PEDIGREE PAPER AD HOC COMMITTEE
APRIL
30, 2002
Members
Present:
Mike
Stamitoles, Chairman, representing the Board of Pharmacy
Gregg
Jones, Bureau of Pharmacy Services
Sal
Ricciardi, representing PDA
Benny
Rideout, representing PhRMA
George
Sheldon, Attorney General’s Office
Philip
Stalas, representing Florida Retail Federation
Sandra
Stovall, Bureau of Pharmacy Services
Chris
Zimmerman, representing HDMA
Bruce
McCall (representing Jerry Wells), representing AHCA
The
meeting was called to order by Mike Stamitoles, Chairman, and introductions were
made.
The
Chairman read an introductory statement as follows:
A pedigree paper is a common term describing a written statement identifying all previous sales of a drug. It is a chain of custody for the sales of a prescription drug through the wholesale channels. An example is included in your notebook under Tab 2. The pedigree paper is a required document, under certain circumstances, in addition to an invoice / shipping record for a wholesale transaction related to a prescription drug.
Simplistically, the industry claims the way the Florida Department of Health, Bureau of Pharmacy Services interprets the requirement for a pedigree paper in Florida law is incorrect and poses an undue burden on certain segments of the prescription drug wholesale industry. The Bureau of Pharmacy Services claims their interpretation is the only practical interpretation and is necessary to protect the public health because the pedigree paper is instrumental in identifying the introduction of diverted or counterfeit prescription drugs into the legal drug wholesale channels.
Representatives from the Department of Health and the drug wholesale industry will each take some time to give you additional background information.
The Secretary of the Department of Health, Dr. John Agwunobi, has convened this committee to consider all possible options to find one or many mechanisms for industry and regulators to prevent, deter, and detect the introduction of diverted, counterfeit, or otherwise potentially harmful prescription drugs into our healthcare system. Ideally, the recommendations of this committee will protect our drug supply and facilitate detection and prosecution of criminals, while being sensitive to the impact of compliance on the legitimate prescription drug wholesale industry.
This committee is not constrained with determining a correct interpretation of the existing law. Our recommendations may include legislative changes to Chapter 499, the Florida Drug and Cosmetic Act or to other Florida laws.
As a side note, I understand that the federal government is interested in the work and recommendations of this committee. If we are successful in reaching a consensus with viable recommendations that will protect the nations drug supply, which industry supports then the work we do here could be considered at a national level.
The
next items on the agenda were presentations by DOH and
Industry.
Sandra Stovall and Gregg Jones presented the Department of Health background on pedigree papers. The pedigree papers are of value because it provides the history of the movement of the drug. The department is working with law enforcement and is currently involved in several criminal investigations. Emergency suspension orders are being filed, permits are being revoked, and criminal action taken. The pedigree paper is instrumental in making these cases. However, often when a company is put out of business, a spouse or other family member opens another company and requests a permit. They are requested to verify in writing that the spouse/family member will not be involved in the day to day activities. Examples of bogus pedigree papers were shown as well as counterfeit and diverted drug packages. The department demonstrated the break in the pedigree chain when the “status quo” interpretation is applied to a wholesale transaction.
Stephanie
Feldman, Assistant Statewide Prosecutor, Attorney General’s Office, Health Care
Fraud Liaison for the State of Florida concluded the department’s
presentation. She is involved in
the criminal side of an investigation.
“There is a problem – there are rats in the state.” There are wholesalers who are unlicensed
and some licensed. When you have
dirty wholesalers, you end up having to spend millions on drug recalls. Pedigree papers pinpoint where
unlicensed brokers introduce their counterfeit, Medicaid diverted,
and stolen goods. A pedigree paper
is the only way to track a drug.
Anyone can manufacture a pedigree paper. Pedigree papers can lead to the back
door of a secret warehouses where a licensed wholesaler has an off
premises location that agents have been unable to get into. With the help of local police department
providing surveillance on the warehouse, a search warrant was obtained and
criminal action is now pending. The
prosecutor’s office and the Attorney General’s office are extremely committed to
this matter. The only way that law
enforcement and prosecutors can track this illegal activity is with these
pedigree papers. If you say that
pedigree papers only need to list the authorized dealer as the starting point of
a pedigree, we lose the ability to protect the public. There is no way to know what the dirty
secondary wholesalers are doing.
They will no longer have to be creative and invent a company name or some
explanation how drugs can travel 3000 miles in two days. Dirty secondary wholesalers need to be
identified and prosecuted so they can be taken out of the food chain. They will no longer drain the profit
margin from any of the legitimate secondary wholesalers. Without the pedigree papers and without
the way they are constituted and interpreted by the Department of Health and the
Board of Pharmacy [it is actually the Bureau of Pharmacy Services, not
the Board of Pharmacy], they cannot find the people. If they aren’t found, then they will
continue to bleed the Medicaid program dry. Medicaid and the taxpayers cannot afford
this. “Keep the pedigree papers and
strengthen them in any way you can.”
Sal
Ricciardi and Chris Zimmerman made a presentation on behalf of the
pharmaceutical wholesale industry.
Sal
told the Committee that he is the Chief Operating Office of Purity
Wholesale. Purity is the
4th largest privately held corporation in Florida, according to
Florida Trend and the 161 largest privately held company in the United States
according to Fortune magazine.
Chris described his company,
Amerisource.
Sal
and Chris explained to the Committee how the pharmaceutical distribution system
works. They also indicated that
they want the Committee to want to accomplish the goals set out by Secretary
Agwunobi and want to work to improve and protect public health in the State of
Florida in a manner that does not put secondary wholesalers out of
business. They explained that there
are a lot of good secondary wholesalers in the state and around the country and
that secondary wholesalers play a vital role in the pharmaceutical wholesale
industry.
They
indicated that their goal is to help the Department do a better job of
protecting public health and hope to offer some suggestions to accomplish
that. They told the
Committee that they too are concerned with the public health and safety and
about distributions of prescription drugs in the State of Florida and the
entire U.S. At the same time, they
told the Committee that they are concerned that their companies, and many
others, are leaving or may have to leave Florida and, as a consequence, the
state may lose their jobs those companies provide. Sal and Chris told the Committee they
hope the Committee members can work together and to accomplish the Secretary’s
goals and not lose good businesses and jobs within those good
businesses.
Sal suggested the Committee review the licensing criteria, for pharmaceutical wholesalers and that the Department do detailed follow up on all licensing applications, and audit of every wholesale licensed in the State of Florida. He added that there are over 3,000 different manufacturers in the U.S. and over 130,000 pharmacy sites and that drug products can flow through numerous hands before reaching consumers. All parties, after the manufacturer, are required to be licensed wholesalers, thus ensuring that warehousing and handling guidelines are met to protect public health and safety.
Sal
explained that Purity Wholesale has a scanning imaging system and keeps a
scanned image of the packaging for all drug products Purity handles in its
warehouse so when they see the product they compare it to the scanned
image. He suggested that
this type of system may be something wholesalers could utilize to protect
against counterfeit, adulterated or diverted drug products. He also explained that if Purity has a
potential vendor with questionable background, a red flag goes up and that
vendor is not placed on Purity’s approved vendor list.
Sal and Chris explained to the Committee that the pedigree is an important document that needs to remain as a regulatory tool; the issue is how far down the distribution chain should it go.
Chris explained that the reason distributors buy from secondary wholesale market is to stay profitable. He explained that the profit margin on drugs purchased from secondary wholesalers is much higher than that for drug products purchased from manufacturers. He added HDMA is working with FDA and the federal government trying to get bills through Congress to change the PDMA to conform to industry practice on pedigrees.
Mike
asked Sandra to explain the Committee members’ notebooks.
The Committee took a short recess.
The Committee discussed Secretary Agwunobi’s letter of February 18, 2002.
Chris explained that the
history of drug products is not lost when a pedigree is not passed along by a
wholesaler that is an authorized distributor of record for that product invoices
are kept and records for such drugs can be traced to manufacturers. The invoices and pedigree papers for
such drug products are kept in the wholesaler’s corporate office and, in
Florida, on-site at the facility.
Bruce asked how much of the
problem is coming from outside of Florida?
What impact will we have?
Sandra stated that the Department does regulate out of state companies
that do business in Florida.
Robert
Daniti, Assistant General Counsel for the Department of Health, explained the
Sunshine Law and that the committee meetings must be noticed. Further, all discussions by two or more
committee members of issues before the committee must be held in the
Sunshine.
The
Committee discussed Rules of Procedure for the committee meetings and decided to
proceed in an informal manner. The
committee also decided to include an “audience comments” period on all future
agendas.
The Committee agreed that at the May 30 meeting, a representative from FDLE will be asked to attend to make a presentation about the investigative and regulatory process for adulterated, counterfeit and diverted drug products.
The Chairman reviewed some issues and asked the members for additional suggestions to be addressed by the committee. Preliminary issues identified include:
1.
Is
the pedigree paper beneficial?
2.
Is
the cost of complying with pedigree paper requirements
prohibitive?
3.
What
is an authorized distributor of record (ADR)?
How does one become an
ADR?
Impact / involvement of manufacturers in determining who becomes an
ADR.
4.
Should
an ADR ever have to provide (pass on) a pedigree paper?
Should an ADR provide
a pedigree paper if the prescription drug was purchased directly from the
manufacturer?
What about intra-company transfers?
5.
How
far back in the chain should the pedigree paper go?
6.
Should
a pedigree paper go all the way to the end user?
7.
Should
Florida move ahead in implementation prior to implementation of the federal
law?
8.
Is
there something better? Are there
other solutions?
9.
Stricter
regulations / licensing & application requirements / sunsetting of
wholesaler permits
10. Imaging
systems – have demo
11. Bring
manufacturers in to help eliminate counterfeit packaging
12. Bar
coding – lot number & expiration date
13. Nevada
law – need copy for committee & impact on Nevada
14. Should
we consider discussing elimination of preferential pricing / manufacturer’s
special pricing?
15. Any
connection from the material on pedigree papers and charge back
documents?
16. What
should be the extent of a wholesaler’s review of the pedigree paper? (due
diligence?)
17. Evaluate
status quo – explain and show how it works
18. How
does the pedigree paper prevent counterfeiting?
19. How
to get rid of ‘dirty’ wholesalers?
The
following items will be on the May agenda:
FDLE and how using the pedigree paper
Investigative
process
Regulatory
application
Authorized
Distributors
Staff was instructed to
assure that Secretary Agwunobi is provided with the dates and times of future
committee meetings since he has expressed an interested in attending a
meeting.
The
committee meetings will be from 9:00 a.m. until 4:00 p.m. The dates/location for the meetings are
as follows:
Thursday, May 30 – 2585 Merchant’s Row, Prather Bldg., Room
207
Tuesday, June 18 – 2585 Merchant’s Row, Prather Bldg. Room
207
Tuesday, July 16 – 4052 Bald Cypress Way, Room 301
Thursday, August 22 – 2585 Merchant’s Row, Prather Bldg. Room
207
Tuesday, September 10 – 4052 Bald Cypress Way, Room
301
Should
the meeting locations change, all Committee members will be
notified.
Staff of the Bureau of
Pharmacy Services indicated that they would notify members of the public about
the agendas for future Committee meetings and would make the handouts for the
meetings available before the Committee meetings to those requesting
them.
The
meeting adjourned at 12:30.