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Drug Pedigree Mandate Could Be Expensive

According to a new study, complying with legislation proposed by two U.S. Congressmen could cost as much as $110,000 per pharmacy—and more than a billion dollars for a large chain.
By Beth Bacheldor
Jul 07, 2008A coalition of retail pharmacies has released a study that estimates the cost of implementing RFID and 2-D serialized bar-coding as part of a federally mandated track-and-trace system could be as high as $110,000 per store. Conducted and prepared by Accenture for the Coalition for Community Pharmacy Action (CCPA)—which is comprised of the National Community Pharmacists Association (NCPA) and the National Association of Chain Drug Stores (NACDS)—the study was carried out during the past month and a half in response to the proposed Safeguarding Pharmaceuticals Act of 2008 (HR 5839), introduced in April of this year.

Introduced in the U.S. House of Representatives by Steve Buyer (R-Ind.) and Jim Matheson (D-Utah), HR 5839 would require the U.S. Food and Drug Administration (FDA) to generate a unified pedigree standard that companies would then need to use to track and trace pharmaceuticals as they traverse the supply chain (see U.S. Congressmen Seek to Specify a Track-and-Trace Technology for Drugs). This would amend the Federal Food, Drug, and Cosmetic Act, and has been referred to the House Energy and Commerce Subcommittee on Health for review. The prospects for passage are uncertain at this early stage.

The Accenture study based its findings on research of media and literature regarding counterfeit drugs, as well as surveys of NACDS and NCPA members selected at random. The company also conducted verbal interviews with a subset of NACDS and NCPA members, and developed a cost model to estimate the cost implications of such an implementation.

Retail pharmacies are not opposed to track-and-trace technologies that would bolster the safety and security of the pharmaceutical supply chain, says Charlie Sewell, senior VP of government affairs for the NCPA, and co-president and founder of the CCPA. But the concern, he says, is that federal and/or state mandates calling for track-and-trace systems would currently be too costly for many retail pharmacies. In particular, he notes, the coalition is "adamantly opposed to HR 5839 in its present form."

NACDS, in a press release issued after HR 5839 was introduced, claimed the adoption and implementation of track-and-trace systems "would be extremely complex and costly for retail pharmacies and others in the supply chain, and without the desired benefit. These systems are many years away from full development, have not been fully tested and lack uniform standards and patient privacy safeguards."

The study determined that costs would range between about $84,000 and $110,000 per pharmacy for the hardware, software, infrastructure, and labor and resources necessary to implement a track-and-trace system. In addition, it also determined cumulative costs covering a seven-year timeframe. The authors assumed the track-and-trace system would be fully implemented within the first year, but that there would be other costs associated with the system in subsequent years, including maintenance, hardware and software upgrades, compliance and so forth.

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