Anti-Counterfeit Drug Initiative Workshop
U.S. Food and Drug Administration
February 8 & 9, 2006

Good morning and thank you for the opportunity to comment on behalf of the Healthcare Distribution Management Association (HDMA) and on our strong commitment to the continued safety, security and efficiency of the U.S. healthcare supply chain. HDMA commends the FDA for holding this important public workshop on behalf of patient safety.

HDMA represents the nation’s primary, full-service healthcare distributors. Our 42 members are national and regional companies, as well as family-owned businesses. Each and every day, HDMA member companies safely and efficiently deliver nine million healthcare products to more than 142,000 pharmacies, hospitals, nursing homes and clinics across the United States for patients in need.

HDMA members serve as the central link in a sophisticated supply chain. As such, we have a responsibility to work closely with our supply chain partners to safeguard patient health. We take this mission very seriously, and we support manufacturers, pharmacies and the government in the ongoing efforts to ensure the U.S. system remains secure, efficient and highly regulated.

I would like to stress that every supply chain partner must share this commitment. No one link in the supply chain works independently, and patients depend on us to work together to keep their medicines safe and secure.

I can assure you that HDMA and our members take the lead each day in advancing business, technology, legislative and regulatory solutions to protect patients from increasing criminal threats to supply chain security. One of the greatest threats is counterfeiting -- and it can occur at any point in the healthcare supply chain.

That is why HDMA is a driving force for technology-based anti-counterfeiting solutions. HDMA has and will continue to spearhead industry work groups and educational initiatives that bring together top government and industry leaders.

Our goal is to develop and implement business, legislative and regulatory solutions that provide a safe and reliable supply of medicines for patients, 24 hours a day, 7 days a week. We work toward this goal every day, and we are making constant improvements.
HDMA has conducted leading-edge research, worked on pilot projects and provided industry educational forums to work toward broad-based solutions.

Already, the HDMA Foundation has released groundbreaking research on the costs and benefits of adopting EPC in healthcare. Conducted by A.T. Kearney, this study found that the leading benefits of EPC/RFID adoption include improved supply chain integrity and patient safety. These benefits increase as more products are tagged at the item level.

Just last year, the HDMA Board approved a proposal for the formation of a joint industry initiative to facilitate progress on supply chain business and technology solutions. HDMA is in discussions with NACDS and manufacturers to develop an industry-wide roadmap to enhance patient safety, reduce the threat of counterfeiting and support continuous business improvements across the healthcare supply chain.

Separately, the HDMA Foundation is beginning a new research project with Rutgers University to develop the requirements for Data Management and Data Sharing in the healthcare supply chain, both of which are key elements in advancing the progress of track and trace solutions.

These are just a few of a long list of programs and initiatives that HDMA has advanced on behalf of patient safety, supply chain integrity and business innovation.

HDMA firmly believes that standards-based electronic solutions -- such as EPC/RFID -- are the best solution for providing true track and trace capability, not a false sense of security. We commend the FDA for working with HDMA and all supply chain partners to explore what’s practical and what’s possible on the way to 2007 and beyond.

Track and trace solutions are evolving. The industry continues to learn more about what technology can do through pilots and real-world implementation. Armed with this new knowledge, I can say the industry’s original goal for implementing track and trace technologies by 2007 may have been too optimistic. However, that does not diminish our commitment to seeing these technologies uniformly applied as soon as possible across the entire supply chain to improve patient safety.

I applaud the many companies who are developing technology solutions to increase supply chain security. Many of these companies are here today. HDMA looks forward to continuing to work with these and other technology companies to develop true track and trace solutions based on consistent, open standards.

These standards currently are being developed by EPCglobal, with input from HDMA, its members and our supply chain partners.

Technology alternatives may exist now, but many are company-specific, proprietary and created to address unique business concerns. In a supply chain where distributors are at the center of a system consisting of hundreds of manufacturers and thousands of different pharmacy settings, an endless array of competing systems will create technology gridlock. The patients we serve every day are depending on us to work together to implement solutions that stay ahead of criminal counterfeiters and improve the safety of the medicine supply. They will neither tolerate blame across the supply chain, nor the development of a plethora of semi-solutions that do not track, trace or authenticate products down to the item level.

As distributors, we understand this. Solutions cannot start in the middle, nor can progress be pushed along by a single link in the supply chain. We need the support of the entire supply chain. We must succeed collectively on behalf of patients nationwide, with all trading partners moving toward a uniform system.

The industry has made progress, but I believe we can do more by uniting around our common goals. Let’s begin at the beginning, with standards-based mass serialization, and work with each other to the end of the supply chain. The time is now for the industry to come together and agree on uniform, consistent standards, privacy safeguards and business solutions that enable true track and trace.

I want to emphasize that electronic track and trace solutions, however, are just one element of the overall strategy to improve supply chain security and patient safety. HDMA has been active for years, petitioning states and working with legislators to crack down on criminals who seek to obtain drug distribution licenses. HDMA has been leading the call for stricter, more uniform licensing standards, stronger regulations and tougher criminal penalties, and has been advancing best business practices to help secure the nation’s medicine supply.

HDMA also supports implementation of the final Prescription Drug Marketing Act (PDMA) rule, in tandem with necessary improvements that reflect the 2006 marketplace. This will be a positive step to further ensure the continued, safe and efficient distribution of healthcare products.

Since Congress enacted the PDMA, the marketplace for medicines has changed dramatically. A vast array of biotechnology and generic products have been introduced, with hundreds of new companies and thousands of new packages, many requiring special handling. Healthcare delivery models have also changed, and distributors now serve more than 142,000 pharmacy settings. These changes have made the system significantly more complex and require precise regulation to maintain the continued, efficient flow of medicines to patients in need. This applies in emergency situations, such as hurricanes or earthquakes, but also in everyday situations when life-saving medications are delivered to patients “just in time.”

With this in mind, HDMA is committed to working with the FDA on implementation of the PDMA final rule and to address the changes necessary to ensure the continued safe and efficient distribution of essential medications to patients nationwide. We pledge to work with all of our supply chain colleagues, EPCglobal and with the FDA to advance current and emerging technologies such as EPC/RFID. And we pledge to work with Congress to strengthen the PDMA statute to aggressively address the threat of counterfeit products, through uniform, federal licensing of healthcare distributors.

In conclusion, the nation’s healthcare supply chain is a true partnership. As distributors, we work tirelessly with manufacturers, pharmacies, the government and law enforcement to develop comprehensive anti-counterfeiting solutions that protect patients. We must remain vigilant in recognizing new threats to our supply chain. And we must continually implement new processes to stay ahead of the criminals who attempt to breach existing security systems.

No single solution will suffice. Healthcare distributors will continue to advocate for a comprehensive approach. We will continue to advocate for:

• Stricter, more uniform federal licensing standards, stronger enforcement and harsher criminal penalties;
• The adoption of supply chain technology solutions such as EPC/RFID;
• The development of new research and best business practices in the supply chain.

The safety of our nation depends on each of us -- and all of us together -- in this healthcare partnership.