Thursday, February 21, 2013


Are politics to blame for the current drug shortage crisis, which according to a recent Associated Press Review of the health industry, including interviews with experts, discovered at least one death per month being caused by drug shortages in hospitals? Or, is the reason health care providers have to scramble to find drugs for their patients more fundamental than that? It’s inevitable that when a problem exists and persists that someone or something is blamed. There has been plenty of finger pointing going on lately as various experts, politicians and government officials try to explain why the United States is in such a dire situation with our drug supply. Some blame the current administration for the shortage and others blame the manufacturers for lack of quality control. And that's just the tip of the blame game.

A fairly recent congressional committee report blamed the FDA, stating the FDA has failed to ensure that enforcement and compliance activities are conducted in a manner that does not create unnecessary shortages of critical drugs. Although the shortages have been attributed to a myriad of factors from a lack of raw materials to increased demand, information obtained by the Committee on Oversight and Government Reform shows that the crisis was largely sparked by actions of the FDA.

Drug manufacturers' feet have also been held to the fire. Ideally, there would be an early warning system for impending drug product shortages that would provide ample opportunity to prepare for all implications of the shortage. Manufacturers are required to give the FDA six months’ advance notice only when they plan to stop producing a single-source, medically necessary drug. However, even this requirement has been criticized as being “soft,” since “medically necessary” is not statutorily defined, so, the manufacturer is given free rein to decide whether or not notification is required, and the manufacturer isn’t penalized in any way if it fails to provide the required notification. Therefore, manufacturers are criticized for providing little or no notice of an impending drug shortage or providing little advance notice and no estimate of the projected duration. Thus, the FDA lays the blame at drug manufacturers.

Now, according to a recent article in MedScape Today, GPOs (Group Purchasing Organizations) are to blame for drug shortages. According to Physicians Against Drug Shortages, the blame can be laid firmly at the feet of GPOs, who state in this article that "The real reason for the current situation is that there is no free market for drugs, medical devices, or healthcare supplies in the United States."

The GPO blame for drug shortages is upheld by Phillip L. Zweig, MBA, executive director of Physicians Against Drug Shortages. However, it should be noted that Zweig previously worked as communications director for Retractable Technologies (the maker of safety needles) and as a consultant for Masimo (the leading maker of pulse oximeters). Although, Zweig states he has had no financial ties to the medical-device industry for nearly 5 years, and has been working entirely on a pro bono basis to uncover the underlying causes of the drug shortage, and states related expenses come out of his own pocket.

S. Prakash Sethi, PhD, Baruch College, The City University of New York, corroborates Zweig's remarks by stating "GPOs are a major, if not the primary, contributor to the market distortions in the healthcare industry... Through exclusive contracting, which has given GPOs effective monopolistic control of this industry, they have contributed to product shortages and disincentives for legitimate producers to manufacture and stock essential drugs." (It's interesting to note that a 1987 Medicare anti-kickback “safe harbor” provision exempted GPOs from criminal prosecution for taking kickbacks from healthcare suppliers in the form of administrative fees, or “pay-to-play” arrangements. Physicians Against Drug Shortages want the “safe harbor” provision repealed.)

Curtis Rooney, president of the Healthcare Supply Chain Association (HCSA ), in what may be considered a rebuttal to Zweig and Sethi, said that "the group purchasing industry is the most transparent sector in healthcare, and we have a longstanding commitment to promoting openness, accountability, and the highest ethical standards in business practices."

The issue regarding GPOs has prompted Congressional action. In a letter sent November 2012, Ed Markey (D-Massachusetts), Henry Waxman (D-California), John Dingell (D-Michigan), Frank Pallone (D-New Jersey), Diana DeGette (D-Colorado), and Anna Eshoo (D-California) asked the Government Accountability Office to investigate whether contracting practices by GPOs are a driving cause of drug shortages.

With Congress involved, I wonder where this will end up. Do you believe Congressional actions will result in a more “free market”, or more regulation? As always, your comments are welcome, and may be the basis for a follow up post on this subject.

Here's to better solutions, 
Dave Bystrom

Thursday, February 7, 2013


Pedigree (noun): The recorded purity of breed of an individual or strain; a register recording a line of ancestors.

You may be asking, "What does a pedigree have to do with my pharmacy and the chain of events that get the drugs I need to me?" I'd say, "Plenty."

In 2007, California legislators issued The California Pedigree Law, which requires pharmaceutical and biotech manufacturers, wholesalers, and pharmacies to generate electronic pedigrees whenever a change in ownership occurs from the sale of drugs to any of their trading partners. Prescription drug manufacturers who want to continue offering their products to patients within California after 2015-2016 must add unique serial numbers to each drug package and start an electronic drug pedigree.
These pedigrees must track each drug at the smallest package or immediate container level and each item must have a unique serial number a register recording a line of ancestors.  

 The most significant rationale for this law is to detect the introduction of illegitimate drugs (counterfeit, stolen, up-labeled, diverted, etc.) into the legitimate supply chain as early as possible, preferably at the very first transaction. These laws accomplish this by requiring companies buying drugs within the supply chain to receive the full supply chain history of those drugs at the time of the purchase (contained in a “pedigree”), and, most importantly, by requiring them to verify the legitimacy of those prior transactions. In California, this verification can only be performed through the use of digital signatures.

California is the only state that requires both of those things but most manufacturers are forced to treat the California state law as if it applies nationwide. That’s because most drug manufacturers sell through distributors in the United States and so they have no way of knowing which drug package will end up being shipped into California and which ones will not. Voila! Pharma manufacturers end up having to serialize and create a pedigree for every single package that enters the U.S. supply chain.

Will the pharmaceutical supply chain be “safer” or will the counterfeiters still be able to penetrate it ; do you think the cost of implementation and maintenance of such a system will be passed on to the consumer? Stay tuned.

Here's to better solutions, 
Dave Bystrom