By Rick Dana Barlow

Last in a two-part series

As the U.S. Food and Drug Administration marshals the healthcare industry to help it inoculate the supply chain from fake drugs and medical supplies it’s clear that the federal agency’s efforts will lead to at least one promising and much-needed side effect. Providers and suppliers will have to overcome their historical reluctance to work together and adopt and implement technologies they have rebuffed for years.

Two months ago the FDA released its final recommendations for combating counterfeit products. The investigational report called for stronger regulatory oversight and enforcement by state agencies and licensing boards, stiffer criminal penalties for counterfeiters, secure and sound business practices of buyers and sellers and increased consumer awareness and education. And it also supported the development of an effective reporting system, called the Counterfeit Alert Network, linking the FDA to healthcare professionals and the public whenever a counterfeit product is identified.

The agency topped its short list of best practice recommendations with new technology adoption and implementation.

One of the common themes the agency has reinforced over the last year or so is that there is no single "magic bullet" technology that will ensure supply chain security long-term. However, it looked to other industries for examples and strategies and centered its opinion on a combination of "rapidly improving track and trace" and "product authentication" technologies as a reliable solution.

Among the most promising approaches is radio frequency identification (RFID) tagging of products by manufacturers, distributors and retailers to replace paper record-keeping requirements, commonly referred to as pedigrees. These pedigrees, which can be falsified or incomplete, typically accompany product lots. "Quite frankly, a pedigree only goes back to the last authorized distributor," said Greg Yonko, senior vice president of purchasing for McKesson Corp.’s pharmaceutical division (San Francisco). "It’s not a living document like a deed to your house. This is something that somebody could basically print out. There’s no way to validate whether the information on it is correct." Some of the more high profile counterfeit cases involved counterfeit pedigrees.

With RFID tags serving as new electronic pedigrees, suppliers, retailers and providers will be able to track and trace the movement of drugs from production to dispensing. They also can use them for managing inventory and reducing costs to offset the technology investment expense. The FDA indicated that industry-wide adoption of RFID tags is "feasible by 2007."

Thomas McGinnis, R.Ph., Pharm.D., director of pharmacy affairs at the FDA, and chairman of the agency’s Anti-Counterfeiting Task Force, favors the RFID electronic chip, which is about a third of the size of a grain of rice and carries a unique ID number. "That’s going to be the cornerstone of any type of track-and-trace technology," he said. "That’s the 21st century solution to this problem. And it’s got to start with the manufacturer."

Affixing an electronic chip to product packaging will help suppliers and providers to ensure product safety and improve inventory management, according to McGinnis. In fact, by 2005, Wal-Mart is requiring its top 100 suppliers to put chips on cases and pallets at their warehouses or those cases won’t be received, McGinnis said. "If companies don’t comply they won’t be able to sell to that retailer," he said. "That’s like the kiss of death for some of these guys so they will drive this faster than the FDA could." The Healthcare Distribution Management Association is requiring the same thing of its suppliers by the end of 2005.

"We think this chip will be the 21st century pedigree but that most likely won’t happen until 2005 at the earliest, and 2007 at the latest," McGinnis said.

Staying one step ahead

Another recommendation involves product authentication technologies embedded in a drug or its label. These include color-shifting inks, holograms, fingerprints, taggants, threads and chemical markers that should be applied randomly to various products identified as popular counterfeiting candidates. That way they foil the abilities of counterfeiters to adapt and circumvent those measures designed to stop their activities.

"We feel very strongly that the answer is a layered approach that combines bar coding with RFID and other overt and covert means like holograms," said Debbie Murphy, life sciences marketing development manager for Zebra Technologies Corp. (Vernon Hills, IL). "A counterfeiter will eventually unlock the secret you have to give them a moving target."

Ken Kleinberg, healthcare global market leader for Symbol Technologies Inc. (Holtsville, NY), marveled at the complexities of staying one step ahead of counterfeiters. "It’s an interesting dynamic," he said. "The larger the prize, the more the bad guys want to succeed in their efforts. Unfortunately, that creates more complex holes in the system and the more complex the holes are the costlier it is to fix them." For example, counterfeiters can photocopy one-dimensional and two-dimensional bar codes that are subsequently usable, and can manipulate RFID chips if they’re not embedded in closed containers or protected by tamper-proof shielding, he added.

Developing the list of drugs likely to be counterfeited shouldn’t be too difficult, McGinnis noted. In fact, the FDA has been able to spot a distinct pattern in the types of drugs being faked and offered this profile: "High-priced drugs in high demand with a couple of years left on their patent life so there wasn’t going to be generic competition in the near future seemed to be the common thread of drugs counterfeited during the last two-and-a-half years," McGinnis said.

"Let’s be honest," said Robert Betz, Ph.D., executive director of the Health Industry Group Purchasing Association (HIGPA) (Alexandria, VA), "in healthcare, the technology component is weak. It’s our weakest link." But Betz added that technology isn’t the final solution to the issue.

Digital imaging and high-tech printers facilitate counterfeiting efforts to duplicate or manipulate labeling and packaging found online. "These labels and packages look so good and so genuine," McGinnis said. "I’ve been practicing pharmacy for 25 years and I can’t tell the difference."

The Internet also provides an open and virtually unregulated (but that’s changing) marketplace for counterfeiters to shop for and buy drug-making equipment, such as "tableting machines," and then to sell finished product to bargain-hunting retailers and consumers who don’t want to pay full price or simply want larger discounts.

It’s everybody’s problem

To ensure product quality and safety in the supply chain, suppliers and providers must centralize their purchasing activities and properly investigate their business partners, which is "probably the easiest, fastest and most effective way to mitigate the problem," Yonko said. Controlling the process controls the problem.

"Everybody along the supply chain basically has to use due diligence and have similar processes in place to ensure that [counterfeit] product doesn’t enter into the system," he continued. "It’s not just a McKesson issue or an issue for one of the three top wholesalers. It filters down throughout the whole system."

Betz points to the food industry as a model because suppliers track products down to the individual unit. "We can’t do that in healthcare yet," he said. "What’s the difference? All of the participants in the food supply chain have taken ownership of the problem. We need to have buy-in across the board. We have to come down on the side of patient safety. We’ve started this conversation and hopefully we’ll come to the same conclusion as the food industry."

Meanwhile, Murphy cites United Parcel Service (UPS) as a more familiar example. "If you buy something on the Internet today and ship it via UPS you can follow that package wherever it goes," she said. "UPS is in control. The pharmaceutical supply chain isn’t that way. Trading partners aren’t sharing data like they should and there’s no way to track bar codes all the way through the entire chain. The healthcare industry has to come together and develop data standards to make this happen."

McGinnis and Yonko agreed that any technology-based anti-counterfeiting measures should begin with the manufacturers and be supported by distributors, retailers and providers. "If the manufacturers don’t put bar codes on every product it’s very difficult for us to implement something system-wide that can be used," Yonko said. "[Manufacturers] have been slow to embrace that technology. But all of the participants within the supply chain will have to embrace the technology at some level. If manufacturers and distributors could work together to implement RFID then that would pretty much guarantee products going into the retail channel are safe and effective." McKesson participates in Jumpstart, a coalition of wholesalers and retailers exploring and testing RFID chips affixed on packages.

Adopting and implementing new technologies as a counterfeiting prevention strategy may draw accolades in theory and on paper, but it may not easily pry open pocketbooks. The promise of cost savings on the back end has become something of a trite justification for massive investments on the front end. So who should have to pay for these safety assurances?

For more information: http://www.fda.gov/oc/initiatives/counterfeit/report02_04.html