In a recent action, the Food and Drug Administration (FDA) moved to abolish, or at least significantly pare back, its drug pedigree requirements. Specifically, on July 14, 2011, FDA proposed to remove a section of the Prescription Drug Marketing Act (PDMA) regulations requiring that, prior to any wholesale distribution of a prescription drug for which the seller is not the manufacturer or an authorized distributor of record (ADR), the seller must provide to the purchaser “a statement identifying each prior sale, purchase, or trade of such drug,” starting with the manufacturer. This identifying statement, commonly known as a “pedigree,” must include certain information about the drug and each prior sale, purchase, or trade.
FDA explained in the preamble to the proposed rule that it was taking this action “in response to longstanding issues, including an injunction currently in effect, regarding the application of and compliance with this requirement.” The Agency also announced that, while the rulemaking is pending, it intends to exercise enforcement discretion regarding the statutory pedigree requirements of the PDMA and certain related regulatory requirements, provided that pedigrees issued by wholesale distributors identify the last ADR that handled the drug and the date of the transaction, as well as the names and addresses of all unauthorized distributors that handled the drug subsequent to that ADR and the corresponding dates of those transactions.
The PDMA of 1987, which was modified by the Prescription Drug Amendments of 1992, amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) to impose restrictions and requirements relating to various aspects of the marketing and distribution of human prescription drugs. The primary goal of the PDMA is to prevent the introduction and sale of substandard, ineffective, and counterfeit drugs in the U.S. drug supply chain. Among other things, the PDMA requires each wholesale distributor “who is not the manufacturer or an authorized distributor of record” to provide a pedigree to the purchaser “identifying each prior sale, purchase, or trade of such drug (including the date of the transaction and the names and addresses of all parties to the transaction).”
The term “authorized distributors of record” is defined in the PDMA as “those distributors with whom a manufacturer has established an ongoing relationship to distribute such manufacturer’s products.” Conversely, the term “unauthorized distributor” is defined in common sense terms in the regulations implementing the PDMA as “a distributor who does not have an ongoing relationship with a manufacturer to sell or distribute its products.” The regulations further define the term “ongoing relationship” as “an association that exists when a manufacturer and a distributor enter into a written agreement under which the distributor is authorized to distribute the manufacturer’s products for a period of time or for a number of shipments.”
Soon after the PDMA was enacted in 1988, FDA issued a letter that provided guidance to industry on the practical effects of the PDMA, pending the issuance of implementing regulations. The 1988 guidance letter stated, among other things, that the required identifying information regarding all transactions in the chain of distribution may begin either with the manufacturer or with the ADR. As explained in FDA’s 2001 Prescription Drug Marketing Act Report to Congress, the Agency assumed at that time that the ADR would be the initial distributor to which the manufacturer sold the drug, not a distributor that purchased the drug farther down the distribution chain.
The 1999 Final Rule Adding Section 203.50(a)
In March 1994, FDA issued a proposed rule that was intended to implement certain provisions of the PDMA, including the drug pedigree requirements. The proposed rule provided that the pedigree for sales by unauthorized distributors must include “the business name and address of all parties to each prior transaction involving the drug, starting with the manufacturer.” One commenter objected to the proposed pedigree requirement, arguing that it would require an unauthorized distributor to provide information about all prior sales, purchases, or trades of the drug, beginning with the manufacturer, even in circumstances in which the seller from which the distributor received the drug was an ADR and did not provide a pedigree for the drug. The comment recommended revising the proposed rule to require that the pedigree reach back only to the last ADR. In a final rule issued in December 1999, FDA declined to revise the proposed rule, opining that the PDMA itself requires that the pedigree identify “each prior sale, purchase, or trade of the drug,” and “[t]here is no indication in [the] PDMA that Congress intended that the statement include only those sales, purchases, or trades since the drug was last handled by an authorized distributor.”
As a result, the December 1999 final rule codified section 203.50(a) of FDA’s regulations, which provides that before the completion of any wholesale distribution by a wholesale distributor of a prescription drug for which the seller is not the manufacturer or an ADR, the seller must provide to the purchaser of the drug a pedigree that reaches back to the manufacturer, commonly known as a “complete” pedigree. As required by that regulation, the complete pedigree must include the proprietary and established name of the drug, dosage, container size, number of containers, the drug’s lot or control number, the business name and address of all parties to each previous transaction involving the drug (beginning with the manufacturer), and the date of each prior transaction.
Following publication of the December 1999 final rule, FDA received numerous comments on, and held several meetings to discuss, the implications of the requirement that unauthorized distributors provide a pedigree showing all prior transactions going back to the manufacturer. In particular, unauthorized distributors explained that they were not able to provide such information because many of the drugs they distribute are purchased from ADRs, which are not required to provide pedigrees and, frequently, are unwilling to voluntarily provide them. Representatives of unauthorized distributors argued that implementation of this requirement would result in as many as 4,000 unauthorized distributors going out of business, as they would be effectively prohibited from distributing many drugs to their customers.
As a result of these comments and a petition for stay of action submitted to FDA in May 2000, the Agency issued several delays of the effective date of certain provisions of the December 1999 final rule, including section 203.50, until December 1, 2006. In late 2006, a group of unauthorized distributors filed a lawsuit against FDA seeking, among other things, a preliminary injunction against implementation of section 203.50 of the regulations. In RxUSA Wholesale, Inc. v. Department of Health and Human Services, 467 F. Supp. 2d 285 (E.D.N.Y. 2006), the district court granted the preliminary injunction, which decision was affirmed on appeal. See RxUSA Wholesale, Inc. v. Department of Health and Human Services, 285 Fed. Appx. 809 (2d Cir. 2008).
The district court’s preliminary injunction, as affirmed by the U.S. Court of Appeals for the Second Circuit, enjoined FDA from implementing the requirement in section 203.50(a) that a pedigree identify each prior sale of a drug back to the manufacturer and the requirement that specifies the types of information that must be included in the pedigree. Under the district court’s order, unauthorized distributors are required to provide pedigrees that only include information regarding transactions going back either to the manufacturer or to the last ADR that handled the drug. In addition, as required by the PDMA, all pedigrees must include the dates of the listed transactions and the names and addresses of all parties to those transactions. Following this litigation, FDA announced that it would exercise enforcement discretion in a manner consistent with the court’s opinion nationwide, effectively extending the injunction beyond the Second Circuit’s jurisdiction.
The Current Proposal To Remove Section 203.50(a)
FDA’s current proposal to remove section 203.50(a) would abolish the requirement in the regulations that a pedigree identify each prior sale or trade of a drug back to the manufacturer. In addition, the proposal would remove from the regulations the requirement that a pedigree include the information specified in section 203.50(a). While this proposed rulemaking is pending, FDA has stated that it intends to exercise enforcement discretion with respect to all of the requirements of section 203.50(a), though “FDA encourages wholesalers to include the drug, dosage, container size, number of containers, and the drug’s lot or control number(s) in the pedigree as well” (emphasis added).
Although the statutory pedigree requirements would remain in effect, FDA has expressed its intention to exercise enforcement discretion and not initiate enforcement action against wholesalers that fail to provide a pedigree that reaches back to the manufacturer or that fail to include the information specified in the regulation, provided that the pedigree identifies the following information: (1) the last ADR that handled the drug and the date of the transaction, and (2) the names and addresses of all unauthorized distributors that handled the drug after the last ADR, and the corresponding dates of those transactions.
In the preamble to its proposed rule, FDA emphasized that its proposal “should not be interpreted to mean that there is not a problem with counterfeit and diverted drugs.” The Agency emphasized it will continue its efforts to implement the pharmaceutical security provisions set forth in section 913 of the Food and Drug Administration Amendments Act of 2007 (FDAAA), which created new section 505D of the FD&C Act and requires FDA to develop standards and identify and validate effective technologies for securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs. Section 505D directs FDA to consult with specific governmental and industry stakeholders to prioritize and develop standards for identification, validation, authentication, and tracking and tracing of prescription drugs.
The statute also requires that, no later than 30 months after the date of enactment of FDAAA, the Agency must develop a “standardized numerical identifier” (SNI) to be applied to a prescription drug at the point of manufacturing and repackaging at the package or pallet level, sufficient to facilitate the identification, validation, authentication, and tracking and tracing of the product.
Section 505D(b)(2) further directs the Agency to harmonize SNIs, to the extent practicable, with international consensus standards for such identifiers and specifies that an SNI applied at the point of repackaging be linked to the SNI applied at the point of manufacturing. In March 2010, FDA issued its final guidance on SNIs for prescription drug packages, intended as “the first of several guidances and regulations that FDA may issue to implement section 505D of the Act.”
The 505D(b) provisions are intended to complement and strengthen FDA’s other requirements to secure the drug supply chain, including the nearly obsolete pedigree requirements.
D. Kyle Sampson is a partner in the Washington, D.C. office of Hunton & Williams LLP (www.hunton.com) and a member of the Firm’s Food and Drug Practice. He can be reached by email at email@example.com. Brian J. Wesoloski is an associate in the Firm’s Food and Drug Practice. He can be reached at firstname.lastname@example.org.