HHS to develop criteria to determine whether a drug is at high risk for counterfeiting, as well as an initial list of drugs that will be flagged as high risk. These drugs would be the first to be required to be given unique identifiers (² (Also see "House Bill Requires Standard Numerical Identifiers For Drug Tracking By 2010" - Pink Sheet, 21 Apr, 2008.), p. 19).

California is not pursuing a risk-based approach for a variety of reasons, including questions about what constitutes high risk, litigation that could arise from a high-risk designation and potential consequences to manufacturers if their drug gets flagged as high risk.

"A number of [brand name drug manufacturers] revealed their concern about having a 'bad list' of counterfeit drugs available to the public and counterfeiters," a summary document of the bill revealed. "Those manufacturers do not want their products to be publicly tainted as being at risk for counterfeit out of concern that it might erode consumer confidence and give rival drug manufacturers a competitive market advantage."

Ridley-Thomas' staffer also cited cost to the state as a factor, noting it does not have the proper resources to examine the more than 70,000 National Drug Codes to make a proper risk determination.

However, some drug manufacturers favor an approach that limits e-pedigree requirements to drugs known to be at risk of counterfeiting.

"The pedigree law should be phased in, beginning with drugs where law enforcement has verified cases of counterfeiting," Pfizer said in a May 6 letter to Ridley-Thomas. "This will allow resources to be focused on medicine where there is an actual counterfeit threat. It will also allow time for a system to be created that can be utilized by all in the supply chain."

Bristol-Myers Squibb in a June 12 letter said it understood the need for the serialization of high-risk products, but the company does not believe "that all pharmaceutical products need to be serialized. We believe the serialization of low-risk products will simply lead to higher-cost pharmaceutical products and higher health costs with little to no benefit to patients."

At a recent Congressional hearing a Johnson & Johnson executive said e-pedigrees and the accompanying track-and-trace technology would aid law enforcement in fighting counterfeiting.

Generics Also Subject To Pedigree

The California bill makes a point of saying that generic drugs will be subject to the pedigree requirements, to keep them from becoming a new counterfeiting target. "Once it becomes very difficult for bad actors to counterfeit pedigree, branded drugs, they will turn to those drugs that are easier to counterfeit, leaving those without pedigrees more susceptible to counterfeit or adulteration and jeopardizing patient health," the summary document states.

Generics, however, will have a separate timetable for meeting the e-pedigree requirements. The staffer said that an amendment will be introduced setting a 2015 deadline for generics to meet e-pedigree requirements. The deadline was chosen to give consideration to the costs of implementing an e-pedigree solution and an expectation that costs would decrease over time, allowing for a lower financial burden on generic drug manufacturers.

But the Generic Pharmaceutical Association is opposed to the measure. In a June 20 letter to Mike Eng, D-Monterey Park, chairman of the California Assembly's Business and Professions Committee, GPhA President and CEO Kathleen Jaeger cited IMS Health figures showing that in 2007, generic drugs accounted for 65 percent of total prescriptions, but only 16 percent of total dollars spent on prescription drugs.

"The affordability of generic medicine not only provides enormous savings for consumers and the health care system, but also makes the vast majority of generic drugs the least attractive targets for counterfeiters," Jaeger wrote in the June 20 letter. "For this reason, it is a waste of valuable health care dollars to require the application of expensive electronic pedigree tags to products that flow in a secure chain of distribution and are unlikely to ever be targeted by counterfeiters."

The bill provides for a specific list of drugs that would not require a pedigree - drugs that are labeled for veterinary use only, medical gases and intravenous solutions. Drugs already in the supply chain prior to the enactment of the e-pedigree requirements will be grandfathered from meeting e-pedigree requirements.

One thing absent from the original regulation or the amendments being considered is defining the technology for e-pedigree tracking. The staffer said California will adopt whatever FDA determines is the best track-and-trace technology. The agency has received comments on potential solutions (³ (Also see "RFID’s Possible Interaction With Biologics Queried By Biogen, Pfizer" - Pink Sheet, 16 Jun, 2008.), p. 16).

- Gregory Twachtman ([email protected])