November 1, 2005
Thank you for the opportunity to testify about FDA’s efforts regarding counterfeit prescription drugs. Let me emphasize that the overall quality of drug products that consumers purchase from United States pharmacies remains high. The American public can be confident that these medications are safe and effective. FDA cannot, however, offer the same assurance to the public about the safety and quality of drugs purchased from sources that are outside the U.S. regulatory system. My testimony today will focus on FDA’s efforts to further secure the safety of our nation’s drug supply.
The Counterfeit Drug Problem
Counterfeit prescription drugs are illegal and unsafe. Many are visually indistinguishable from authentic drugs, and they pose a potentially serious health threat.
FDA is concerned that the drug supply is under unprecedented attack from a variety of increasingly sophisticated threats. This disturbing trend is evident in the increased efforts to introduce counterfeit drugs into the U.S. market.
Although FDA believes domestic counterfeiting is not widespread, the Agency has witnessed an increase in counterfeiting activities and a more sophisticated ability to introduce finished dosage counterfeits into legitimate drug distribution channels. Illicit wholesale drug diverters provide the window through which most counterfeit drugs have historically entered legitimate distribution channels.
In fiscal year (FY) 2004, FDA’s Office of Criminal Investigations (OCI) initiated 58 counterfeit drug cases, a significant increase from the 30 cases initiated in FY 2003. We believe that this is in part due to an increased awareness and vigilance at all levels of the drug distribution chain as a result of FDA’s Counterfeit Task Force’s, February 18, 2004, final report entitled, “Combating Counterfeit Drugs: A Report of the Food and Drug Administration.” In addition, this increase in investigations is due to increased referrals from and coordination with other state and Federal law-enforcement agencies and communication with drug manufacturers.
Fortunately, most of the counterfeit drugs at issue did not reach consumers because we focused our resources and developed proactive investigations that enabled us to identify components of counterfeit products and interdict finished counterfeit drug products before they entered domestic distribution. Counterfeit, stolen, and otherwise fraudulently obtained pharmaceutical drugs all enter legitimate channels through pre-existing illicit diversion networks. OCI enforcement efforts targeting these diverters also have resulted in detection and dismantling of counterfeit schemes. Without the intimate knowledge of diversion borne of extensive investigative experience it would be difficult, if not impossible, to effectively combat pharmaceutical counterfeiting.
Although the number of counterfeit drug cases has increased and the threat to the public health is real, most of the suspect counterfeits that we discovered in FY 2004 were found in smaller quantities, compared to those found in FY 2003.
Counterfeit drugs may be contaminated or contain inactive ingredients, incorrect ingredients, improper dosages, sub-potent or super-potent ingredients. As a result, patients may be at risk for serious adverse health consequences. For example, Procrit, an injectable, sterile drug used by cancer and AIDS patients, was counterfeited when the drug was replaced with non-sterile tap water, which could have caused a severe infection of the bloodstream.
In another counterfeiting incident, counterfeiters labeled aspirin tablets as Zyprexa, a drug for schizophrenia and bipolar disorder. This could have been particularly dangerous for patients who are aspirin-sensitive or aspirin-allergic, or who have bleeding disorders. In addition, patients who took the counterfeit drugs no longer received appropriate treatment for their illness.
Counterfeiters also have been known to use lower-strength active ingredients in their products. As a result, patients receive lower than expected doses of drug, leading to ineffective treatment and therapeutic failure.
While the rate of counterfeiting in the U.S. is difficult to estimate, on a global scale, counterfeiting is a widespread problem and affects both developing and developed countries. The World Health Organization (WHO) has reported that up to 25 percent of medicines consumed in poor countries are counterfeit or substandard. It has been reported that up to 50 percent of drugs for sale in some countries are counterfeit. Counterfeit drugs are most prevalent in developing countries.
This problem is not confined to counterfeiting the drug itself. Today, everything from product packaging to labeling and containers can be readily purchased, created or counterfeited, and counterfeiters and diverters take advantage of this opportunity. Moreover, the skill and ingenuity demonstrated by counterfeiters and diverters have improved significantly. As a result, more than ever before, well-organized criminals have the ability to exploit our regulatory system and profit at the expense of public health.
Prescription Drug Marketing Act
During the 1980s, at least two high profile cases prompted further congressional action. In one instance, over two million unapproved and potentially unsafe and ineffective Ovulen-21 birth control tablets from Panama were distributed throughout the U.S. They were falsely imported as American goods returned. In another case, a counterfeit version of Ceclor, a widely used antibiotic at the time, entered into the U.S. drug distribution system from a foreign source. These concerns prompted Congress to pass legislation to correct this threat. After investigating the cases, Congress determined that the safeguards in the prescription drug distribution system were insufficient to prevent the introduction and retail sale of substandard, ineffective, or counterfeit drugs. Further, Congress found that a wholesale drug diversion sub-market had developed that prevented effective control over, or even routine knowledge of, the true sources of drugs.
Thus, in 1987, the Prescription Drug Marketing Act (PDMA) was enacted to further ensure the safety and effectiveness of prescription drug products and to safeguard the American public from the risk of counterfeit, adulterated, misbranded, sub-potent, or expired drugs. Key provisions of the PDMA include:
In 1999, FDA published final regulations implementing the PDMA. Shortly thereafter, the Agency received comments objecting to provisions concerning the pedigree requirement. These comments included letters and petitions and other communications from industry, industry trade associations, and Members of Congress. In addition, FDA received a petition requesting that the Agency issue a stay to suspend the implementation of the section of the final rule requiring: 1) a written agreement with a manufacturer establishing that a drug wholesaler was an authorized distributor, and 2) that unauthorized distributors provide a pedigree showing all prior drug sales extending back to the manufacturer. FDA received a second petition from the Small Business Administration raising these concerns and asserting that the rule would have severe economic consequences on more than 4,000 small businesses.
In response to these concerns, FDA delayed the effective date of certain regulations relating to written authorization agreements and drug pedigrees until October 1, 2001. We took this action to give the Agency time to evaluate the possible consequences of implementing these regulations and to further evaluate the issues at stake. These concerns included the high cost and logistics of maintaining a pedigree and the inability, in some cases, to obtain a transaction history from prior authorized distributors traceable back to the manufacturer, thus calling into question the usefulness of the pedigree. FDA was told that taking steps to address these regulations, using traditional methods, could impose substantial cost at a time when access to affordable drugs is a major concern.
In June 2001, FDA submitted a Report to Congress required by the FDA Appropriations Act for 2001. Our report noted that in order for secondary wholesalers to comply fully with the pedigree requirements, Congress would have to amend section 503(e) of the Food, Drug, and Cosmetic (FD&C) Act to make the pedigree requirement universal, thus enabling so-called secondary wholesalers to obtain the transaction history from all prior purchasers of the drug, including those currently designated as authorized distributors. To allow Congress to consider the information contained in the Agency’s report, and in light of the problems associated with written authorization agreements and drug pedigrees, in 2001, 2002 and 2003, FDA has annually delayed the effective date of these provisions of the PDMA rule.
In February 2004, concurrent with the release of FDA’s Counterfeit Drug Task Force Report, FDA further extended the stay of these provisions until December 2006. As further discussed later in this testimony, FDA was encouraged by the comments and information that it received from drug supply chain stakeholders that an electronic track and trace system would be in place in the supply chain by that date. This electronic system would create a de facto pedigree that followed the product from the place of manufacturer through the U.S. drug supply chain to the final dispenser. If developed properly, this electronic pedigree could be used to meet the statutory requirements of the PDMA to provide a pedigree under certain circumstances. To allow stakeholders to continue to move toward implementing widespread use of an electronic pedigree and focus their efforts, the effective date of the relevant provisions were delayed until December 2006, a date that stakeholders believe was adequate to achieve the goals.
Counterfeit Drug Task Force
As part of this effort, the Task Force met with several Federal agencies, such as the Secret Service, U.S. Customs and Border Protection, the Bureau of Engraving and Printing, and the Department of Justice, as well as various private sector stakeholders. The Task Force also reviewed reports prepared by, or on behalf of, Federal and state governments, and heard from the public, including such stakeholders as pharmaceutical manufacturers, wholesale distributors, pharmacy associations, consumer groups, academicians, independent consultants, and manufacturers of anti-counterfeiting measures.
FDA released the Task Force’s final report on February 18, 2004, entitled, “Combating Counterfeit Drugs: A Report of the Food and Drug Administration.” This report and a May 2005 update can be found on FDA’s website at: www.fda.gov/counterfeit.
The comprehensive report highlights several measures that can be taken to better protect Americans from counterfeit drugs. These measures rely on public and private sector efforts to address six critical areas:
Technology: Securing the product, packaging, and movement through the supply chain
Track and Trace Technology
Over the last year, stakeholders have made tremendous progress in the development and implementation of EPC/RFID. This is a huge endeavor that requires close collaboration among all constituents of the pharmaceutical distribution system. We have observed and supported this collaboration, and we continue to support it today.
A critical piece of this undertaking is the development of standards for the type of technology to be used and the systems for storing and sharing pedigree information. This activity will ensure that the electronic track and trace technologies adopted are comprehensible and data communication systems are interoperable. We have been present at and actively participated in many industry, standard-setting, and government meetings and workshops where implementation issues were discussed.
We received a number of questions over the past year regarding RFID and regulatory issues from members of the supply chain. In response to these common questions, on November 15, 2004, we issued a Compliance Policy Guide for implementing RFID feasibility studies and pilot programs as an important and essential step in moving this technology forward. The Compliance Policy Guide presents FDA’s current thinking regarding several labeling, current good manufacturing practices, and other regulatory issues that may arise by affixing an RFID tag to a drug product for a feasibility study or pilot program. Several members of the supply chain simultaneously announced their intention to move forward with pilot programs (joint programs across the supply chain or within an individual company) that will involve the tagging of products susceptible to counterfeiting. In fact, three major pharmaceutical companies said that they will incorporate an RFID tag into at least one of their products by the end of 2005. We have been in close communication with participants in these and other pilot studies and provided input when appropriate.
In November of last year, we also announced the creation of an internal, cross-agency “RFID Workgroup.” This group is charged to monitor adoption of RFID in the pharmaceutical supply chain, pro-actively identify regulatory issues raised by the use of this new technology, and develop straightforward processes for handling those issues. We believe that the workgroup will improve communication with members of the supply chain on RFID related issues and will facilitate both the performance of pilot studies and the collection of data needed to formulate policy.
It is important to gain a better understanding of the effects of RFID on drug products, particularly biological products because they may be more susceptible to change in their environment. We developed a protocol for companies to follow for studies examining the impact of radio-frequency on drug and biological products. Also, a laboratory within FDA’s Center for Devices and Radiological Health is conducting analyses of the heating and the radio-frequency field strengths induced in certain liquid pharmaceuticals by some RFID systems. To date, we have not received much data looking at the effects on drug and biological products and are looking at several options for how to obtain this information.
FDA continues to play an active role in supporting public and private sector efforts toward developing an “electronic safety net” for our drug supply, including the adoption and widespread use of reliable track and trace technology by 2007. We continue to facilitate and monitor standard-setting activities, including efforts by epcGlobal (an entity that has taken a lead role in developing standards) to establish standards for numbering systems, chip frequency, electronic pedigree, and data-sharing and security. In addition, we continue to encourage and foster research on the use and potential impact of RFID on drug and biological products.
In the Report, we said that in order to facilitate the use of authentication technologies on or in approved products, we would consider publishing a draft guidance document on notification procedures for making changes to products, their packaging, or their labeling. We decided not to issue guidance in the past year because we would like to gain additional experience working with companies in their application and use of authentication technologies so the guidance can have appropriate general applicability.
We continue to work with companies and organizations to facilitate use of authentication technologies in products, labeling, and packaging.
Regulatory Oversight and Enforcement
We are pleased with the progress stakeholders, standard-setting bodies, and software and hardware companies have made thus far toward implementing an electronic pedigree for drug products. We recognize that there have been, and continue to be, challenges along the way. Although we are optimistic that this progress will continue, and that widespread track and trace technology may be feasible by 2007, we are concerned that the private sector may not meet this and related goals stated in the Report.
We are closely monitoring the progress of widespread use of electronic pedigrees as we assess whether to lift, maintain, or pursue other options regarding the stay of implementation of the provisions in the PDMA final rule.
NABP last year also announced the creation the Verified-Accredited Wholesale Distributors™ (VAWD) program as a complement to the Model Rules. Applicants for VAWD accreditation undergo a criteria compliance review, licensure verification, an inspection, background checks, and screening through NABP’s clearinghouse. It is intended to provide assurance that the wholesale distribution facility operates legitimately, is validly licensed in good standing, and is employing security and best practices for safely distributing prescription drugs from manufacturers to pharmacies and other institutions. Indiana was the first state to pass a law that requires VAWD accreditation for all drug wholesale distributors who do business in Indiana.
In the Report, we said that there would be great value in the creation of a national list of drugs most likely to be counterfeited based on factors that are likely to contribute to counterfeiting risk. The Model Rules called for such a national list as a starting point for application of pedigree requirements in the short term so that there would not be 50 different state lists. In December 2004, NABP convened a National Drug Advisory Coalition, which included industry and state and national government representation. FDA has served in an ex-officio role on this Coalition. The Coalition developed criteria for inclusion or removal from such a list and created a national list that includes 31 drugs. FDA applauds NABP on this accomplishment.
We recognize that states have implemented and are considering provisions requiring a pedigree (in some cases electronic) for drug products. We are pleased that these efforts complement Federal requirements and believe that rapid and uniform implementation of a pedigree that starts at the point of manufacture and accompanies the drug product until it is dispensed would be beneficial. As stated in the Report, adoption and enforcement of the Model Rules by all states would have the greatest impact on protecting the nation’s drug supply.
In the Report, we also said that increased penalties would help deter counterfeiting and more adequately punish those convicted. As we continue the efforts on the Federal level, it is equally important that states adopt stronger penalties (like those outlined in the Model Rules) so the penalties associated with counterfeiting drugs are commensurate to the significant threat they pose to the public health.
Secure Business Practices
It also is important to note that many of the secure business practices outlined in these trade associations’ best practices guidelines are included in the Model Rules for Licensure of Wholesale Distributors for adoption by the states.
Increasing Penalties for Counterfeiters
Heightened Vigilance and Awareness
Counterfeit Alert Network In the Report, we stated that we would create a Counterfeit Alert Network (CAN) and partner with health professional and consumer groups to provide timely and effective notification to their members or constituents of a verified counterfeit event. By signing the CAN co-sponsorship agreement, organizations become CAN partners and agree to deliver time-sensitive messages and information on specific counterfeit incidents and educational messages about counterfeits in general, as well as information about how and when to report suspect counterfeit drug products. In the past year, we formed the CAN and currently 13 organizations have signed the CAN co-sponsorship agreement.
Also, in the Report, we stated we would develop internal guidelines for the informational contents of outgoing FDA messages that would be useful to communicate a counterfeiting incident to CAN partners. In the past year, we have developed these guidelines, in the form of a template, in collaboration with CAN partners. This template will allow for the efficient preparation and delivery of uniform counterfeit alert messages for partners to further disseminate.
Streamline FDA’s Internal Rapid Response to Reports
Educating Consumers and Health Professionals
We also set up a webpage on FDA’s website for consumers to obtain information about counterfeit drugs, FDA initiatives, and educational information. This website can be found at www.fda.gov/counterfeit. In addition, the National Consumers League developed a highly informative website containing useful consumer information about counterfeit drugs.
In the past year, FDA partnered with the National Health Council (NHC) to jointly create and disseminate educational messages on counterfeit drugs. NHC is a private, non-profit organization of over 100 national health-related organizations. Under this partnership, messages to raise awareness of the dangers of counterfeit drugs and how to avoid them will be developed and tested to measure their effectiveness. In addition, products will be created to deliver these messages to the target audience.
In addition, FDA is developing educational messages to inform pharmacists about how to recognize counterfeits, counsel patients on how to minimize the risk of exposure to counterfeits, and on how to notify FDA if a counterfeit drug is suspected. These efforts are in the early stages.
In the Report, we said that we would re-launch our safe online buying practice campaign. In March 2005, we launched a new campaign with tips for consumers on how to buy drugs safely on the Internet and minimize their risks of getting a counterfeit or otherwise substandard drug.
In the coming months, we plan to take steps to increase dissemination of the PSAs and counterfeit drug messages. We also will continue to update and post relevant information on our counterfeit drug webpage. We also plan to continue to work with the NHC to finalize educational messages and develop a dissemination strategy for those messages. We are currently working with pharmacy organizations to finalize educational messages for pharmacists and develop a strategy to disseminate these messages.
OCI, within FDA, continues to work with foreign law-enforcement agencies directly and through Interpol on individual international counterfeit cases.
OCI also has provided training on counterfeit drugs to foreign law-enforcement, customs and judicial officers from various parts of the world through the U.S. Patent and Trademark Office, Intellectual Property Enforcement Academy. In addition, in the past year, several individual countries have sought FDA’s insights, advice, and/or training on combating counterfeit drugs. Although the approaches that we outlined in the Report were specific to the U.S. drug distribution system, many of the principles outlined in the Report are applicable generally.
Recent Significant Counterfeit Cases
Participants in this scheme conspired to purchase and sell counterfeit, misbranded and illegally imported drugs. Foreign versions of Lipitor and Celebrex were smuggled into the U.S. from South America and re-sold after being re-packaged to conceal the true origin of the drugs. Counterfeit Lipitor also was manufactured in South America and then smuggled into the U.S. where it was co-mingled with the genuine foreign Lipitor and sold in the U.S. In addition, participants conspired to buy, sell and traffic almost eight million dollars worth of stolen Glaxo Smith Kline and Roche drugs, using fake pedigrees to launder the drugs and thereby concealing that they were stolen. There also were charges related to the sale of counterfeit Procrit, as well as counterfeit and misbranded Serostim and Neupogen. Procrit is an injectable drug used in the treatment of anemia and Neupogen is an injectable drug used by cancer patients to stimulate the production of white blood cells in order to decrease the incidence of infections.
Counterfeit Lipitor and Viagra
Counterfeit Viagra, Cialis, and Lipitor
Counterfeit Risperdal and Zyprexa
Counterfeit Drugs from Mexican Border Pharmacies
OCI coordinated with FDA regulatory authorities who issued two Talk Papers (July 30, 2004, and May 10, 2005) alerting consumers to the counterfeit drugs. OCI and FDA regulatory authorities also established contact with the Mexican Federal Commission for Protection from Sanitary Risks to provide them with details and samples of the counterfeit drugs so they could take appropriate action in Mexico.
Genapharm.com (Counterfeit Human Growth Hormone)
Counterfeit Labeled Pharmaceuticals
World Express Rx
Monitoring the Tamiflu Supply
Despite the progress made, there remains a viable and concrete threat of counterfeit drugs entering the U.S. drug distribution system. We must all continue to work together to expeditiously pursue the measures outlined in the Report to further protect the safety and security of the U.S. drug supply.
I would like to thank the Subcommittee for this opportunity to testify today on this important issue. I would be pleased to respond to any questions.
Last Revised: November 2, 2005