Speech before
RFID World Conference
Dallas, Texas
Remarks by
Randall Lutter, PhD
March 1, 2006
This text contains Dr. Lutter's prepared remarks. It
should be used with the understanding that some material may have been
added or deleted during actual delivery.
I would like to thank RFID World for this opportunity to speak about the promise
that electronic track and track technologies such as RFID hold for efforts
to fight counterfeit drugs in the United States. Americans are fortunate
in being able to trust that the medicines they receive in hospitals or buy
at their local pharmacies are indeed safe and effective products, approved
by FDA. We are committed to preserving that trust and to keeping fake
medicines out of pharmacies and medicine cabinets. Electronic track
and trace technologies such as RFID can help us honor that commitment.
I serve as co-chair of FDA's recently reconvened Counterfeit Drug Task
Force. My colleague Maggie Glavin, FDA's Associate Commissioner
for Regulatory Affairs, also serves as co-chair.
The Task Force was reconvened last fall by Acting Commissioner Dr. von Eschenbach
because progress has been made towards adoption of RFID and implementation
of an electronic drug pedigree across the U.S. drug supply chain, but more
slowly than FDA had earlier anticipated.
Acting Commissioner Dr. von Eschenbach asked the Task Force to assess the
progress that has been made in adopting electronic track and trace technologies,
and to look at the obstacles that have been encountered and what measures should
be taken to quickly overcome these obstacles. He also asked the Task
Force to address what, if anything, the Agency should do upon the expiration
in December 2006 of the stay of certain provisions in the regulation related
to the Prescription Drug Marketing Act.
The Task Force organized a public meeting in Bethesda, Maryland on February
8th and 9th to address issues that may slow or impede the adoption of electronic
track and trace technologies such as RFID. The Task Force is preparing
a report based on what it learned at the public meeting and from comments placed
in a public docket open to comments post-marked on or before last Friday. Its
report is scheduled to be made public in May 2006.
Today I would like to review with you some of the work of the Task Force,
and how it relates to FDA's general efforts to fight counterfeit drugs. In
these remarks I will talk about
- FDA's recent experience in fighting counterfeit pharmaceuticals,
- Progress to date of the Counterfeit Drug Task Force, and
- Future actions to look for regarding electronic track and trace technologies
to fight fake medicines.
I. FDA's Recent Experience Fighting Counterfeit Drugs
Before discussing steps to improve the integrity of the U.S. drug supply it
is important to note how good it already is. Counterfeit drugs in the
U.S. are quite rare.
- While we have no direct quantitative evidence about the prevalence of
counterfeit drugs, because they so successfully mimic genuine products
and by all accounts are rare, we are confident that the overwhelming majority
of prescription drugs sold in the U.S. are products genuinely approved
by FDA. In contrast, in some countries with less effective
regulatory systems, fake medicines may be a significant share of all medications
so that getting them unwittingly is a major concern of patients and doctors.
- The high confidence that we and the public have about the integrity of
the distribution system for U.S. drug products stems from an intricate
web of federal and state laws.
- Despite this high confidence, FDA
has been concerned that the drug supply is under increasing threat of attack
from ever more sophisticated counterfeiters. There
have been increased efforts to introduce counterfeit drugs into the U.S.
market.
The Agency has witnessed an increase in counterfeiting activities and a
greater capacity to introduce finished dosage form counterfeits into legitimate
drug distribution channels. Illicit wholesale drug diverters and others
in the supply chain provide the window through which most counterfeit drugs
have historically entered legitimate distribution channels.
- The number of newly initiated counterfeit drug cases has risen sharply
from just a few years ago, although still preliminary data from fiscal
year 2005 suggest a decline relative to the peak reported for fiscal year
2004. In fiscal year 2004, FDA's Office of Criminal Investigations
(OCI) initiated 58 counterfeit drug cases, a significant increase from
the 30 cases initiated in FY 2003 and from an average of less than 10 in
the 4 years before 2001.
- Let me stress that these are estimates
of the number of newly initiated counterfeit drug cases being investigated.
And since these are ongoing cases, we have no estimate of the volume of
counterfeit drugs involved in each case--it could vary from dozens to thousands
of prescriptions.
- We believe that the unusually high number of cases in FY2004
is in part due to an increased awareness and vigilance at all levels of
the drug distribution chain. We believe that one factor contributing
to this increased awareness and vigilance is the Counterfeit Drug Report
that FDA issued in February 2004. A second is increased referrals
from, and coordination with other state and federal law-enforcement agencies,
such as the DEA and the FBI, and communications with drug manufacturers.
- The decline from 58 cases in 2004 to 32 new cases in 2005 may be due
partly to a positive deterrent effect of the new 2004 cases on the level
of counterfeiting in 2005. But the decline may also exist
because some new cases, after further research, are found to relate to
the large number of existing ones. In reality we can not identify
the exact causes of changes in the number of new counterfeit drug cases
opened each year.
- Fortunately, most of the counterfeit drugs at issue did
not reach consumers because we focused our resources and developed proactive
investigations. We
believe that this strategy enabled us to identify components of counterfeit
products and interdict finished counterfeit drug products before they entered
retail distribution.
- It is important to note that the number of cases that
OCI has opened is NOT an indication of the prevalence of drug counterfeiting
in the U.S. Nearly
4 billion prescriptions were filled last year. That means a very
large volume of drugs is moving through the supply chain. The sophistication
and precision of some counterfeit copies of legitimate drugs make a reliable
estimate of the number of counterfeits impossible. However,
we believe that existing regulations and the commitments by most supply
chain stakeholders to comply with these rules keep the prevalence of drug
counterfeiting in the U.S. very low.
- Unfortunately, not everyone abides
by the rules. Counterfeit, stolen,
and otherwise fraudulently obtained pharmaceutical drugs can enter legitimate
channels through pre-existing illicit diversion networks. Enforcement
efforts by FDA's Office of Criminal Investigations against these
diverters have resulted in detection and dismantling of counterfeit schemes.
In February 2004, FDA released a report entitled "Combating Counterfeit
Drugs." This comprehensive report highlighted several measures
to better protect Americans from counterfeit drugs. Of particular
interest to us today are measures to secure the movement of the product
as it travels through the U.S. drug distribution chain. In the February
2004 report, we said
- Radio Frequency Identification (RFID) is the most promising
approach to provide reliable and timely track and trace information.
- Adoption and common use of reliable track
and trace technology would be feasible in 2007, and would help secure the
integrity of the drug supply chain by providing an accurate drug "pedigree".
- Electronic track and trace, including RFID, alone is not the solution
to combating counterfeit drugs. A multi-layer approach, using other
technologies to secure the product and packaging, such as holograms, color
shifting inks, etc., increased vigilance and awareness, increased penalties
and State efforts, just to name a few, are also important in this effort.
- Adoption of electronic track and trace technology would help stakeholders
meet and surpass the goals of the Prescription Drug Marketing Act.
For those of you who are not familiar with the Prescription Drug Marketing
Act, it is a law passed in 1987 in response to a number of counterfeit drug
incidents in the U.S. where patients received counterfeit drugs.
- PDMA requires minimum standards for State licensing of wholesale distributors
of prescription drugs and requires unauthorized wholesale distributors to
provide purchasers a statement (also called a pedigree) identifying each
prior sale of the drug.
- In 1999, FDA issued final regulations related to the PDMA -- these defined
the authorized distributor of record as wholesalers with written agreements
with the manufacturer.
- Shortly thereafter, the agency received comments raising a number of concerns
related to the pedigree provisions. Many of the concerns suggested
that there would be an adverse economic impact on wholesalers who have to
provide pedigrees.
- As a result, FDA stayed certain provisions of the final rule, and has continued
to stay these provisions. The current stay, which expires in December
2006, was issued in part to give stakeholders time to adopt an electronic
track and trace technology.
II. Recent Activities of the Counterfeit Drug Task Force
- FDA's public meeting on the Counterfeit Drug Task Force workshop
and vendor display took place on February 8 and 9 and attracted 400 registrants. They
heard both Acting Commissioner Dr. von Eschenbach and Assistant Secretary
for Health Dr. Agwunobi discuss RFID as a way of fighting counterfeit
drugs. The agenda, slides of many speakers' presentations
and the entire transcript are available at FDA.gov in the counterfeit drug
section.
- We were pleased to have senior representatives of some of
the biggest stakeholders in the manufacturer and distribution of pharmaceutical
products, as well as EPC Global.
- During the public meeting we heard vendors, wholesalers, and some manufacturers
agree that the RFID pilot projects conducted to date showed that providing
real-time electronic pedigrees is already feasible in a production environment
with single wholesalers. But no pilot projects were presented that
provided an RFID based pedigree for a drug product sold by one wholesaler
to another before being sold to a retail pharmacy.
- We heard some vendors describe
hybrid technologies, such as two-dimensional bar codes combined with RFID
that might provide both identification and electronic pedigrees even without
RFID being universally adopted.
- At this point we are reviewing comments to
the docket and drafting a report to meet the Acting Commissioner's
May deadline.
- While we are working on that report we continue to believe
that electronic track and trace technologies like RFID could offer substantial
advantages both to FDA in its effort to ensure the protection of the drug
supply and to industry.
- RFID, along with software solutions, could create
a chain of custody for FDA-approved products and could thwart efforts
by would-be peddlers of diverted or fake medicines, leaving them unable
to sell to unsuspecting U.S. wholesalers, pharmacists and, most importantly,
patients.
- Pharmacists at drug stores and hospitals could be more certain
of the safety and efficacy of drugs they are dispensing.
- This certainty
could come not merely because the label conveys FDA approval but because
an up-to-date electronic database confirms that the particular package was
tracked at each stage of the distribution chain, from the FDA-approved manufacturing
facility, to the dispensing pharmacist.
- Further, the electronic track
and trace system that will provide this certainty could offer such savings
to private firms that the benefits of greater certainty about safety and
efficacy are realized without any untoward increase in the costs of medications
at a retail level.
- This final point is important. While fighting
counterfeit drugs is a key part of FDA's mission to ensure drug safety,
we acknowledge important public concerns about the cost of medications and
the implications of high costs for access to drugs. Based on discussions
with some drug companies and retailers, we believe that RFID could offer
significant savings to manufacturers, wholesalers and retailers alike from
better inventory management.
III. RFID Outlook
Stakeholders interested in watching the development of RFID technology for
medicines generally have a lot of activities to look forward to. They
should
- Look for our report to appear in May. It will review obstacles to
faster adoption and measures that might be taken to overcome such obstacles.
- They should also look for an FDA announcement about the stay of the PDMA
pedigree rule later this year.
- Finally, they should look for additional more extensive pilot projects
by drug companies and distributors that wish to reduce counterfeiting.
More generally, stakeholders should look for additional actions by industry
to adopt electronic track and trace. A confluence of two separate
interests, both safety concerns and business concerns, will carry forward these
actions.
- As stated so well by Assistant Secretary Dr. John Agwunobi 2 weeks ago,
our interest in electronic track and trace technologies is primarily about
safety. My family, like yours, walks into a pharmacy to get a prescription
filled and then takes it home and gives it to the kids. My family like
yours does not worry about whether the drugs are fake and we are grateful
that we do not have to worry. But we at FDA worry whether we will have
done enough to avert a tragedy that might grab headlines and TV time.
- But apart from this safety concern, which some businesses share, adopting
RFID may simply be very good business for drug makers and distributors alike. It
is entirely possible that one day we will all wake up and we will open the
newspaper and splashed across the headline of that newspaper will be tragic
event affecting a friend or member of our community. This person will
have ingested something they thought was a legitimate medication but in fact
was counterfeit and dangerous and toxic. On that day, as CNN is running
the story, some companies will be able to stand and say that the tragedy
didn't occur for their drugs because they were protected throughout
the distribution chain. A brand will stand out while others will be
tainted. Manufacturers ought to think about this eventuality at least
as hard as we consider the risks to safety posed by failure to adopt appropriate
measures to fight counterfeits.
Thanks again for giving me this opportunity to speak. I have a few minutes
for questions.
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