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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
According to the study, a "large" chain, consisting of 14 distribution facilities and 4,000 pharmacies, would incur a total cumulative cost of $1.3 billion, while a "medium" chain would face a $46.6 million total cumulative cost for one distribution facility and 100 pharmacies. The typical "small" chain would experience a total cumulative cost of $3.9 million with no distribution facilities and 15 pharmacies, whereas an "independent" pharmacy with no distribution facilities and two pharmacies would incur a total cumulative cost of $472,275.

Sewell says community pharmacies, which are already struggling, may be put out of business altogether if a mandate requiring them to support track-and-trace technologies were passed at the present time. "This could be the straw that breaks the camel's back," he states. "It would really make the economic viability of community pharmacies come into serious question, and it would definitely have an impact on chain pharmacies."

The study based its analysis on the following assumptions: that the system would be fully implemented within the first year of a seven-year timeframe, that it would incorporate both RFID technology and 2-D bar codes, and that the RFID technology would include both ultrahigh-frequency (UHF) and high-frequency (HF) systems. The study breaks down timeframes and percentages regarding when, and to what extent, each technology would be implemented.

The assumptions were necessary, Sewell says, simply because there are so many questions as to what a federal mandate would require, or how any such system would be implemented. "Like so much legislation, the parameters aren't necessarily all spelled out," he says. "The problem is, it is all up in the air—nobody has a definite handle as to how this is all going to work."

The FDA's Prescription Drug Marketing Act (PDMA) of 1987 requires drug distributors to document (via a pedigree, though not necessarily in electronic form) the chain of custody as drug products move through their distribution system. The agency has considered track-and-trace technologies for some time, and does advocate the use of RFID to create pedigrees for prescription drugs in an effort to combat drug counterfeiting and improve drug safety.

Several states have either enacted or are currently considering enacting legislation calling for pedigrees. Florida has a pedigree law, for instance, requiring pharmaceutical distributors to document the chain of custody of prescription drugs in that state. And California's proposed legislation calling for an electronic pedigree (e-pedigree) system in its state has been pushed out from an effective date of 2009 to 2011, because the pharmaceutical industry indicated it would be unable to meet the earlier deadline (see All Eyes on FDA for Drug Pedigree).

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