White House gets serious about counterfeit pharmaceuticals

Pharmaceutical CommercePharmaceutical Commerce - March/April 2011

Intellectual property coordinator assembles enforcement agencies, proposes legislation on Homeland Security to focus on supply chain threats

As a follow-on to last summer’s 2010 Joint Strategic Plan on Intellectual Property Enforcement, the White House Intellectual Property Enforcement Coordinator (IPEC) office has published a new report, the Counterfeit Pharmaceutical Inter-Agency Working Group report, outlining a series of steps already taken, or about to, to address counterfeiting and diversion, and making recommendations to Congress to pass new laws, or enhance existing ones, to secure the supply chain.

The Working Group brings together numerous commercial and regulatory agencies, including Customs and Border Patrol, Immigration and Customs Enforcement, DoJ, FDA to develop coordinated policies. Perhaps most significantly, it will also bring the Homeland Security Investigations division of the Dept. of Homeland Security into the picture—that office has 69 offices in 47 countries to investigate security threats.

Already, CBP has opened a Pharmaceutical Center of Excellence and Expertise, a pilot to study threats and share information. In December, IPEC announced the initiation of a voluntary effort by key Internet service providers and e-commerce financial services, GoDaddy, Google, Microsoft, Yahoo!, Network Solutions, Nuestar, eNom, PayPal, MasterCard, Visa, and American Express, to restrict Internet pharmacy sales and to promote use of the Verified Internet Practice Sites (VIPPS) “white list” of legitimate online pharmacies. DoJ has an internal IP task force to address counterfeit and trademark violations, including counterfeit pharmaceuticals. International efforts with the World Customs Organization, Interpol and others will be continued.

The Inter-Agency report has 20 legislative recommendations, several of which are specific to pharmaceuticals:

  • Require importers and manufacturers to notify the FDA and other relevant agencies when they discover counterfeit drugs, including the known potential health risks—something that is done voluntarily now;
  • Extend the Ryan Haight Act’s definition of “valid prescription” (and its telemedicine exemption) to the Federal Food, Drug and Cosmetics Act (FFDCA) to drugs that do not contain controlled substances;
  • Adopt a track-and-trace system for pharmaceuticals and related products;
  • Provide civil and criminal forfeiture under the FFDCA, particularly for counterfeit drug offenses (something that, in some cases, is only a misdemeanor now), while increasing statutory maximums for drug offenses and IP theft.

IPEC was already on record, through last year’s report, in support of mandated track-and-trace systems. But it got only cursory mention in this report, and it seems that IPEC is divided over the potential intrusiveness of the system: “We note the importance of addressing privacy concerns, such as deciding where the information resulting from this system will be housed and who will have access to it.”

“I look forward to working with Congress in the months ahead to consider and pass these legislation recommendations,” wrote Victoria Espinel, IPEC leader, in an announcement tied to the report. “It is critical that we work together to make sure that we are doing all we can to combat these crimes.”

Retail pharmacy checks out

Response from inside the Washington Beltway was fairly quick to the report. In a note concerning counterfeit pharmaceuticals generally, John Castellani, president of PhRMA, stated that “Efforts to crack down on counterfeit medicines have certainly helped shield Americans from counterfeits, but more must be done,” and cited the increased criminal penalty recommendations of the IPEC report.

But over at NACDS, president John Anderson quickly jumped on the track-and-trace recommendation: “NACDS does not support the report's proposal to mandate a 'track and trace' system in the U.S. The operational processes surrounding a mandated track and trace system are still under development and cannot achieve their desired purpose at this time, which will prove extraordinarily costly for pharmacies and other supply chain operators.” Back in 2008, as the California Board of Pharmacy was pushing for its statewide e-pedigree system, NACDS sponsored a study (conducted by Accenture) that highlighted the costs of a track-and-trace system, but skipped over the potential benefits. Notwithstanding NACDS’ participation in industry supply-chain security forums, it appears that its stance has not changed.

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