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Trade Groups Call for Tighter Drug Distribution Rules

By Mary Pat Flaherty and Gilbert M. Gaul
Washington Post Staff Writers
Thursday, December 4, 2003

The two major trade groups representing pharmaceutical wholesalers are issuing new guidelines intended to combat criminal activity and counterfeiting in the nation's drug distribution system by toughening requirements for the middlemen between drugmakers and retail outlets.

Both groups call for stricter and more uniform state licensing of wholesalers, enhanced inspections, and improved record-keeping to more fully disclose a drug's path from manufacturer to patient.

The industry guidelines come in the wake of rising problems with sales of counterfeit and adulterated drugs. A task force at the federal Food and Drug Administration is currently studying how to enhance the security of the drug-supply chain.

The Healthcare Distribution Management Association, which is based in Reston and represents many of the largest wholesalers, and the Pharmaceutical Distributors Association, based in Boca Raton, Fla., and representing smaller firms, called for the FDA to back their guidelines.

A federal rule that would have tightened drug distribution has been in limbo for 15 years, in part because the wholesaler industry said it would impose burdensome paperwork and bankrupt small companies.

Both the HDMA and the PDA yesterday said they continue to believe the federal rule needs refining and should await the development of improved technologies, such as electronic tracing devices on pharmaceuticals. But both groups said that if the FDA adopted the trade groups' guidelines as formal "guidance," it would reduce distribution problems.

"Under these guidelines, wholesalers can better determine who to -- and not to -- do business with," said Sal Ricciardi, president of the PDA.

William K. Hubbard, FDA senior associate commissioner, yesterday characterized the PDA recommendations as "a step forward. In most cases, they embody the kinds of questions that we believe wholesalers should be asking of their suppliers and the kinds of requirements that wholesalers should be imposing on people."

In October, a series of articles in The Washington Post disclosed lax licensing and monitoring of pharmaceutical wholesalers that allowed numerous rogue operations to open shop, obtain discounted pharmaceuticals through illicit means and then resell them at huge profits. Drugs had been stored in trunks of cars and trailers in blazing heat, and drugstores and patients who ultimately bought them often had no idea where they originated, The Post found. The gaps in the distribution system allowed counterfeits into the market.

The HDMA called for all states to inspect a wholesaler applicant's site before issuing a license. Most states do not perform an inspection before issuing a license, HDMA staff found.

Both groups called for wholesalers to tighten their scrutiny of prior sales records, particularly when an invoice shows three prior sales. The HDMA also called for more extensive sales histories on high-priced items particularly attractive to counterfeiters. The enhanced histories would be tracked back to a drugmaker. Current rules say that the sales are tracked only to a manufacturer's authorized distributor, which can mask some sales.

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