After Heparin: - The Pew Charitable Trusts

—Chapter 3—
3.3 Barriers to drug tracking and oversight
of distribution
3.3.1 Limits of current drug tracking requirements
Drug distribution occurs nationally or regionally, but wholesalers are registered and regulated at the state
level, usually through the state’s board of pharmacy. The FDA and the U.S. Drug Enforcement Administration
investigate suspected illegal activity by wholesalers and pharmacies when it crosses state lines,
but states are responsible for most compliance oversight. Both state and federal investigative resources
are limited. Controlled drugs, it should be noted, are subject to separate requirements (see sidebar 4).
In the early 2000s, wholesaler licensure requirements in many states were minimal, presenting attractive
opportunities to individuals willing to abuse the system for profit. In particular, Miami Dade County,
Florida, was associated with a number of high-profile diversion cases in the early 2000s (see case study
7). To the dismay of law-abiding secondary wholesalers, insufficient regulation, combined with large
financial incentives, encouraged the proliferation of bad actors, seriously eroding trust in the secondary
market.
To address this criminal activity, many states have endeavored to tighten their wholesaler licensure
requirements, in some cases based on best-practice standards established by the NABP. 515 As of February
2011, 29 states (as well as the federal government) have established pedigree requirements, according
to HDMA. 516 To address shortfalls in drug tracking, the laws require entities involved in distribution
to maintain “pedigrees,” or transaction histories, of the products they sell. (The intent of a pedigree
requirement is to make the concealment of illicit activity more difficult by increasing transparency, and
to support enforcement of responsible purchasing by wholesalers and pharmacies. Weak or nonexistent
tracking systems make it difficult to find stolen merchandise and to implement recalls, when necessary.
For example, the California Department of Public Health estimated that 7,832 patients in the state were
exposed to adulterated heparin after the recalls were issued because of communication failures among
wholesalers, hospitals, hospital pharmacies and the manufacturer. 517
Despite efforts at the state level, weaknesses in regulation remain. Varying state laws make compliance
more complicated for companies operating in more than one state. Wholesalers licensed in states with
weaker oversight may still sell nationally, often without having to meet additional, possibly more stringent,
requirements of other states. Most state pedigree standards allow for paper-based documentation, *
* Colorado, Oregon and California are the only states that require electronic pedigrees. Colorado’s requirement only applies to transactions outside of the
“Normal Supply Chain”—a direct pathway from manufacturer to authorized distributor to pharmacy.
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Pew Health Group