Henry Schein 2013 Annual Report Download - page 49

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names and addresses regarding transactions going back to either the manufacturer or the last authorized distributor
of record that handled the drugs. The FDA has continued to develop its policies regarding the integrity of the
supply chain, such as by issuing a Final Guidance in 2010 regarding standardized numerical identification for
prescription drug packages and by issuing a final rule in 2013 for a unique medical device identification system, to
be phased in over seven years, that will require most medical devices distributed in the United States to carry a
unique device identifier. The new requirements of the Drug Quality and Security Act may affect previously issued
FDA guidance regarding standardized numerical identifiers.
Over the last several years, many states have implemented or proposed laws and regulations that are intended to
protect the integrity of the pharmaceutical supply chain. This created a patchwork of state wholesale distributor
licensing and drug pedigree (i.e., track and trace) requirements. Bills have been proposed in Congress that more
comprehensively address the security of the drug supply chain, including track and trace systems. One important
federal measure, The Drug Quality and Security Act of 2013, was signed into law by President Obama on
November 27, 2013. Title II of this measure, known as the Drug Supply Chain Security Act, will be phased in by
the FDA over 10 years, and is intended to build a national electronic, interoperable system to identify and trace
certain prescription drugs as they are distributed in the United States. The Drug Supply Chain Security Act
provides specific track and trace requirements for manufacturers, wholesalers, repackagers, and dispensers (e.g.,
pharmacies) of prescription drugs and requires manufacturers and wholesale distributers, by January 1, 2015, to
have in place a system by which they can identify a product in their possession or control that is a “suspect
product,” and to meet product tracing requirements.
The law also sets requirements for the licensing and operation of wholesalers and third party logistics (“3PL”)
providers, and includes the creation of national wholesaler and 3PL licenses in cases where states do not license
such entities. Wholesalers and 3PLs would also be required to submit annual reports to the FDA beginning on
January 1, 2015, which would include information regarding each state where the wholesaler or 3PL is licensed, the
name and address of each facility, and contact information.
Significantly, under the Drug Supply Chain Security Act, beginning on its enactment date, the Act pre-empts
similar state laws, thus apparently rendering unenforceable, in whole or in part, state drug pedigree laws that have
already been implemented. Over the past few years there have been increasing efforts by various levels of
government, including state departments of health, state boards of pharmacy and comparable agencies, to regulate
the pharmaceutical distribution system in order to prevent the introduction of counterfeit, adulterated or mislabelled
pharmaceuticals into the distribution system. A number of states have implemented pedigree requirements,
including drug tracking requirements, which are intended to protect the integrity of the pharmaceutical distribution
system. A number of states, including Florida, have already implemented pedigree requirements, including drug
tracking requirements, which are intended to protect the integrity of the pharmaceutical distribution system.
California has enacted a statute that, beginning in 2015, was intended to require manufacturers to identify each
package of a prescription pharmaceutical with a standard, machine-readable unique numerical identifier, and to
require manufacturers and distributors to participate in an electronic track-and-trace system and provide or receive
an electronic pedigree for each transaction in the drug distribution chain. The California law was to take effect on a
staggered basis, commencing on January 1, 2015 for pharmaceutical manufacturers, and July 1, 2016 for
pharmaceutical wholesalers and repackagers. We are in the process of analyzing the impact of the Drug Supply
Chain Security Act to our business.
The federal Controlled Substances Act also regulates wholesale distribution of controlled substances and
certain chemicals. The Combat Methamphetamine Enhancement Act of 2010, which became effective in April
2011, requires retail sellers of products containing certain chemicals, such as pseudoephedrine, to self-certify to the
Drug Enforcement Administration (“DEA”) that they understand and agree to comply with the laws and regulations
regarding such sales. The law also prohibits distributors from selling these products to retailers who are not
registered with the DEA or who have not self-certified compliance with the laws and regulations. Various states
also impose restrictions on the sale of certain products containing pseudoephedrine and other chemicals. The
Secure and Responsible Drug Disposal Act of 2010, signed by President Obama in October 2010, is intended to
allow patients to deliver unused controlled substances to designated entities to more easily and safely dispose of
controlled substances while reducing the chance of diversion. The law authorizes the DEA to promulgate
regulations to allow, but not require, designated entities to receive unused controlled substances.