After Heparin: - The Pew Charitable Trusts

—Chapter 3—
3.3.2 The Prescription Drug Marketing Act
In 1988, Congress passed the Prescription Drug Marketing Act (PDMA) to improve regulation of drug
distribution and address drug diversion. Key PDMA provisions include:
■ a prohibition of sale or trade of any drugs purchased by hospitals and clinics; 527
■ a requirement that HHS establish guidelines for states on minimum wholesaler licensure requirements,
528 which have since been codified through regulations; 529 and
■ a requirement that entities involved in pharmaceutical distribution maintain pedigrees for the
products they sell. 530
A 1992 amendment to the PDMA further expanded the scope of information required in pedigrees. 531
These measures sought to increase transparency during distribution and to make concealment of illicit
activity more difficult. However, the PDMA pedigree requirement is limited in scope, in that it applies
almost exclusively to secondary wholesalers while exempting wholesalers that have ongoing purchasing
agreements with pharmaceutical manufacturers. 532 These “authorized distributors of record” (ADRs)
include the three major national wholesalers (McKesson Corp., Cardinal Health and AmerisourceBergen)
and the approximately 30 regional wholesalers. * Requiring pedigrees only from secondary wholesalers
assumes that diverted or counterfeit product never moves through the hands of major distributors.
History has shown this not always to be the case (see case study 7). Moreover, when ADRs purchase
product from entities other than manufacturers (although this is now rare), their exemption from tracking
requirements effectively clears any existing pedigree from the record—a data gap that can conceal
problematic distribution histories from subsequent purchasers.
In addition to these weaknesses, meaningful implementation of the pedigree provision has been indefinitely
delayed by a court-ordered injunction—the result of a lawsuit filed by secondary wholesalers. 533
The PDMA requires all entities engaged in distribution, except manufacturers and ADRs, to provide
transaction histories along with the drugs they sell. 534 Early implementation guidance from the FDA
suggested that these pedigrees reflect transactions back to the manufacturer or the ADR. 535 The FDA’s
stated intention regarding this guidance was that distributors should report transactions back to the ADR
that originally purchased the drugs from the manufacturer. 536 In the years after PDMA passage, however,
many smaller non-ADR wholesalers tracked back only to the most recent sale by any authorized distributor.
537 The FDA attempted to remedy this gap in pedigree requirements in a final rule issued in 1999
that required transaction histories back to the manufacturer. However, this move met with opposition
by smaller wholesalers who asserted that they would not be able to comply because the exemption of
authorized distributors rendered it impossible for them to obtain reliable sales histories all the way back
to the manufacturer. 538 The effective date of the 1999 rule was delayed five times by the FDA, and when
* Based on the approximate number of regional or specialty wholesalers that are members of HDMA, which represents primary distributors.
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Pew Health Group