		The perfect pharmaceutical product would be a pill or injection that, once taken, has a near-immediate beneficial effect. The disease disappears; the condition improves and quality of life is demonstrably upgraded; and the beneficial effects are experienced by nearly all patients. The biopharma industry has known for many years that these perfect therapies are not easily obtained. A large part of the industry deals with situations where some of the patients, some of the time, get better; or where there is a cacophony of voices recommending one therapy over another.

, funded by the innovator drug companies, but focused on patient interactions. The very term is in dispute; some prefer some variation on “coordinated care” or “integrated services.” Another aspect of the concept is to manage the complexities of reimbursement, especially for expensive drugs for chronic conditions. A fully equipped hub handles patient intake and benefits investigations, oversees drug administration (which might involve a doctor’s office, an outpatient clinic, a home health service or a hospital), and strives to keep the patient on therapy—medication adherence.

		Veterans of the pharma industry have seen this before: the run-up to “disease management” that occurred during the 1980s and 90s, culminating, arguably, with the acquisition of pharmacy benefit management firms in the early 1990s—and fading from the scene a decade or so later with divestitures of those PBMs and related services. Health economics studies showed that the combinations did not result in clearly identified health improvements. There was friction between manufacturers and the rest of healthcare&mdash;pharmacists and medical doctors and payers never got comfortable with the conflicting goals of selling more drugs and managing patients’ lives.

		There are clear signs that the picture is considerably different now. Especially with high-cost specialty pharmaceuticals and their attendant copays, reimbursement is not solely in the hands of the payers; hub service providers strive to match up patients with sources of financial support, and work closely with some patient-advocacy groups. Equally significantly, the complexity of many therapies, with 

, and with the trend toward self-administration, means that hubs can fill a gap between the provider and the coordination of services.

		The clearest test of how hub services will lock in as a part of biopharma’s routine activities will be the extent to which the services demonstrate improved outcomes. The ability to do that is spotty, but all parts of healthcare—payers, providers and biopharma manufacturers&mdash;have a common goal.

		With our first Hub Services report, we plan to track this evolution closely.

	Editor’s note: With our new cover treatment, we’re honored to feature 

, president of the Healthcare Distribution Management Assn., the association of primary drug wholesalers.  Our goal is to continue to bring attention to the key business and policy partners of the biopharma industry in future issues. Tell us what you think!

Articles

The perfect pharmaceutical product would be a pill or injection that, once taken, has a near-immediate beneficial effect.

Getting to the 'hub' of the matter

Fig. 1. Hub vendors place themselves as the interface between the manufacturer and the other components of prescription delivery to patients; but in many cases, the hub is internal to a specialty pharmacy—or even the manufacturer

	A thought experiment: Picture, if you will, the discovery and development of a new continent. Where would the towns or settlements be located? One set of priorities would be military protection (well-defended forts); another would be rapid exploitation of, say, natural resources. Where would highways or train tracks or airports be established? And, fast forward a decade or a century, how does the resulting landscape appear, with thriving cities and towns, or with withering outposts or empty buildings?

	That’s one way of looking at the rapidly evolving landscape of the biopharmaceuticals marketplace, especially as specialty pharmaceuticals become a more central part of the market terrain. Specialty pharmaceuticals are changing the dynamics of drug distribution as manufacturers, payers and providers jockey for controlling positions in the process of managing the healthcare of patients. When a new drug, representing a first-of-its-kind treatment for a disease, enters the market, the manufacturer has a controlling interest. But as competing products—and, make no mistake, the specialty arena is becoming more and more competitive&mdash;appear, the dynamics change to a complex interplay of mandated step therapies, preferred providers, patient outcomes and manufacturer countermeasures.

	Enter hub services as one of the mechanisms by which manufacturers can keep a grip on the marketplace (Fig. 1). “Hubs” have been around for over a decade, starting out as “reimbursement hubs,” usually provided as a service by manufacturers to help patients and providers navigate the process of obtaining permission to use, and reimbursement for, expensive specialty therapies. Industry observers look to pioneering efforts by Genentech and Genzyme, when some of their earliest biotech products entered the marketplace. Along the way, there has been the growth of specialty pharmacies (as the preferred dispensing point for many specialties), the growth of medication-adherence and similar patient follow-up services, and the evolution of patient assistance programs (PAPs) to combine insurance payments (when available) with qualified financial assistance and copay programs, and care coordination (necessary for drugs that, for example, require an infusion center along with office care). The range of specific services is large—and growing (Fig. 2).

Fig. 2. The range of hub services. Source: Occam Health

	The “hub services” term is not universally recognized, although that is changing rapidly. Sandy Robinson, VP of reimbursement and product commercialization at Avalere Health (Washington, DC), prefers the term “comprehensive patient support services”—which is in line with a common refrain throughout the specialty pharmaceutical distribution environment: “At the end of the day, all these complexities should boil down to one thing: how the marketplace can engage to provide better patient support,” she says. “Better patient support should result in better outcomes, lowering costs for healthcare and improving patient lives.”

	Dan Steiber, a partner at D2 Pharma Consulting (St. Charles, MO) refines that message even more: “If you take care of the patient, the business will grow.”

	All of this is about to take a quantum leap as the Affordable Care Act, which will bring millions more consumers into healthcare coverage, kicks in next year, putting an added emphasis on getting specialty distribution and hub services right. “I expect that we’ll see a repeat of when Medicare Part D went live,” says David MacLeod, a VP for program development at inVentiv Health (Burlington, MA), which is in the process of building out a hub services offering in its Patient Access Solutions group. During the first year of Medicare Part D, reimbursements to pharmacists were slowed; there were disconnects between where pharmaceutical inventories had been stockpiled, and where pharmacies needed deliveries, and generally, significant confusion on the part of patients who weren’t sure what was free (subsidized by the federal government) and what was in the “doughnut hole,” and needed substantial copays. All that confusion settled out fairly quickly, but the process took its toll on harried pharmacists, anxious patients and confused physicians.

SPECIALTY PHARMA, HUBS AND THE COLD CHAIN

						Logistics can be a critical part of specialty distribution, and cold chain is a critical element to that type of logistics. The reasons are simple: many specialty products are biologics and/or injectables, and their relatively high value means that a mishandled drug is a cost to both the healthcare system and the manufacturer. Pharmaceutical Commerce publishes an annual Cold Chain Sourcebook that forecast, in 2013, that the overall cold chain market is growing at double the rate of conventional pharma products, and will reach $288 billion (out of a $1.3-trillion) global biopharma market in 2017.

						Typically, cold chain drugs are required to be kept between 2—8°C, and when in transit, are packaged in insulated containers with gel packs that keep the drug within temperature for a set period of time. Some drugs have a predetermined “stability regime” that allow excursions outside the 2–8° range for a defined period of time (usually specified on the product label), but the industry is still working out how that period can be calculated across the entire distribution process.

						National and international standards have been set for life sciences cold chain distribution by organizations like the Parenteral Drug Assn., US Pharmacopeia, the International Air Freight Assn. and others; arguably the most comprehensive regulations come from the EU’s “Good Distribution Practices” (GDP) guidelines. Manufacturers, distributors and logistics providers tend to operate under these requirements; the guidance for pharmacy operations is more diffuse, under the control of state boards of pharmacy.

						Bottom line: specialty manufacturers will want their supply-chain management along when evaluating the service offers of SPs, hub providers and specialty distributors.

	MacLeod, who has worked for years in patient reimbursement and support, at manufacturers as well as service providers like inVentiv, notes that the usual complexity of access and reimbursement for specialty pharmaceuticals will cause similar confusion.

	The semantics of hub services are important because different players, with different histories, are all aiming at the patient services space, and positioning themselves as the best intermediary between manufacturers and patients. A spate of new entities, what some are calling the “next wave” of hub services, are also coming forward. A run-down of the biggest types of organizations:

	The biggest and oldest are offshoots of insurance companies or PBMs, such as Express Scripts’ combination of Accredo and CuraScript (both specialty pharmacies) and HealthBridge (physician and patient support). UnitedHealth, an insurance company, operates OptumRx, a PBM, which has a specialty unit within it. Cigna has Tel-Drug, a mail-order pharmacy and support system.

	Walgreens now has a large specialty pharmacy operation, as do most of the other major retail chains. Independent SPPs include Diplomat, Amber, AcariaHealth and dozens of others. Over the past couple years, two trade associations dedicated specifically to specialty pharmacy have arisen: the Specialty Pharmacy Assn. of America (organized by, but independent of, Armada Healthcare) and the National Assn. of Specialty Pharmacy (NASP).

	Managing reimbursement has become an increasingly complex part of dispensing drugs, especially when there are steps to locating both the responsible payer, and when patient assistance like copays, coinsurance and charitable foundations enter the picture. Lash Group was one of the pioneers in this area, especially with oncology; now, it as well as many other reimbursement service providers have expanded their patient support to include other therapy areas. Omnicare, whose original business was in providing pharmacy-related services for long term care, acquired RxCrossroads several years ago, and made that part of the foundation of its Omnicare Specialty Solutions business, with an SPP and distribution arm.

	Covance and Parexel, two prominent contract research organizations (CROs) have been building up their market access services to include related patient support. inVentiv Health, which combines a CRO with marketing and advertising services for pharma, has established a Patient Access Solutions group.

	Each of the Big Three wholesalers now has a Specialty Solutions division, with AmerisourceBergen Specialty Group arguably the largest. McKesson bought US Oncology two years ago to boost its specialty business; Cardinal Health acquired P4 Pathways (dedicated to oncology care) and added it to its specialty services. Most recently, H.D. Smith (Springfield, IL) created a specialty unit that includes Smith Medical Partners, a specialty distributor, and acquired Triplefin (Phoenix, AZ), a patient-support services company, to flesh out its hub offering.

	Sonexus Health (Lewisville, TX) was created in 2012 to combine a patient-support network (the former Chronic Disease Foundation) with a distribution arm.

	Some of these are the newest entrants in the hub field; they position themselves primarily as the go-to resource for pharma manufacturers, and then connect with other companies to provide distribution, pharmacy services and the like. Names include CareMetx, Occam Health and ProMetrics, among others.

	Today, a big chunk of hub services is simply dedicated oncology care; this is a core part of the Big Three wholesalers. But orphan and ultra-orphan diseases (which have seen rapid entry of new therapies) is a key part of the business. Centric Health Resources (Chesterfield, MO), a property of Dohmen, was one of the early entrants in this space. There are also a number of alliances between orphan disease advocacy groups and various combinations of SPPs and patient-assistance programs.

	Calling itself “a group purchasing organization with a twist,” (in the words of Mike Baldzicki, newly appointed EVP of industry relations), Armada Health (Florham Park, NJ) has pioneered the concept of a network of specialty pharmacies and service providers—a sort of “meta-hub” over the past several years. The company centralizes purchasing contracts, has a prior-authorization service, ApproveRx, among others, and then coordinates pharmaceutical distribution and dispensing through several hundred pharmacies and providers in its Aspen network.

	To this list could be added select companies from the patient assistance program (PAP) world, as well as specialized firms focused on adverse event reporting, medication adherence programs and others. Their services have existed independently of distribution or pharmacy, but as the hub business swells, and as distributors and others angle for a piece of the pie, they become valued partners or additions to the latter companies. So, for example, H.D. Smith, the largest privately held wholesaler, has acquired Triplefin, a patient services company, to build out its Specialty Solutions platform. Dohmen has added an adverse-event reporting business, and a medical communications company, to its portfolio logistics service (DDN) and specialty pharmacy (Centric Health). More recently, Telerx, a dedicated call center company that is a subsidiary of Merck, acquired Sentrx, an adverse-event reporting company.

For specialty pharmaceuticals, the connection between manufacturer, payer and patient is the rising crop of hub services

Finding the 'HUB' in Specialty Pharma Services

		CVS Caremark (Woonsocket, RI), a leading pharmacy benefit manager (PBM), has released the second edition of its State of the States: Adherence Report. Derived from data in its book of business in 2012, combined with analysis of refill rates, medication possession ratios (MPRs, a measure of actual to potential number of days a patient has a drug on hand)—and with some data on generic substitution levels, the report gives plan managers and public health administrators a guide to where medication adherence is functioning well, and where it could be improved. The study focuses specifically on four therapy areas: diabetes, hypertension, dyslipidemia and depression; in theory, these can be a marker for overall adherence levels; the study also broke out data based on the type of healthcare coverage: health plans; employer plans; and Medicare Part D.

		The “winning” states, with the highest MPRs and highest rates of generic substitution, were Maryland, Vermont and Maine, which had MPRs of, respectively 81.9% (health plans in that state); 84.7% (employer plans); and 86.3% (Medicare). The highest generic dispensing rates (GDRs) were found in Minnesota and Massachusetts, with rates in the range of 92.0%—93.4%, depending on the type of coverage. The lowest states for MPR were Alaska, North Dakota and Wyoming, with health-plan MPRs of, respectively, 60.9%, 62.0% and 66.1% (MPRs for employer plans and Medicare were significantly higher). The worst-performing states for GDRs, based on employer plans, were Connecticut and West Virginia, tied at 78.3%, and Mississippi, with a rate of 78.5% (GDRs for health plans and Medicare were higher). There is one GDR outlier, however: New Jersey, whose health-plan MPR is 77.0% (in the high middle range), but whose GDR is 70.8% for health plans and 73.8% for employer plans—both significantly below all other states. This is all the more surprising because New Jersey scores highest among all states for access to the CVS Caremark Pharmacy Advisor, a service of the company to perform adherence outreach and education. (Could beneficiaries in that state be especially attuned to GDRs because there are so many pharma workers there?)

		Across all types of plans, patients with depression generally had the lowest adherence rates, while Medicare beneficiaries generally had the highest MPR rates across the therapy areas. Geographically, adherence rates for health plans in the Midwest were the lowest, while adherence rates were lowest in the South for employer and Medicare plans.

		CVS Caremark also made a couple passes at estimating healthcare cost savings with better MPRs and more generic substitution—the former is worth at least $6.5 billion, while the latter is nearly double that. Texas, with California close behind, has the highest potential savings to in-state coverage with better MPRs, potentially saving $686 million and $652 million, respectively, if MPRs could average above 80%. (Other, broader-based estimates, however, peg the national cost for poor adherence at nearly $300 billion.) “There is a good deal of regional variation in adherence rates,” says Dr. Troyen Brennan, EVP and chief medical officer at CVS Caremark, “and this is going to be a critical issue going forward.”

		What are the implications in all this for pharma? Many manufacturers support adherence programs for branded products, and the industry is a notable participant in the Prescriptions for a Healthy America program recently announced. But especially for the disease states studied by CVS Caremark in this report, chronic-care medications are usually generics. Support for better adherence is a factor in healthcare-provider performance under the Affordable Care Act, and PBMs as well as payers are giving it more attention; but both of these actors will look for continuing support from pharma.

		The full report is available at www.CVSCaremarkfyi.com, along with a companion research compendium, Advancing Adherence & the Science of Pharmacy Care, compiled by CVS Caremark. The company also offers more detailed analysis to clients on request.

State-by-state, plan-by-plan analysis from CVS Caremark highlights multibillion-dollar savings if adherence rates are improved

More analytic firepower is being directed at the US medication-adherence problem

Fig. 1. Biomarkers are a growing proportion of cancer testing.

		The promise of personalized medicine (or, more recently, “precision” medicine) is becoming realized as more biomarkers and companion diagnostics roll out of clinical research and into commercial reality. For some new drugs, especially in oncology, the companion diagnostic is essential to approval. Payers, realizing that companion diagnostics can focus expensive drugs on appropriate patients (thereby avoiding reimbursement of the drug for others, and providing meaningful health benefit to members) are becoming more receptive to the tests. At the same time, some of the testing is becoming a tailored service from healthcare providers, whose labs have developed their own protocols for the testing.

		Last June’s Supreme Court ruling, in APL vs. Myriad Genetics, that unaltered human DNA could not be patented, is expected to have mixed results in future biomarker commercialization. While voting unanimously that genes cannot be patented, the Court also gave approval for patenting complementary DNA (cDNA)—a synthetic step in Myriad’s (and others’) form of genetic testing. The ability to patent cDNA and other synthetic testing protocols will be the subject of future litigation (indeed, Myriad followed the Supreme Court decision with lawsuits against some out-of-the-gate competitors). But the consensus among industry commentators seems to be that some genetic testing will now be more readily commercialized, and the business overall will forge ahead.

		A biomarker is defined as a naturally occurring molecule, gene or characteristic that can be objectively measured and evaluated as an indicator of either normal biological or pathogenic processes, or pharmacological response to a therapeutic intervention. Typically, this involves genetic mutations, aberrant protein expression, or changing triglycerides levels. To date, the bulk of the biomarker work has been carried out in oncology, but interest and developmental efforts are underway in a wide array of non-oncology indications as well.

Fig. 2. How various biomarker tests affect therapy market. 

Fig. 3. Companion diagnostics developed in-house or with collaborators. Source: Kantar Health

		Today, the world market for in vitro diagnostic testing in oncology has reached $4.8 billion, and is expected to grow by 9%/year for the next few years to reach $7.3 billion by 2017, according to market researcher Kalorama Information (New York). Biomarker-based tests will outpace traditional testing like PAP smears, HPV and other assays, point-of-care tests of tumors or cancer cells and the like (Fig. 1). More than 200 companies are involved in some form of cancer-related testing, ranging from top-tier in vitro diagnostics giants Abbott, Novartis and Roche, to device makers such as Becton Dickinson and Siemens, to companies focused on molecular testing such as Gen-Probe and Bio-Rad, says Kalorama.

		According to recent data from McKesson Specialty Health/USOncology Network (MSH), of the $18.5 billion in US drug sales related to anti-cancer drugs, nearly 60% were targeted therapies (as opposed to standard chemotherapy). And, of the 189 oncology therapies currently under development in the period 2012—2015, 105 agents (56% of the total) have an associated biomarker. By 2017, 34 of these pipeline therapies are expected to launch, and 20 of these will be targeted to biomarkers.

		A separate study conducted by Kantar Health evaluates 69 agents that are currently in clinical development within the oncology pipeline. The study author, Stephanie Hawthorne, PhD, director, clinical and scientific assessment, Kantar Health (Foster City, CA) says: “Interestingly, the majority of the indications in which these 69 agents are being developed target rather small indications in terms of patient population size, with 60% of the ongoing pivotal trials being conducted in indications with a target population of less than 12,500 patients.”*

		This represents a marked change from a decade ago, when much of the focus was on developing drugs that were targeted at the largest possible patient populations, such as breast cancer, non-small cell lung cancer (NSCLC) and colorectal cancer (CRC). Within this trend, she notes that some of the smaller indications represent tumors in which the incidence of disease is small overall, but others represent biomarker subsets of larger tumor types, such as Met+ NSCLC or NRAS mutant melanoma (Fig. 2).

		However, despite the oncology community’s growing focus on personalized medicine, Hawthorne says that only 22% of the pipeline agents currently in pivotal trials are being developed in a biomarker-defined patient population (Fig. 4).

		“Unlike diseases such as hypertension or diabetes, which tend to be more limited in their manifestations and management, cancer is really a collection of hundreds if not thousands of unique diseases,” says Harish Dave, MD, MBA, a VP at Quintiles (Rockville, MD). With anti-cancer therapies being among the costliest and most toxic in the pharmaceutical arsenal, “The ability to avoid the unnecessary administration of expensive therapies—which can cost upwards of $10,000/month or more&mdash;that will provide no clinical benefit and may incur a lot of side effects (and even ER or hospital visits) provides tremendous opportunities for cost savings to plans and to the overall healthcare system, so there’s a lot of interest in this,” adds Michael Kolodziej, MD, FACP, national medical director for Oncology Strategies (Hartford, CT).

Fig. 4. Kantar Health projects that 30% of cancer patients will have a

		From the physician and patient perspective, “The science has moved along fairly quickly in oncology because there is great sense of urgency and this is not a very forgiving disease category,” says Ed Pezalla, MD, national medical director for pharmacy policy at Aetna. “While you can comfortably experiment over several months with finding the right drug for controlling, say, high blood pressure, when it comes to tumor progression, you may lose a lot of ground with the trial-and-error approach and the resulting delays.”

		Despite ongoing advances in genomic medicine, “Biomarkers still face multiple challenges going from bench to bedside,” says Meghan FitzGerald, president of Cardinal Health Specialty Solutions (Dublin, OH). “The industry is still grappling with how to cost-effectively integrate biomarkers into clinical care, but we believe as the science continues to advance and therapies become increasingly target-specific, biomarkers will become increasingly valuable and will ultimately play a bigger role in advancing cancer care.”

		“If molecular diagnostic testing for cancer is inappropriately utilized, it could be expensive for the healthcare system and could lead to treatment recommendations that might not be fully evidence-based,” explains Marcus Neubauer, MD, medical director, oncology services for MSH. For instance, molecular diagnostic testing is often ordered when all “standard” therapy has been exhausted and patients are unlikely to benefit from further treatment regardless of which mutations are present.

		“Identification of actionable DNA alternations is the best way to make advances in the overall treatment of cancer, and this can’t be ignored by payers,” he says. MSH is working on guidance to include molecular diagnostics in its network.

		With regard to coverage decisions for any given biomarker-related test, Pezalla of Aetna notes that drug and test developers must demonstrate to payers that the following two key questions can be answered in the affirmative (and to support this with data, wherever possible):

Essential for approving some new products, biomarkers are becoming integrated with patient therapies

Biomarkers and companion diagnostics expand drug potential

The Healthcare Distribution Management Assn. is the lead trade group

 for what it calls “primary” wholesalers—the companies that acquire products directly from manufacturers, and then distribute to retail pharmacies, hospitals and clinics throughout the US. The formal scope of the association is US trade, although some of its members have international operations and, as will be seen here, this globalization is affecting HDMA’s outlook.

		HDMA, founded as the Western Wholesale Druggists’ Assn. in 1876, became the National Wholesale Druggists’ Assn. in 1882, and took its current name in 2000. HDMA’s 32 members distribute nearly 90% of all pharmaceutical products in the nation, and derive 98% of their revenue from that distribution activity, according to the association’s annual Factbook. They send products from approximately 150 distribution centers to more than 200,000 locations—and do that, on average, five days a week. Pharmaceutical Commerce sat down with John Gray, president and CEO of the organization, to get his views on the past and future of drug wholesaling. Here’s what he had to say.

1. You’re coming up on 10 years as head of HDMA. How has the organization and its mission changed over that time?

		I came on in 2004, from many years as an executive with the International Foodservice Distributors Association (formerly Food Distributor International) and before that, the Grocery Manufacturers of America. Like pharma wholesaling, the food business has significant logistics and supply chain management issues, and I got a lot of experience dealing with things ranging from shipping-pallet standards to barcoding. Although my education was mostly in law and business, this work has challenged me to be knowledgeable about supply chain issues.

		2004 was the year that drug diversion and pedigree became a hot topic, and just as I joined, the state of Florida was in the midst of implementing one of the most robust pedigree programs in the nation. While there had been concern from some supply chain stakeholders, eventually, a system that the wholesaling industry could live with was established, passing almost literally at the stroke of midnight in 2006. Pedigree and track and trace—now focused mostly on California’s 2015 mandate and the action on Capitol Hill&mdash;have been a constant concern over the years.

		Pedigree also figures in a big change our association underwent in 2005. As more and more states began implementing their own pedigree standards, we shifted our membership to focus solely on the primary wholesaling market, no longer including secondary wholesalers. This membership rule change resulted in a decrease in our membership, from around 90 members to the low 40s (consolidation among those companies leads to our current membership of 32).

2. I guess it’s inevitable that pedigree and now, traceability technology, would come up early in this discussion. What is HDMA’s position on the current legislative efforts in Washington? (Ed. Note: at the time of this writing, Congress had just gone on recess with bills in both houses under active consideration)

		The biggest issue is getting a national program in place, because without that, we’ll be dealing with 50 different state programs. Can you imagine trying to produce a different product label for each of the 50 states? We are now tantalizingly close to getting this done. The biggest hurdle on the industry side has been getting all three sectors of pharma distribution—manufacturers, wholesaler/distributors and retail pharmacy&mdash;together, through their involvement in the Pharmaceutical Distribution Security Alliance. (Ed. note: HDMA, along with PhRMA, GPhA, BIO, NACDS, NCPA and many individual manufacturers and wholesalers, are members of this consortium.)

		A bill has passed the House (H.R. 1919), and there is one in the Senate (S. 959). There has been criticism of these bills because they require drug traceability initially at the lot level, and not the item level until Phase Two; and the timetables for implementation. But I say, the legislature does its work by setting the overall goals, and then the private sector will kick in with higher performance standards in a competitive marketplace. Lot level traceability is a step in the right direction, and both bills get to item level tracing over time. I think passage of these laws is now more a question of “when” rather than “if.”

		There’s one other regulatory issue that’s important to mention: drug diversion and the problem of drug abuse. We’d like to see a more collaborative effort, where manufacturers, retail and distributors could sit down together with the Drug Enforcement Administration to work out a better way to deal with these issues. DEA has had a recent policy of attempting to choke off access to abused drugs by going after distributors and retailers. It’s not clear that that is making any difference in addressing these problems, and at the same time, it creates difficulties for access for needed drugs for healthcare providers and their patients. Again, we’d like to work on these problems collaboratively with regulators, but that hasn’t happened yet.

3. Where does the basic relationship between manufacturers and HDMA members stand today?

		It’s interesting—when I came on board at HDMA and for the next few years, we held discussions with pharma CEOs on track and trace, and just couldn’t get their attention. Back then, manufacturers thought they had little to worry about regarding their supply chains. That’s changed over the years. Part of this is due to the debate over drug traceability, and part due to the growing importance of global operations in pharma, where supply chain issues are critical.

		Starting in 2007, and every two years after that, we’ve sponsored a study by Booz & Co. (Ed. note: “The Role of Distributors in the US Healthcare Industry”). The latest study shows that the wholesale distribution industry provides the healthcare system the equivalent of $42 billion in savings, compared to if pharma manufacturers handled distribution themselves. When this first came out, many thought it was a self-serving document—that was a time when the industry was converting to a fee-for-service basis, and there were a lot of mixed feelings. But we said, “You can question the numbers, but not the logic&mdash;put your own distribution cost numbers in and see.” When the second and third editions came out, there was much less questioning of the value proposition we were making.

		It’s interesting, too, that while PhRMA and GPhA have roughly 75 members combined, we have 145 pharma manufacturers as associate members. They value our meetings and research as educational forums and as sources of best practices in pharma distribution, in such issues like cold chain management or returns processing. Manufacturers are more aware of logistics and supply chain issues than they were a decade ago.

4. Of the products handled by primary distributors, roughly 90% goes through the Big Three (McKesson, Cardinal Health, AmerisourceBergen). Does this concentration create problems for manufacturers?

		These things go through cycles. Consolidation has been happening in wholesale distribution for quite a while now—and that’s not unique to our industry. Look at the US airline industry, or my former industry, food distribution&mdash;or the pharma industry itself, for that matter. A longer view of business history shows that there are periods of such concentration.

		Today, there’s tremendous change occurring in specialty pharma, both for us and for manufacturers. Time will tell where all that will sort out. I would say, never count out independents. Regional players can thrive in this environment and I believe that those who stick it out will be glad they did.

5. Some HDMA members are expanding internationally. Will HDMA follow suit?

		We’ve got several things going on right now. My intention is to have HDMA build a global scope going forward. For the past several years, we’ve sent a team of HDMA staff to World Health Organization meetings, and they’ve had a beneficial educational impact on discussions occurring there. Additionally, for the past couple years, we’ve had international groups, including the International Federation of Pharmaceutical Wholesalers and CAPDM, the Canadian Assn. of Pharmaceutical Distribution Management, attend our annual Distribution Management Conference. They come because they want to learn from the US supply chain experts that participate there—the same reason that representatives from pharma manufacturers participate.

		Negotiations are under way right now to hold an international distribution-management meeting in China next year. IFPW will be holding their annual meeting there at the same time, and the China equivalent of the FDA (SFDA) will be involved; our membership is onboard as well. HDMA has an important educational role to play in bringing the advanced practices that are common here to the rest of the world.

6. During your tenure, the Center for Healthcare Supply Chain Research was set up. What role will that play going forward?

		The Center is an extension of that educational role that is so valuable for HDMA to perform; it publishes the “Role of Distributors” report referenced earlier, as well as other research, like the HDMA Factbook. We’re beginning to raise our profile in academia as well. With the help of a grant from the Cardinal Health Foundation, we’ve developed a “Distribution 101” course, “Understanding Distribution,” that provides graduating pharmacy students with a background in how the distribution industry works, giving pharmacy students the basics of the retail pharmacy business and working with pharmaceutical distributors. It’s good for them, and good for our members.

		We would also like to get closer to the great university schools of logistics and supply chain management across the country, to make them better informed about supply chain issues in healthcare.

7. Looking back, what do you consider your greatest accomplishment?

	It’s not there yet, but I think that passage of the federal traceability law will be a landmark event in the industry. For me, it’s been nine years and we’re very close to getting it done. It will be a big lift for the entire industry when it happens.

A conversation with John M. Gray, Healthcare Distribution Management Assn.

Fig. 1. The timetable for implementation of the European Falsified Medicines Directive (EU-FMD);

						‘delegated acts’ are technical decisions made by the EU for member states. Source: EFPIA

		The overall product security picture for the pharma industry in 2013 is: almost-but-not-quite federal legislation; slow but steady progress in Europe and other parts of the world; and heightened focus on supply chain issues here and abroad, as pharmaceuticals and other life sciences products remain the target of counterfeiters, diverters and thieves. Add to this the troubling regulatory gaps (in the US) for compounded pharmaceuticals—which were more or less safety delivered, but turned out to be contaminated with life-threatening microbes&mdash;and it all adds up to more work and worry for pharma supply chain managers.

		On the bright side, corporate pursestrings have finally begun opening up for serialization projects—Step 1 in a drug-tracking system&mdash;but inside and outside the US. Dozens of packaging-line serialization projects have begun, partly because forward-looking US manufacturers are aware of the January 2015 deadline of the California Board of Pharmacy for that state’s e-pedigree rules. Progress at that level has been abetted, in part, by the positive reception of barcoding standards for healthcare products announced by the GS1 Healthcare US group, last March (Pharmaceutical Commerce, May/June, p. 12). In Europe, the European Stakeholder Model (ESM) has been codified, with the participation of European trade associations and the European Union, as the basic framework for moving forward with their approach to pharma product verification. The ESM, in turn, structures what is called the European Medicines Verification System (EMVS)&mdash;the data-sharing component that will allow pharmaceutical authenticity to be verified at the point of dispensing. Various European countries are moving forward with national implementations (Fig. 1).

		But it’s not as if the clouds have broken up and it’s clear skies from here on out. In the first half of this year, there was an expectation that national pedigree legislation would already have been law by the end of July; as of this writing, the talk is that the law could be passed by the end of the year. Meanwhile, although FDA, Interpol and other national and international organizations conducted another successful “Pangea” operation—Pangea VI&mdash;involving the shutdown of thousands of websites involved in diverted, illegal or improperly imported pharmaceuticals&mdash;the practice shows little sign of abating.

		In May and June, as the Senate sped forward on the Pharmaceutical Quality, Security and Accountability Act (S.959), there was talk of having a bill ready for White House signing before the August recess, which began Aug. 2. The House passed a comparable bill, HR 1919 (the Senate bill is still in committee). But a major difference between the two—whether to include legislation pertaining to compounded pharmaceuticals&mdash;now appears to be a major stumbling block. In the Senate, the track-and-trace legislation got bolted together with a compounding pharmaceutical bill. The House version did not, and two pharmacy bills in the House Energy and Commerce committee showed some signs of being hung up over a generally Republican stance of leaving authority mostly in state hands, versus a Democratic stance of expanding FDA authority.

Manufacturers and wholesalers, who came together (with others) in 2012 to form the Pharmaceutical Distribution Security Alliance, very much want federal legislation in place—sooner rather than later&mdash;to forestall the implementation of the California e-pedigree law, which is set to go into force beginning in January 2015. A manufacturer who has done nothing to add serial numbers to pharmaceutical packages, and set up an IT system to track where those packages have gone into the supply chain, now has 17 months to get ready for that requirement&mdash;unless a federal law pre-empts the California mandate (which, ironically, California’s own law allows the federal law to do). Wholesalers have an additional year to get their systems in place&mdash;and most of them have been clear that a) they don’t want to be distributing “California-only” packages and b) they will not want excessive amounts of pre-mandate, untrackable inventory in their distribution centers come January 2016.

		In mid-July, a House E&C subcommittee held a hearing on drug compounding, in the context of the VALID Compounding Act (HR 2186), the Senate bill, and a draft bill from Rep. Mason Griffith (R-VA), called the Compounding Clarity Act. While testimony from FDA, the Am. Soc. of Health-System Pharmacists (ASHP) and the National Assn. of State Boards of Pharmacy (NABP) was strongly for expanded federal oversight, testimony from the National Community Pharmacists Assn. (NCPA) and the International Academy of Compounding Pharmacists (IACP) was just as strongly for state-level control. All participants, meanwhile, struggled with how to define a difference between “traditional compounding” (a pharmacist making a single dose for an identified patient and used more or less as soon as supplied) and “nontraditional compounding”—making dosages in bulk, not for named patients: the kind of production that has been implicated in the NECC meningitis scandal of the past year, resulting in at least 63 deaths.

		One of the interesting—and worrisome&mdash;revelations of the past few months of study of this problem is that hospitals now routinely depend on so-called “outsourced suppliers” for significant quantities of compounded products, especially anesthetics. An HHS OIG report from April found that 92% of surveyed hospitals used outsourced compounded sterile products (CSPs)&mdash;and while they reported few problems with them, it is likely that federal or state oversight of those suppliers is spotty.

Fig. 2. Omega Design’s LabelSync, a device to rapidly verify labels and serial numbers.

		The NECC compounding scandal, arguably the worst quality breakdown since the heparin scandal of 2008, clearly needs to be addressed, but at this point threatens to derail the near-30-year-long effort for a federal track-and-trace system. It’s impossible to predict what will happen next. The compounding legislation could be severed from the track-and-trace legislation; the House could pass a compounding bill, and then the House and Senate conferees could try to reconcile their differing bills; or track-and-trace could be left on the side of the road (again). If the House and Senate can resolve their differing approaches to compounding pharmacies, they still have some heavy lifting to resolve the differences between the drug-tracking bills. The House version (which passed) includes a vastly stretched-out implementation schedule, with actual drug tracking through the supply chain still to be established, perhaps in the late 2020s. The Senate bill (still in committee) has a shorter implementation schedule, but one that still goes beyond the timeline for the California e-pedigree mandate.

, president of the Healthcare Distribution Management Assn., puts it, “The legislature does its work by setting the overall goals, and then the private sector will kick in with higher performance standards in a competitive marketplace.”

		In terms of actual capital spending, much of the activity of the moment is focused on packaging line upgrades, in order to deliver serialized products. At Omega Design (Exton, PA) company CEO Glenn Siegele reports that projects are picking up both inside and outside the US for its labeling and sorting machines; its LabelSync technology (Fig. 2) enables individual bottles to be tracked through the case-building and packaging process, the better to address the nagging problem of aggregation of individual package codes with the cases or pallets they are packed into. Siegele says that the company has been broadening its equipment lines to combine manual and automated processes (especially for low-labor-cost countries outside the US); its Intelli-Pac unit allows for manual case building.

		Cognex, a Natick, MA, vision systems supplier, announced an upgraded In-Sight Track & Trace system last spring that combines its machine-vision devices with software to identify and verify units on the packaging line. Machine-vision upgrades have also been the goal of companies like Optel Vision (Quebec), Systech (Cranbury, NJ), Seidenader (Clearwater, FL), Mettler-Toledo (Columbus, OH), Xyntek (Yardley, PA) and others.

		Putting the serial codes on the packages (or, alternatively, obtaining precoded labels and applying those) has been well established by packaging-equipment vendors such as Domino-Amjet, Zebra Technologies, Videojet Technologies and others. For pharma track-and-trace, the key hurdle has been developing IT systems that can accurately collect the serial data, deliver it to an enterprise-level system, and from there make it available to trading partners or regulators on demand. Vendors in this area include Acsis (see companion story in this issue), Systech, Optel Vision, Axway (Phoenix), Oracle (Redwood Shores, CA) TraceLink (Wakefield, MA) Fastpoint Technologies (Lake Forest, CA) and rfXcel (San Ramon, CA), among others.

		IDC Health Insights, a market research firm, recently ranked TraceLink and Axway as “leaders” in this category, based on a combination of technology, market acceptance and growth capabilities, although it apparently had a restricted list of vendors that it chose to study. “This is an emerging market that will undergo significant expansion in the next several months,” comments Todd Slocum, director of research at the firm.

		And there are other players who, if not introducing new products, are repositioning themselves for the run-up to the California deadline and beyond. One is Frequentz (Los Altos, CA), which acquired the InfoSphere technology of IBM a year ago; that technology has been commercialized in food processing and distribution, among other areas, says Michael Lucas, CEO, who adds that although IBM divested this technology to his relatively small firm, the IBM Global Services business (one of the largest IT services firms in the world) stands behind the technology and will assist in implementations.

		Another new force is JDA Software (Scottsdale, AZ), which acquired the supply-chain software firm RedPrairie last year. Both RedPrairie and JDA have experience in track-and-trace-related pharma projects, but neither was a major player in past packaging-line serialization efforts. Tom Kozenski, product marketing and industry strategist for warehouse management systems, notes that at least one of the company’s clients has been using JDA Software to comply with the established regulatory system in Turkey. The company has announced a broadbased integration plan for JDA and RedPrairie products, to be complete in early 2014, involving JDA’s supply-chain planning and transportation-management software with RedPrairie’s warehouse management software.

		Greg Cathcart, president of Excellis Healthcare (New Hope, PA), which provides consulting and systems-integration expertise for clients using SAP enterprise software (which is widely used throughout pharma manufacturing and distribution) says that SAP’s two data-management products, known as AII and OER, are already widely available where SAP is installed; there is a systems-integration project to undergo in using those products for enterprise-level data storage and transmission, but that the time necessary to do a combination of serializing a packaging line and performing the SAP integration is declining to four months or less for a first implementation, and less time for successive ones. (Manufacturers need to serialize line by line; some of them have multiple lines serialized already, while others are designating certain lines for serialization and waiting for further national or international regulatory activity.)

		Systech, with an eye on approaching deadlines for serialization, has made some changes to how its software products are positioned so that an implementation can occur more quickly, says David DeJean, president. “Our Enterprise Serialization Solution is now prepackaged, and can be implemented relatively quickly for the specific goal of getting the serialized data from the packaging line into the software that runs your distribution center,” he says. That step is a critical one to enabling the serialized data to move with the physical distribution of product to trading partners. Other parts of the Systech IT “stack” are being developed for supply chain analytics, regulatory reporting and other functions.

		Systech acquired another company, Apostrophe Systems, over a year ago specifically to enable its serialization software to be provided on a SaaS (software as a service) basis, which has come to be broadly synonymous with “cloud computing.” Cloud computing offers certain efficiencies in code maintenance and implementation costs; it so happens that it is also evolving to be a vital part of broadbased data communications. That’s the logic pursued by TraceLink, founded by principals who have worked in pharmaceutical product tracking for many years. Their wholly-cloud-based offering, Life Sciences Cloud, has been used to provide communications between pharma brand owners and their contract manufacturing organizations (CMOs), among other applications. Amazon Web Services, the cloud service provider used by TraceLink, recently published a case study of how TraceLink is installed there, making use of AWS’ “Elastic Compute Cloud” to deliver data, and “Elastic Load Balancing” to provide “persistent instance storage and backup,” and “AWS Identity and Access Management” for data security. Technical concerns like these are significant for pharma track-and-trace, because the ability of cloud-based systems to receive and transmit needed data is still in a nascent form. The GS1 organization is updating its EPCIS standard for data sharing, but Bob Celeste, program manager there, notes that some aspects of that work will depend on how the federal legislation is written in Washington—which brings the question of a federal law back into the picture.

		The global GS1 organization (which is somewhat distinct from the GS1 US Healthcare group) is holding an international meeting next month in San Francisco (Global GS1 Healthcare Conference, Oct. 1—3; www.gs1.org/healthcare/news_events/011013) to air out EPCIS issues as well as to bring other healthcare participants, such as medical devices and hospital materials management, together.

		Cardinal Health, which over the years has both developed track-and-trace systems and piloted tests involving multiple trading partners, has been running a full-blown track-and-trace system at its Sacramento, CA, distribution center for several years (as have AmerisourceBergen and McKesson at facilities of theirs). Julie Kuhn, VP of operations, says “we’re facing some really hard work” to get ready for the California deadline. Part of the problem is that while more manaufacturers are serializing products, they’re not quite ready to conduct the data-sharing processes that will be necessary to meet the California mandate. “The volume of products we’ve handled to date barely reach 1% of our throughput,” she says. Current IT technology is “too rigid,” and exceptions processing (when a data record does not match up with the physical product being received) are an ever-present concern.

		Cardinal is currently doing this work on a point-to-point basis—data from one pharma supplier coming into the DC, and then data about that supplier’s product going out to one customer. In Europe, plans are already moving forward for a national database; while in the US, there are still debates over whether there will be a central repository for these trading data, or a “federated” system of multiple databases, or simply a vast array of point-to-point communications.

		Bill Fletcher, head of Pharma Logic Solutions (Yardley, PA) asserts that many problems like these are solvable with the latest technology generations, and that the pharma industry has a lot to learn from other industries where item-level tracking is an established fact. It is clear that a new implementation of the latest solutions would be an improvement over existing ones—but then the question is, in the face of continuing regulatory uncertainty, how willing are pharma manufacturers and distributors for tearing out one system and putting in new ones.

Come September, all eyes will be on federal legislation that is close to final passage

PRODUCT SECURITY REPORT: Pharma track-and-trace inches closer to reality

		Some call it “revenue management” and some call it “enterprise revenue dynamics,” but what it is is the increasingly complicated process of managing the terms of contracts that biopharma manufacturers set with payers, GPOs, and governments. As the demands for cost control from the payer community rises, manufacturers have tended to write more complex contracts, with volume discounts and rebates tied to matters like formulary placement. Yet, even though revenue, the lifeblood of the company, depends on these contracts, managing them both effectively and profitably is a challenge.

		And that challenge is about to ramp up even higher as payments become tied to outcomes from providers like accountable care organizations, says Marc Ginsky, VP and GM of Covance Market Access Services. Covance has provided managed-markets consulting for many years, but is now stepping more directly into the contract administration aspect of it.

		To that end, it will provide, either as an outsourced staffing service, or as a strategic consulting service, contract administration. This administration includes managing chargebacks (which are charges sent in by wholesalers to reconcile price differentials between a buyer’s contract with a manufacturer, and the price to the wholesaler), rebates, and the proper pricing and credits to state and federal Medicare and Medicaid programs.

		A key part of this service is efficient use of the software tools that are now available. Ginsky says that Covance will work with the manufacturer’s installed system, but especially for smaller to mid-size companies just gearing up its contract administration function, it will recommend (but not perform the installation of) a system from a business partner, BPI Technologies (Irving, TX).

Company will provide services to manage data and terms of sales contracts

Covance builds out its managed-markets advisory service

		At the close of its 2013 term, the Supreme Court of the United States handed down one of its more important patent decisions of the session. Because of the potentially serious antitrust implications, all counsel active in the life sciences/Hatch-Waxman space should take note of this decision.

		On June 17, 2013, the Supreme Court handed down a decision that addressed a “reverse payment” settlement agreement between Solvay Pharmaceuticals (plaintiff patent holder) and Actavis and Paddock Laboratories (the generic companies who were the alleged infringers). While the Supreme Court acknowledged that the anticompetitive consequences of the agreement fell within the patent holder’s lawful right to exclude others from the market, it disagreed with the lower courts that this fact alone immunized the agreement from the antitrust laws.

		The Supreme Court held that a settlement agreement in which a patentee pays an accused infringer not to enter the market—even if the agreement allows market entry before the patent term expires&mdash;is not presumptively lawful and is still subject to antitrust scrutiny. In remanding the case to the District Court, the Supreme Court articulated the standard for the lower courts to apply when analyzing reverse payment settlements&mdash;“the FTC must prove its case as in other rule-of-reason cases.”

		In 1999, Solvay Pharmaceuticals filed a New Drug Application (NDA) for AndroGel, and FDA approved Solvay’s application in 2000. In 2003, Solvay obtained a patent covering AndroGel (US Patent No. 6,503,894—the “’894 patent”), which was subsequently listed in FDA’s Orange Book. Later that year, Actavis, Inc. filed the first Abbreviated New Drug Application (ANDA) for a generic version of AndroGel, and thereafter Paddock Laboratories also filed an ANDA for its generic product. Both Actavis and Paddock certified under Paragraph IV of the Hatch-Waxman Act that they did not infringe the ’894 patent, and that the patent was invalid. Thirty months after Solvay sued Actavis and Paddock for infringing the ’894 patent, FDA approved Actavis’ generic product.

		Then, in 2006, all parties to the litigation settled. Actavis agreed that it would not bring its generic product to market until 2015, cutting Solvay patent life by 65 months. Actavis and other generic companies would promote AndroGel until then. In return, Solvay agreed to pay millions of dollars to the generic companies.

		When the FTC learned of Solvay’s reverse payment agreement with the generics, it filed suit against all parties, alleging violation of § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 by, among other things, agreeing “to share in Solvay’s monopoly profits” and refraining from launching generic products to compete with AndroGel for nine years.

		Two lower courts dismissed the FTC complaint, but the FTC appealed to the US Supreme Court. Based on a number of factors, the Supreme Court found that it would be “incongruous to determine antitrust legality by measuring the settlement’s anticompetitive effects solely against patent law policy, rather than by measuring them against procompetitive antitrust policies as well.”

		The matter was remanded to the District Court with instructions to analyze the settlement under the “rule-of-reason.”

What this means to the pharmaceutical industry

		This decision will discourage the settlement of Hatch-Waxman patent litigations—at least in the short run. Because the Supreme Court took a middle-of-the road approach by rejecting the “scope-of-the-patent test” while also holding that pay-for-delay settlements were not presumptively illegal, both branded and generic companies will have to reconsider litigation settlement strategies.

		Drug companies will now have to prepare for potential Hatch-Waxman and antitrust litigations. As a result, it may be prudent for pharmaceutical businesses to revise their document retention policies to further emphasize a mindful approach to the generation of potentially privileged documents relating to antitrust issues, as well as IP issues.

		Also, the rule-of-reason doctrine states that only combinations and contracts unreasonably restraining trade violate the antitrust laws; possession of monopoly power is not in itself illegal. Under this doctrine, district courts must consider the circumstances in which a reverse payment agreement was entered. Before parties enter into these types of agreements, they should ask themselves if the benefits of such a business venture is worth the antitrust risk.

		Antitrust concerns may be avoided by resorting to a traditional ANDA settlement model. The Court agreed with the FTC that Hatch-Waxman cases may settle by 1) allowing the generic manufacturer to enter the patent holder’s market before the asserted patent expires, provided there is no payment from the patentee to the challenger, and 2) permitting the generic to enter the patentee’s market by paying the branded company an amount equal to the savings in expenses associated with foregoing the patent litigation. Since reverse payment agreements are now subject to antitrust scrutiny, branded and generic companies will be more likely to enter into these lower-risk ANDA settlement contracts.

		Also, the door is open both for other, already-settled reverse-payment agreements to be challenged by the FTC, and for other private parties to bring antitrust actions.

		Because reverse payment settlement agreements will be reviewed under the rule-of-reason, presumably some will be held valid and enforceable. However, until the law is settled and the application of the rule-of-reason is established in the context of reverse payments, it will take a brave pair of litigants to enter into a reverse settlement agreement and face the uncertain consequences.

		Martin Pavane has more than 30 years of experience litigating intellectual property cases. He has been lead counsel in many patent, trademark, and copyright cases throughout the United States, including many jury trials. At Cozen O’Connor, he currently holds the titles of vice chair of the Intellectual Property Department and vice chair of the ANDA and Biologics Practice Group.

		Philip Kouyoumdjian has litigated cases on behalf of numerous pharmaceutical companies, as well as other manufacturers. He has also prepared Paragraph IV Certifications and Detailed Statements in connection with numerous ANDA filings.

What are the risks of future 'pay for delay' settlements between branded and generic manufacturers?

Supreme Court: reverse payment settlements subject to antitrust scrutiny

		The market for counterfeit pharmaceuticals is estimated to be worth up to $200 billion (according to the World Customs Organization) and growing. No longer confined to lifestyle drugs, counterfeit pharmaceuticals are a major threat to both patients and pharmaceutical manufacturers. Pharmaceutical manufacturers are harmed by reduced revenues, a lower return on R&D and damaged reputations.

		To combat this very serious threat, countries around the world have legislation invarious stages of enactment to secure the pharmaceutical supply chain.

		The current California e-Pedigree legislation, due to take effect January 2015, has been driving serialization and pedigree efforts in the US. States, including Texas, Florida and New York have developed their own pedigree laws. In fact there is a nasty little provision in the Florida pedigree law that could require the passing of serialized pedigrees for product distributed outside of “normal distribution” once manufacturers start serializing product.

		At the federal level, the US has struggled with pedigree since the publication of 21 CFR Part 203.5a which was originally due to take effect in December 2000. Even as I write this, there is a flurry of activity at the national level around pharmaceutical serialization. The Senate bill S.959, the Pharmaceutical Quality, Security, and Accountability Act, is in committee. At the very least, federal legislation would offer the industry the opportunity to work toward a harmonized set of standards and dates for the national market vs. a patchwork of state regulations. Even as recently as the June 2013 California Board of Pharmacy meeting, there are still unanswered questions around issues such as inference/aggregation, drop shipments, grandfathering, and e-Pedigree models.

		At the same time, worldwide regulatory watchers will note that there are upcoming regulations in Europe with delegated acts expected later this year—Korea (2015), India (primary package 2014), Saudi Arabia (2015), Jordon (2017) and China (2015). Meanwhile, Brazil has issued preliminary regulations for comment, with final regulations due by the end of the year; Columbia has completed a very successful pilot and intends to have regulations out for comment by the end of the year. Mexico has issued draft regulations, and the Ukraine has issued a draft law for comment.

		With all this uncertainty and looming deadlines, what kind of investments can pharmaceutical supply chain participants make that are at least directionally correct? The answer lies in finding common themes or common denominators across the regulations affecting any one supply chain participant.

		Certainly one of the first things any supply chain participant should do is to help shape regulations as they are being drafted. Usually proposed regulations have a comment period. Regulators are not supply chain experts and manufacturers in particular have a vested interest in ensuring regulations are harmonized across markets.

		For the most part, with the exception of China, countries are standardizing on the GS1 data standards for global trade identifier, serial number, lot and expiration date, as encoded in a GS1 2D Datamatrix. Where the GS1 data standards are not specified, the regulations are written in such a way as to accommodate them as options. Even if serialization and the ability to perform unit-level tracking in the US are delayed, I am reasonably confident that some form of lot level tracking will be present in US legislation. If lot level tracking regulations are enacted, manufacturers will need to provide downstream supply chain participants with a machine-readable way of capturing the lot number for transactions occurring at the unit of sale.

		There are advantages to manufacturers of encoding only the GTIN and serial number in a barcode. The lot and expiration date can be printed in human readable format online and then be recorded as attributes of a serialized GTIN in an electronic file which can be passed to downstream supply chain partners or to a regulatory body.  This would enable cartons or labels to be printed with GTIN and serial number at a printer, handling serial number randomization offline if necessary. While this does not ease the burden associated with aggregating the serial numbers of sales units to shipping cases it can reduce the cost of the packaging line implementation.

		From a manufacturer’s perspective, accurately capturing the serial numbers of each sales unit and associating them with the parent shipping case serial number is one of the more challenging aspects of a packaging line serialization implementation. While aggregation is generally not a regulatory requirement, it is necessary from a pure logistics standpoint anytime some form of unit level tracking or reporting shipments by customer is required.

		Similarly, moving the burden of randomization to an offline solution provides the opportunity to reduce cost and complexity of the line implementation. It is widely anticipated that randomization and end-point authentication is what will appear in country-specific regulations as they emerge across Europe. Two very successful pilots have been executed, most recently the SecurPharm project encompassing millions of coded packages. SecurPharm is now entering an operational phase in Germany.

		In the European security model, a dispenser authenticates a product serial number against a database of valid serial numbers prior to dispensing to a consumer. At the same time there is no reason that manufacturers should not be thinking about providing authentication portals that would allow consumers to initiate contact directly with the manufacturer via the authentication process. This could lead to voluntary enrollment in patient compliance programs, support groups and patient assistance programs.

		At the end of the day, the industry has viewed serialization from a compliance/anti-counterfeiting perspective and has had to deal with a lot of uncertainty around dates and requirements. However, once these regulations are clearly defined and the industry understands what it needs to do to implement those regulations, the industry can focus on the significant opportunities to use the data generated to develop a more effective, cost-efficient supply chain.

Roger Saumure is president of Excellis Health Solutions (New Hope, PA; www.excellishealth.com). He has 30+ years of pharmaceutical and technology management experience focusing on manufacturing, demand management, strategic planning, supply chain, and customer services as well as ERP and revenue management systems. Roger served as the senior executive and board member of three European companies. Mr. Saumure has extensive international experience in both Europe and Asia.

Regardless of how pending US legislation is resolved, manufacturers need to move ahead

Worldwide, pharma distribution is moving to a serial-coded basis

The Becton Dickinson Neopak syringe, one of the company’s latest offerings, was designed specifically for iopharmaceuticals. The prefillable device is manufactured with tighter dimensional tolerances to reduce silicone lubrication levels and less dead-volume space. Credit: BD

		Beginning about 50 years ago, around the time the measles and polio vaccines were introduced, immunization began a subtle transition in the public’s mind from miracle cure to everyday necessity. As evidence of vaccination success grew with each new decade, families and insurers raised their expectations. Doctors and nurses demanded ever-higher levels of efficacy and safety. Advisory committees published schedules and guidelines.

		And to a large degree, those heightened expectations and demands have now been met: Childhood vaccination programs are unquestionably one of the greatest achievements of public health.

		But today, while one might think that the market for vaccines in developed countries is fully mature—with only limited room for improvement or innovation&mdash;a spirit of continuous improvement exists in many areas across the immunization enterprise, from programs to help drive increased coverage, to new delivery devices (for nasal and intradermal administration for example) and a renewed focus on best practices in storage, preparation and administration. And as it turns out, an important component of continuous improvement in preparation and administration is not only linked to the clinician’s practice routine or in the manufacturer’s vaccine formulation&mdash;but also in the humble vaccine container.

		This article briefly reviews how vaccine packaging has shifted from an arguably lower priority to an important topic of discussion for healthcare organizations, public health agencies, and the many providers of immunizations including nurses, physicians, and pharmacists. More specifically, ready-to-administer prefilled syringes (PFS) are increasingly the preferred choice over multi-dose vials (MDVs) and single-dose vials (SDVs) for injectable vaccine and drug administration. As support, consider 1) the new best-practice guidelines from the US Centers for Disease Control (CDC); 2) recent published evidence of vaccine administration safety and efficiency; and 3) noteworthy trends in vaccine primary packaging choice and user (clinician) preferences.

		The take-home message: A growing proportion of stakeholders in the vaccine marketplace—from patients, to clinicians, to payers, to policy makers&mdash;are paying attention to the impacts of injectable vaccine packaging on immunization program safety and efficiency, and this growing awareness is translating directly into increased usage of prefilled vaccines and drugs.

		Greater awareness of potential problems with the practice of “predrawing” vaccines to save time has led the CDC to change its immunization guidelines. Predrawing—that is, filling a number of syringes from either a multiple-dose vial or a single dose at the same time and storing them for later use&mdash;is a practice employed in many busy immunization settings to help speed the process. But now, acknowledging the potential for error and contamination, the new (November 2012) CDC guidance reads as follows:

		Manufacturer-filled syringes are recommended instead of predrawing vaccine. Manufacturer-filled syringes are labeled and prepared under sterile conditions that meet standards for proper storage and handling. They have been designed and tested to assure vaccine potency and sterility over prolonged storage times. As long as they are stored under appropriate conditions, manufacturer-filled syringes may be kept and used until their expiration dates unless contaminated. (

www.cdc.gov/vaccines/recs/storage/toolkit/storage-handling-toolkit.pdf

		The heart of the issue for the CDC is consistency and safety. Their new recommendation seeks to shift the repetitive task of filling and properly labeling the predrawn syringe away from hundreds of thousands of nurses, physicians, pharmacists, nurse practitioners, medical technicians, etc. Instead, with PFS, the preparation/filling task is managed by the vaccine company—a consistent FDA-inspected, cGMP-compliant process that avoids the inherent variability found in the diverse predraw environments.

		Driving these safety-related changes from the CDC as well as other organizations is the growing evidence base documenting exactly how variability in vaccine packaging and preparation may affect safety and reduce efficiency. Examples from this evidence base are discussed next.

		A 2010 time-motion study performed by The Johns Hopkins University Bloomberg School of Public Health demonstrated the safety and workflow advantages of PFSs. [1] Investigators observed over 1,500 vaccine injection preparations, and determined time differences and subsequent cost differences associated with the use of PFSs vs. MDVs. They also observed preparation and handling practices.

		Investigators found that preparing a dose using MDVs took 37 seconds longer than with PFSs due to the increased number of steps required to prepare a vaccine packaged in a vial. Assuming standard costs for materials and labor, researchers concluded that administration via PFSs could save a clinic approximately $1,100 per 1,000 doses assuming the same price per vaccine dose.

		More significantly, PFSs reduce the risks associated with deviation from best practices as established by the CDC. [2] For example, researchers observed the following with MDVs:

			Neglecting to write on a vial the date it was opened

			Not properly sterilizing the rubber stopper prior to withdrawing vaccine dose

			“Trusting” memory for transcribing lot number

			Predrawing the day before or using leftover predrawn syringes from a prior day

			Predrawn syringes were often left out (not refrigerated) for long periods of time and, in some cases, for a whole day

			Drawing vaccine from multiple vials, especially without checking if the lot numbers are the same [3]

		By eliminating many preparation steps required with a vial, a prefilled syringe is simpler and easier to use. Vaccination workflow may be faster and smoother for clinicians and may improve speed of patient throughput.

		An additional and important advantage offered by PFSs is that they come from the (vaccine) manufacturer labeled by the manufacturer. All too often, syringes predrawn from vaccine vials are left unlabeled, or are subject to variable labeling practices, clinic by clinic or perhaps even clinician by clinician.

		As emphasized in the new CDC guidelines, this predrawing increases the risk of a wrong or improperly stored injectable vaccine being given; dosing errors also increase when a vaccine is prepared and labeled by hand. [4] Prefilled and prelabeled syringes can help avoid these errors and omissions, ensure accurate dosing, and offer clinics a ready-to-use safe and simple time-saving alternative to predrawing several vaccine syringes in advance.

		Variations from clinical best practices can be influenced by many different factors including experience, education, and “real-life” clinician scenarios (multitasking, distractions, work-flow pressure, etc.). While the vaccine enterprise in the US is considered safe, there have been cases, studies, and data developed that show errors in preparation and administration can occur.

		In 2010, Premier Safety Institute conducted a study with more than 5,000 clinicians to understand the current injection practice patterns. This was done in response to “increasing reports of outbreaks in the US involving transmission of hepatitis B and C to patients associated with unsafe injection practices and breakdowns in basic infection control”. [5] An example of this occurred in the 2007—08 influenza campaign where a physician’s office in Long Island, NY was engaged in a practice of drawing six 0.5ml flu vaccine doses into a 3ml syringe and subsequently vaccinating six individuals with the same syringe and only changing the needle. [6]

		The Premier study revealed that this practice may be more widespread than anticipated. Among study participants, 0.9% reported that they change the needle but reuse the syringe on multiple patients, 6% reported using single-dose or single-use vials for more than one patient, and 1.1% reused a syringe to enter a multi-dose vial and then save that vial for use on another patient. [7]

		Citing CDC definitions of injection safety, the study authors concluded, “Our findings provide evidence that healthcare professionals continue to engage in unsafe injection practices, which represent an ongoing threat to patient safety in the United States and are devastating to all those patients who are impacted.”

		Driven partly by evidence of the type just cited, and partly by market factors, decisionmakers in immunizations programs in developed countries have been steadily shifting to adoption of the PFS format. Consider two market factors accelerating that shift.

		The typical vaccination setting in the US is diversifying from the clinic/hospital to non-traditional settings such as retail, schools, and pharmacies. In the 2010—11 influenza vaccination campaign, nearly one in five adults received their flu shot in a retail setting. [8] Vaccinators in these new settings bring widely varying clinical experiences, education, and skills. At the same time, these new immunization enterprises, facing inescapable cost pressures, are seeking every opportunity to shave costs in delivering vaccinations.

		These dual factors—a diversifying vaccine workforce and a push for program efficiency&mdash;have prompted immunization leaders to seek out new practices that standardize and simplify the vaccination process.

		To this end, the vaccine package—which occupies an underappreciated space at the clinical interface between vaccine, patient, and caregiver&mdash;has been re-evaluated as a potential leverage point in vaccination safety and efficiency. And when considering the three main types of vaccine packages in use&mdash;prefills, multi-dose vials (MDVs), and single-dose vials (SDVs)&mdash;many clinician decisionmakers have elected to switch to the PFS format. The main reason: the unit-dose ready-to-administer vaccines essentially eliminate multiple steps that must be repeated flawlessly throughout the day. This simplification is critical since it allows immunization programs to neutralize much of the skillset and practice variability in their staff&mdash;in both traditional and emerging vaccination venues. Potential gains in efficiency with the PFS product are another important factor.

		Both clinicians and patients have recently voiced opinions on vaccine packaging. Here is one comment on vaccine safety issues from a recent article in the American Journal of Infection Control:

		“Although there is a clear need for more education, this may not necessarily eliminate all unsafe practices. Adopting principle from human factors engineering, we must consider redesigning devices, equipment, and processes to reduce or eliminate risk of bloodborne pathogen transmission.” [9]

		This statement is consistent with FDA’s increasing requirements around the integration of Human Factors Engineering (HFE) and device design. HFE is the science and the methods used to make devices easier and safer to use … helping to improve human performance and reduce the risks associated with use. [10]

		To better understand the user interface of clinician and various vaccine packages, and the associated potential for errors, a comprehensive study was conducted in 2011 by Interface Analysis Associates. [11] The researchers outlined the process of vaccine preparation from storage through disposal for the three vaccine package types, and then developed a list of all potential errors associated with each step. The study identified all distinct, significant operations within each risk category for potential contribution to risk.

Vaccine administration is shifting from multidose vials to prefilled syringes for a host of important safety and economic considerations

A growing preference for ready-to-administer vaccines: new guidelines, evidence, and trends

Fig. 1. The structure of PPD’s REMS management system. Credit: PPD

		Are you prepared to work with your competitors on the development, management and assessment of a Risk Evaluation & Mitigation Strategy (REMS) program for your drug or biological product? If you have a REMS now or may have a REMS program associated with one of your products in the future, there is a good chance you will eventually be doing just that.

Risk Evaluation & Mitigation Strategy (REMS) programs are evolving, with new complexities for compliance managers

Pharmaceutical Commerce - September/October 2013