FDA Counterfeit Drug Task Force

Interim Report

U.S. Department of Health and Human Services

Food and Drug Administration

Rockville, Maryland 20857

October 2003

Safe & Secure

FDA Counterfeit Drug Task Force Interim Report

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Contents

EXECUTIVE SUMMARY.....................................................................................1

I. The Counterfeit Drug Task Force..................................................................4

A. Purpose of the Task Force..........................................................................4

B. Development of the Interim Report ...........................................................5

C. What the Interim Report Contains.............................................................5

D. Development of the Final Report...............................................................6

E. Goals of the Initiative .................................................................................6

II. Background: Vulnerabilities in the U.S. Drug Distribution System.........7

A. The Drug Distribution System ...................................................................7

B. Sources of Counterfeit Drugs............................................................8

C. Points of Vulnerability in the U.S. Drug Distribution System..................9

D. Background: Regulatory and Legislative History ...................................14

1. Prescription Drug Marketing Act .....................................................14

2. Model Practice Act............................................................................15

3. Penalties and Enforcement................................................................16

E. Background: Technology Issues..............................................................16

1. Types of Anti-Counterfeiting Technologies....................................16

2. Utilization of Anti-Counterfeiting Technologies.............................17

3. Cost/Benefit of Anti-Counterfeiting Technologies..........................18

F. Background: Health Professional and Industry Issues............................20

1. Secure Business Practices.................................................................20

2. Rapid Alert and Response Systems..................................................21

G. Background: Education and Public Awareness Issues............................22
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III. Potential Options for Improving Prescription Drug Security..................24

A. Technology ...............................................................................................24

B. Secure Business Practices and Regulatory Requirements ......................26

C. Rapid Alert and Response Systems .........................................................27

D. Education and Public Awareness.............................................................27

E. International Issues...................................................................................28

IV. Questions Related to the Potential Options for Improving Prescription

Drug Security..................................................................................................29

A. Questions Concerning Technology (Options 1-10).........................29

B. Questions Concerning Regulatory Requirements and Secure

Business Practices (Options 11-14)..................................................31

C. Questions Concerning Rapid Alert and Response Systems (Options

15-17).................................................................................................32

D. Questions Concerning Education and Public Awareness (Options

18-22).................................................................................................32

E. Questions Concerning International Issues (Options 23-24)...........33

V. Request for Comments..................................................................................34

REFERENCES ......................................................................................................34

Appendix A: Table of Anti-Counterfeiting Measures......................................35
FDA Counterfeit Drug Task Force Interim Report

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EXECUTIVE SUMMARY

FDA Commissioner Mark McClellan established the Counterfeit Drug

Task Force in July 2003 as part of FDA's heightened battle against the

growing threat of counterfeit drugs. Commissioner McClellan charged

the Task Force with developing recommendations for achieving four

fundamental goals: (1) preventing the introduction of counterfeit drugs,

(2) facilitating the identification of counterfeit drugs, (3) minimizing

the risk and exposure of consumers to counterfeit drugs, and (4)

avoiding the addition of unnecessary costs on the prescription drug

distribution system, or unnecessary restrictions on lower-cost sources

of drugs.

The Task Force has reached several interim conclusions. First, there is

no single "magic bullet" against the growing number of sophisticated

counterfeiters; rather, a multi-pronged strategy to secure the drug

supply could be much more difficult for counterfeiters to overcome

than any single method. It could also be less costly, because a “onesize-fits-all" approach is unlikely to work for all parts of the complex

prescription drug supply system. Second, although drug counterfeiters

today are more sophisticated and better organized than ever before,

there are many new technologies and approaches that have the potential

to prevent and contain counterfeit drug threats. While most of these

new approaches have not yet been fully developed, implemented, and

tested, they hold the promise of a more secure drug distribution system

in the years ahead. Third, because many of these promising ideas have

not been fully developed, the Task Force believes that an opportunity

for broad public comment is essential to guide its further work.

Consequently, the interim report contains a series of potential options

that might be part of a multi-pronged approach to combat counterfeit

drugs. The potential options are based on what the Task Force has

learned to date from reports, other governmental agencies, and

individual stakeholders (e.g., state governments, trade associations,

consumer groups, drug manufacturers, wholesale distributors,

pharmacies, consumers, academicians, manufacturers of anticounterfeiting technologies).

The interim report also contains background information compiled by

the Task Force on the U.S. drug distribution system and the

vulnerabilities that facilitate the introduction of counterfeit drugs into

the system.

The background sections also discuss how specific factors, such as

emerging anti-counterfeiting technologies, industry business practices,

public awareness, and the dissemination of information, affect the

ability to deter and detect counterfeit drugs.
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The discussion of the U.S. drug distribution system and these specific

factors provide the context and basis for the potential options proposed

for consideration by the Task Force. These options are in the areas of:

• Technology;

• Regulatory requirements and secure business practices;

• Rapid alert and response systems;

• Education and public awareness; and

• International issues.

Because a principal goal of this report is to stimulate public discussion

of the most cost-effective way to keep the drugs used by Americans

secure, these options are posed as potential options and are

accompanied by a number of questions for the public, highlighting

areas where the Task Force wishes to obtain further comment to inform

its final report.
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I. The Counterfeit Drug Task Force

A. Purpose of the Task Force

On July 16, 2003, Commissioner of Food and Drugs Mark McClellan, M.D.,

Ph.D., formed an internal FDA Counterfeit Drug Task Force to develop

recommendations for steps FDA, other government agencies, and the private

sector can take to minimize the risks to the public from counterfeit drugs and

biologics (hereinafter, all references to “drugs” refers to both drugs and

biologics) getting into the U.S. drug distribution system. This initiative is

designed to enhance the existing safeguards that are in place to protect the

nation’s drug supply from counterfeit drugs.

Although FDA believes that domestic counterfeiting is not widespread, the

agency has recently seen an increase in counterfeiting activities as well as

increased sophistication in the methods used to introduce finished dosage form

counterfeits into the otherwise legitimate U.S. drug distribution system. FDA

counterfeit drug investigations have increased to over 20 per year since 2000,

after averaging only 5 per year through the late 1990’s.

Counterfeit drugs pose significant public health and safety concerns. They may

contain only inactive ingredients, incorrect ingredients, improper dosages, subpotent or super-potent ingredients, or be contaminated. As a result, patients may

be put at risk for serious adverse health consequences. For example, Procrit, a

drug used by cancer and AIDS patients, was recently counterfeited and the drug

was replaced with nonsterile tap water, which could have caused a severe

infection of the bloodstream. In another recent counterfeiting incident, white

tablets with “aspirin” imprinted on them replaced Zyprexa, a drug used for

schizophrenia and acute bipolar disorder. This could have been particularly

dangerous for patients who are aspirin-sensitive or aspirin-allergic or who have

bleeding disorders. In addition, patients no longer received appropriate treatment

for their illness. Counterfeiters also have been known to switch lower-strength

drug for higher strength drug. As a result, patients receive lower than expected

doses of drug, leading to ineffective treatment and therapeutic failure.

Although exact prevalence rates in the U.S. are not known, outside the U.S. drug

counterfeiting is known to be widespread and affect both developing and

developed countries. For example, in South-East Asian countries approximately

10% of drugs on the market are believed to be counterfeit. In China, authorities

believe that for some drugs, counterfeits account for 50% of the product on the

market. It is reported that in underdeveloped countries such as Argentina,

Colombia, and Mexico, up to 40% of manufactured pharmaceuticals may be

counterfeit.
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B. Development of the Interim Report

The Task Force consists of senior agency staff from the Office of the

Commissioner (Office of Policy and Planning, Office of Regulatory Affairs,

Office of External Affairs, and Office of the Chief Counsel) the Center for Drug

Evaluation and Research, and the Center for Biologics Evaluation and Research.

As part of this effort, the Task Force has met with several government agencies,

such as the Secret Service, U.S. Customs and Border Protection, the Bureau of

Engraving and Printing, and the Department of Justice, as well as various

individual private sector stakeholders. The Task Force has also reviewed reports

prepared by, or on behalf of, federal and state governments, and heard from the

public, including such stakeholders as pharmaceutical manufacturers, wholesale

distributors, pharmacy associations, consumer groups, academicians,

independent consultants, and manufacturers of anti-counterfeiting measures. As

described in more detail below, the Task Force intends to continue these

interactions before developing its final report.

Based on what it has heard to date, the Task Force believes that the most

constructive approach to addressing the problem of counterfeit drugs lies in

identifying vulnerabilities in the drug distribution system and addressing those

vulnerabilities with a multi-pronged approach. So far, the Task Force has found

considerable consensus about these vulnerabilities, as well as new opportunities

to address them. The Task Force intends to build on these ideas to identify a set

of broadly supported initiatives to improve the security of the U.S. drug supply.

C. What the Interim Report Contains

This interim report contains a series of ideas and potential options developed by

the Task Force for consideration in each of the following areas: technology,

regulatory requirements and secure business practices, alert systems, education

and public awareness, and international issues. The potential options are in the

form of potential actions that, if taken, may prevent the introduction of, and help

to quickly identify, counterfeit drugs in the U.S. drug distribution system. These

options do not represent the recommendations of the Task Force; rather, they are

included in this report to stimulate further discussion and critiques, and to

support the development of clear proposals that are likely to succeed. Many of

the options discussed complement each other and are not mutually exclusive.

In its research and exploration of ways to address counterfeit drugs, the Task

Force has been sensitive to the rising cost of drugs and that its efforts should not

impose additional costs that could be borne by consumers nor impede access to

less expensive, lawfully obtained drugs. In fact, this interim report includes

potential options that may bring about cost savings to entities in the U.S.

distribution system, which could reduce drug costs while at the same time

reducing the likelihood that U.S. consumers would receive a counterfeit product.
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Additionally, Section IV of this interim report contains a series of questions

highlighting areas where the Task Force wishes to obtain further information to

help inform its final report.

D. Development of the Final Report

The Task Force plans to continue gathering information from individual

stakeholders and members of the public as it prepares its final report which is

scheduled for release in January 2004. As part of this effort, the Task Force will

hold a public meeting and technology forum on October 15, 2003, during which

the Task Force will hear testimony from the public on the problem of counterfeit

drugs and will learn more about specific anti-counterfeiting technologies. See

the counterfeit drug initiative web page at www.fda.gov for more information

and a copy of the notice announcing the meeting. The questions in this report

supplement the questions published in the notice.

The Task Force recognizes that the options presented in this report are based on

what it has heard and reviewed to date, and looks forward to receiving

comments and information that will provide further basis for the final report and

recommendations of the Task Force.

E. Goals of the Initiative

In the final report, the Task Force plans to issue recommendations that will

ensure that the U.S. drug distribution system continues to be the safest, most

secure system in the world. Features of the system might include:

• the use of cost-effective technologies, including many new and

emerging technologies, to authenticate and track drugs from the point

of manufacture to the point of dispensing to deter and detect the

introduction of counterfeit drugs;

• exercise of a high level of diligence by all purchasers to ensure that

drug products are authentic, in accordance with industry standards and

secure business practices;

• a regulatory scheme that minimizes the burdens placed on each

participant in the system; and

• well-informed stakeholders and consumers.
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II. Background: Vulnerabilities in the

U.S. Drug Distribution System

In order to better understand how counterfeit drugs are introduced into the U.S.

marketplace, the Task Force examined the drug distribution system in the U.S.

to better understand existing vulnerabilities.1

A. The Drug Distribution System

Congress created a framework of laws intended to maintain high public

confidence in the U.S. drug distribution system and the safety and efficacy of

drug products. States also have enacted laws and regulations that are intended to

complement Federal oversight to further protect the integrity of the U.S. drug

distribution system. Together, State and Federal legislation and regulations work

to provide security in the nations drug supply.

The Task Force reviewed and considered information from published reports,

criminal investigations, and other sources describing the drug distribution

system. What follows is a brief summary of what the Task Force has learned to

date.

There are three large wholesalers who account for about 90% of the primary

wholesale market. In addition, there are many smaller wholesalers who may

have full or partial product lines and who may or may not sell nationally or

regionally. Some of these wholesalers concentrate in the “secondary” wholesale

market, i.e., they purchase selected drug products from wholesalers and they

resell to other wholesalers, including large wholesalers, as well as pharmacies.

They generally purchase discounted drug products. There are many reasons why

sales from one wholesaler to another may benefit consumers. These may

include: 1) taking advantage of price discounts available on certain legitimate

drug products, (e.g., when a manufacturer or wholesaler has a temporary

overstock or purchases excessive product on speculation that the manufacturer

will raise prices), 2) low volume transactions (e.g., involving drugs that are used

only occasionally in special populations), 3) quick turnaround (e.g., permitting a

wholesaler or pharmacy to meet a temporary and unexpected increase in demand

 

1

 The Food Drug and Cosmetic Act (the Act) defines a counterfeit drug as “a

drug which, or the container or labeling of which, without authorization, bears

the trademark, trade name, or other identifying mark, imprint, or device, or any

likeness thereof, of a drug manufacturer, processor, packer, or distributor other

than the person or persons who in fact manufactured, processed, packed, or

distributed such drug and which thereby falsely purports or is represented to be

the product of, or to have been packed or distributed by, such other drug

manufacturer, processor, packer, or distributor.” (21 U.S.C. 201(g)(2))
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for a drug), or 4) sale to a remote area (e.g., sales to a small rural community).

Figure 1 depicts drug distribution models in the U.S.

Figure 1

[Figure 1 depicts three models showing the movement of

drugs through the U.S. drug distribution system. (The dotted

lines indicate potential illegal sales.) In the simplest situation,

the manufacturer sells directly to a retailer. However, in many

instances, there can be one or more wholesalers, or even a

repackager, who handles the drug before it reaches the retailer.

It is in these intermediate steps, particularly when the

wholesaler(s) and/or repackager(s) obtain products from

sources other than the original manufacturer, that the greatest

opportunities for compromising the security of the U.S.

distribution system exist.]

B. Sources of Counterfeit Drugs

For a variety of reasons, counterfeit drugs currently are most likely to be

introduced as part of a drug distribution process involving multiple wholesalers.

However, it is important to recognize that criminal activity to introduce

Drug Distribution Models

1. Manufacturer Retailer

 Repackager

2. Manufacturer Wholesaler Retailer

 Repackager

3. Manufacturer Wholesaler Wholesaler Retailer

Other Source of Drugs

(e.g., institutional pharmacies,

closed door pharmacies,

foreign markets
FDA Counterfeit Drug Task Force Interim Report

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counterfeit drugs can occur at any stage in the drug distribution system, so that

safeguards are needed in all of the transaction processes.

Many drugs in the distribution system are also “repackaged”. In the U.S.,

wholesale drugs in bulk containers are often repackaged into smaller containers

prior to sale to an end user. Repackaging operations are performed by

independent entities, wholesale distributors, or by distribution centers owned by

large pharmacies. In the current distribution system products are repackaged for

several legitimate reasons, such as to improve efficiencies for automated

systems. In Europe, products are packaged in quantities that relate to a course of

treatment (unit of use,) in general, obviating the need for repackaging.

The Task Force heard from law enforcement personnel that when counterfeit

drugs are identified, they are often associated with diversion of the drugs that

they purport to be. Diversion is the sale of drugs outside of the distribution

channels for which they were originally intended. Diverted drugs can originate

domestically, when there is illegal redirection of prescription drugs from other

legitimate sources, such as free samples supplied to health care providers or

lower-priced drugs intended for nonprofit clinics or Medicaid programs.

Additionally, diverted drugs can originate in a foreign market, when donated or

lower-priced product intended for use in one country is diverted to another

country where the market price is higher. Counterfeit drugs generally are

associated with the practice of diversion. Our current regulatory system does not

have legitimate, regulated channels for such diverted drugs (even if authentic) to

re-enter the drug distribution system. Consequently, there is no reliable

mechanism in place to distinguish effective authentic lower-cost drugs from

drugs that simply appear to be so, but are not legitimate and may be harmful.

Diversion facilitates the entry of counterfeit drugs into the U.S. distribution

system because those individuals or entities that sell or purchase diverted drugs

are less able to verify the integrity of these drugs, because they are purchased

outside the normal distribution chain and without the usual regulatory

safeguards. As a result, counterfeit, substandard, or otherwise adulterated or

misbranded products may become commingled with authentic drugs in the U.S.

distribution system. Because counterfeiting is often associated with drug

diversion, steps to secure the drug supply against counterfeits may also make

criminal drug diversion more difficult.

C. Points of Vulnerability in the U.S. Drug

Distribution System

As noted above, some business practices that may serve certain desirable

purposes, such as discounted pricing, can create opportunities for criminals to

introduce counterfeit drugs into the drug distribution system. These practices

represent potential vulnerabilities in the drug distribution system and require a

high level of diligence by participants in the drug distribution chain in order to

deter and detect counterfeit drugs. A more secure distribution system should
FDA Counterfeit Drug Task Force Interim Report

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include additional features to prevent counterfeit entry beyond the practice of

due diligence by all participants.

For reasons that often benefit consumers, a manufacturer may sell a drug

product at lower prices to certain end users or wholesalers. When this happens,

the cost differential between the discounted price and the market price (which is

based on the manufacturer’s usual list price and paid by other end users) can

foster multiple profitable transactions before sale to an end user. Both

wholesalers and end users who purchase drug products at discounted prices can

initiate this chain of transactions. A drug product undergoing multiple

transactions between the time it is sold by the manufacturer and the time it is

bought by an end user, should be properly authenticated (e.g., via inspection,

examination of the product's pedigree, or use of track and trace technology) by

each purchaser in order to minimize the possibility that a counterfeit product has

been substituted by an unscrupulous entity during one of the transactions.

Therefore, lack of a high level of diligence by members of the U.S. drug

distribution chain can facilitate the introduction of counterfeit drugs into the

drug U.S. drug supply. Investigations performed by Federal and State authorities

have repeatedly shown the existence of illicit nationwide networks designed to

capitalize on the inadequate due diligence performed by members of the drug

distribution system in order to introduce potentially unsafe diverted and

counterfeit drugs into the U.S. drug distribution system.

As drug prices continue to rise, opportunities to obtain lower cost drugs become

increasingly important. However, because potential cost savings from

discounted pricing provides a target for counterfeiters, the need for due diligence

in this circumstance, particularly when multiple transactions occur, also

increases.

However, even with a heightened level of vigilance by parties participating in

single or multiple transactions or by those seeking lower-cost versions of drugs,

there are weaknesses in the drug distribution system that can facilitate the entry

of counterfeit drugs. Below, we discuss in more detail, several points of

vulnerability in the U.S. distribution system that the Task Force identified.

• Incomplete Pedigrees—A pedigree is a statement of origin that traces

the drug from the point of manufacture and contains information about

all transactions that the product undergoes until it reaches the end user.

Products that have incomplete pedigrees, such as pedigrees that do not

include all the transactions involving a drug from the time it leaves the

manufacturer to the time it is sold to a consumer, make it more difficult

to track and trace the authenticity of those drug products than products

that have more complete pedigree information.

• Inadequate or No Authentication—It is important for purchasers in the

U.S. drug distribution chain to ensure that the product they are

purchasing is the genuine article (i.e., authenticate the product). Tools

and processes are readily available to copy drug products and their
FDA Counterfeit Drug Task Force Interim Report

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labeling and packaging to such an exact degree that even the

manufacturer of the authentic product cannot tell if it is real or fake. On

the other hand, technologies are also available (or will be in the near

future) to identify whether the product that they are purchasing is

authentic or counterfeit. Unfortunately, these authenticating

technologies often are not incorporated into the drug product, labeling,

or packaging.

• Importation—Prior to the passage of the Prescription Drug Marketing

Act (PDMA), including section 801(d)(1), drugs manufactured in the

U.S. could go to a foreign market and then be reimported into the U.S.

This became a common entry point for the introduction of adulterated

and counterfeit drugs into the U.S. drug distribution system. Such

products posed a public health problem because they were found to be

subpotent, lacked active ingredients, contained ingredients that could

pose a severe health hazard if taken by a susceptible person (e. g.,

aspirin), lacked adequate labeling, or were not approved drug products.

For example, pre-PDMA, in 1985, over 2 million counterfeit tablets of

Ovulen-21 from Panama were widely distributed throughout the U.S.

Similarly, in 1985, a counterfeit version of Ceclor, an antibiotic widely

used at that time, found its way into the U.S. drug distribution from a

foreign source.

In response to this public health problem, Congress passed PDMA,

which prohibits reimportation of drugs by any entity other than the

manufacturer. Figure 2 depicts the path of a drug in the U.S.

distribution system, both before and after passage of the PDMA. The

FDA and the States do not have oversight or authority over the foreign

marketplace. Under current law, the FDA only has authority over

foreign manufacturers when they submit to FDA oversight as part of a

new drug application. (See 21 USC 355.) In addition, under current

law, FDA has no authority to inspect or assess the practices used in

foreign drug distribution systems. Obtaining drugs from a foreign

distribution system further exacerbates existing vulnerabilities, similar

to, but more severe than, those that facilitate domestic diversion. (See

Figure 1, Model 3.) However, unlike entities engaged in domestic

diversion, foreign counterfeiters remain outside the reach of U.S. law

enforcement. Congress prohibited reimportation to protect American

consumers from receiving counterfeit, substandard, or otherwise

adulterated drugs.

Furthermore, when consumers order medications from outside the U.S.

(e.g., internet purchases, cross-border purchases), whether safe or

unsafe, a portal of entry is created for counterfeit drugs into the U.S.

distribution system. Counterfeiters can take advantage of this entryway

by combining many small purchases from foreign countries into one

and selling them to U.S. wholesalers or other unsuspecting entities.

Due to the extensive resources involved in preventing small quantities

of drugs from entering the U.S., as the volume of unapproved drug
FDA Counterfeit Drug Task Force Interim Report

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imports increases, it is more difficult for FDA to use its existing

resources to identify and stop unsafe importations.
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Figure 2

• Repackaging—Repackaging may destroy anti-counterfeiting measures

used in the original packaging and labeling of the drug. It may also

provide a point of entry for expired, adulterated, or counterfeit drugs

into the distribution system because they may be repackaged in a way

that makes them appear to be legitimate products. Lastly, counterfeit

and diverted product may be commingled with authentic product during

the repackaging process and find its way to an end user.

• Tamper-Evident Packaging—Currently, many prescription drug

products do not utilize tamper-evident features. Without tamper-evident

features, the original packaging may be reused for counterfeit or

diverted product and thereby be more easily passed off as legitimate

product. The reuse of old prescription drug containers found in trash

facilities or taken from hospitals and clinics is also a significant

problem because no tamper-evident feature has to be replicated,

thereby enabling easy reuse of the packaging to distribute counterfeit,

adulterated, or unapproved drugs. While tamper-evident packaging is

important, it is also worth noting that counterfeit drugs can be

repackaged into legitimate-appearing packaging (including features

intended to mimic legitimate tamper-evident features), so that

packaging alone cannot assure that drugs have not been counterfeited.

Pre- and Post-PDMA

Pre-PDMA

Manufacturer Foreign Market U.S. Wholesaler(s) Retailer

Post-PDMA

Manufacturer U.S. Wholesaler(s) Retailer
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D. Background: Regulatory and Legislative

History

1. Prescription Drug Marketing Act

As previously alluded to, Congress addressed some of these vulnerabilities by

enacting the PDMA in 1988, which was amended in 1992 by the Prescription

Drug Amendments. Among other things, the PDMA:

• requires State licensure of wholesale distributors of human prescription

drugs;

• requires wholesale distributors of human prescription drugs in interstate

commerce to provide a statement of origin, also known as a drug

“pedigree”, which traces each prior sale, trade, or purchase of the

prescription drug, to and from each wholesale customer prior and

subsequent to the sale of the drug to that wholesaler, but exempts

manufacturers’ “authorized distributors;”

• with certain exceptions, prohibits the resale of prescription drugs that

have been purchased by a hospital or other health care entity or that

have been donated or supplied at a reduced price to a charitable

organization.

In 1999, FDA published final regulations implementing the provisions of the

PDMA. The provisions concerning the pedigree requirements at 21 CFR

203.3(u) and 203.50 were stayed by FDA because of valid concerns expressed

by industry, trade associations, and Congress about implementing these

provisions. Such concerns included the high cost and logistics of maintaining a

pedigree and occasional inability to obtain a transaction history from the prior

distributors and the manufacturer, thus calling into question the usefulness of the

pedigree. Taking steps to address these requirements using traditional methods

could impose substantial costs, at a time when access to affordable drugs is also

a major policy concern.

In 2000, FDA held a public hearing to discuss these concerns. In 2001, FDA

submitted a Report to Congress outlining the concerns raised by the secondary

wholesale industry. The agency noted that in order to enable secondary

wholesalers to fully comply with the pedigree requirements, Congress would

have to amend section 503(e) of the Act to enable them to get the transaction

history from all prior purchasers of the drug (because, currently, wholesalers

who are authorized distributors of record are exempt from providing this

information.)

In order to give Congress time to consider the information and conclusions

contained in the agency’s Report to Congress and to determine if legislative
FDA Counterfeit Drug Task Force Interim Report

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action was appropriate, FDA subsequently instituted an additional stay of the

provisions until April 1, 2004.

In addition to being costly, tracing a drug pedigree on paper, as envisioned in the

PDMA, is subject to multiple record keeping failures, and may be subject to

fraud. As discussed below, there are many promising developments in anticounterfeiting technology that will enable the creation of an electronic pedigree

for a drug product, thus reducing the need for paper pedigrees. Other steps

discussed below can also help address the weaknesses identified in the PDMA.

These new approaches are consistent with the desired movement toward

electronic health information systems to prevent errors and adverse events, and

would also make it easier to maintain the high level of diligence needed

throughout the drug distribution system to prevent the introduction of counterfeit

drugs.

2. Model Practice Act

As part of the implementation of PDMA, in 1990, FDA published a final rule

containing “Guidelines for the State Licensing of Wholesale Prescription Drug

Distributors.” The guidelines were codified at 21 CFR Part 205. The guidelines

include the minimum standards, terms, and conditions for the storage and

handling of prescription drugs and for the establishment and maintenance of

records of their distribution. The guidelines followed, among other things, the

“Model Regulations for Wholesale Drug Distribution” (Model Rules) issued by

the National Association of the Boards of Pharmacy (NABP), which were

previously issued as an example for States to adopt in order to comply with the

PDMA. Subsequently, all 50 states have enacted some sort of legislation to

implement the PDMA.

As the introduction of counterfeit drugs has increased over the past several

years, some states, such as Florida and Nevada, have adopted laws and

regulations with more stringent requirements intended to minimize the risk of

counterfeit drugs appearing in their state. The Task Force believes that such

steps could have an impact on the nationwide problem of counterfeit drugs.

To this end, the Task Force is working closely with the NABP to update the

Model Rules and is in the process of reviewing the 50 state practice acts that

govern wholesale distribution of prescription drugs, identifying strengths and

weaknesses of those acts, and suggesting where the Model Rules can be

updated. Based on its findings to date, the Task Force views the following as

important areas for States to focus on in updating their Model Rules:

requirements for licensure, qualifications of employees, handling and storage of

drugs, site security, inspection and examination of drugs, record keeping,

availability of records to inspectors and law enforcement personnel, due

diligence, administrative subpoena power, and criminal penalties.
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3. Penalties and Enforcement

The Task Force has reviewed the current applicable criminal statutes and

sentencing guidelines for various types of counterfeiting and has found that the

penalties for counterfeiting drugs are substantially less than for other types of

counterfeiting, such as counterfeiting registered trademarks. For example,

counterfeiting a prescription drug label (bearing a registered trademark) is

punishable by up to ten years in prison, while counterfeiting the drug itself is

punishable by a maximum of only three years in prison. Also, the U.S.

Sentencing Commission guidelines currently include FD&C Act felonies at the

lowest level of all federal crimes. Yet, counterfeiting of drugs may create

substantial risks to the health and safety of a large number of consumers.

The Task Force has reviewed the statutes under which drug counterfeiting

charges may be brought, as well as provisions that may streamline investigations

and facilitate the seizure of counterfeit drugs and the forfeiture of illegal

proceeds. The Task Force heard from some organizations that, as implemented

to date, these penalties may not be severe enough to deter and punish those

responsible for counterfeiting drugs.

The Task Force also reviewed the subpoena authority currently available to

certain regulatory agencies, such as the Internal Revenue Service and the Bureau

of Customs. The subpoena authority of those agencies is related to their

statutory roles and responsibilities, and in conjunction with their other

authorities, supports the efficient execution of their mission when other

approaches (e.g., surveillance and tracking systems) are unable to provide the

information required to address public threats.

E. Background: Technology Issues

1. Types of Anti-Counterfeiting Technologies

Two types of anti-counterfeiting technologies have existed for many years:

• Authentication technologies, and

• Track and Trace technologies.

Authentication technologies fall into three groups:

• Overt technologies are protective measures that are easily visible to the

eye, such as holograms, color shifting inks, and some watermarks.

• Covert technologies are protective measures that are not visible to the

eye and frequently require special equipment for visualization (and
FDA Counterfeit Drug Task Force Interim Report

17

authentication). These include some watermarks, certain inks and dyes

that fluoresce or absorb ultraviolet light, and invisible bar codes.

• Forensic technologies are protective measures that require

sophisticated analytical equipment, usually found in a forensic

chemistry lab, in order to be identified. These include chemical

markers, taggants, and other unique chemical properties of a substance.

Track and trace technologies include:

• Radio-frequency identification (RFID) is a technology that involves

the placement of electromagnetic chips/tags that contain product

specific information onto cartons, pallets, and individual products. The

system includes the tags, antennae affixed to the tags, readers to receive

the data in the tags, and an information database that is used to

authenticate and track the product as it moves through the distribution

system.

• Barcodes are symbols (representing an alpha numeric value) printed on

labels that are read by a scanner and used to identify drug products. Bar

codes can be combined with covert elements (e.g., security ink) that

also allow them to function as authentication technologies.

Appendix A to this report contains a list of some basic types of authentication

and track/trace technologies along with some of their capabilities and

limitations.

2. Utilization of Anti-Counterfeiting Technologies

The Task Force recognizes that the functions of authentication and track/trace

technologies are complementary. In order to reduce the likelihood of counterfeit

drugs being introduced, and to increase the likelihood of identifying counterfeit

drugs in the U.S. drug distribution system, both technologies should be utilized.

The information reviewed by the FDA to date demonstrates that no single

authentication or track/trace technology is a complete solution to facilitating the

identification, and preventing the introduction, of counterfeit drugs into the

marketplace. Law enforcement officials and other government agencies shared

with FDA their experiences with counterfeiting of currency, credit cards,

checks, and other documents. Their universal advice is that multiple

technologies and measures must be utilized because determined counterfeiters

are able to defeat many anti-counterfeiting measures within 18-24 months after

the measure is implemented. Therefore, multiple strategies and a continuous

evolution of technology are necessary to thwart criminal activity.

 The Task Force has heard that track/trace technologies should be incorporated

at the point of manufacture, used throughout the distribution system, and

inactivated/destroyed at the time of dispensing. When track/trace technologies

are used at a pallet and case level, they have the capability of following the
FDA Counterfeit Drug Task Force Interim Report

18

product at each point in the distribution chain. To be maximally effective for

authentication purposes, track/trace technologies should be incorporated at the

product (individual package) level in addition to the case and pallet level so that

individual product, rather than only bulk shipments, can be followed.

The Task Force has learned that the use of radio frequency identification (RFID)

chips is undergoing pilot testing in several venues; however, widespread use of

RFID may not occur for several years. Aside from the need to work out

technical problems, (e.g., attaining 100% read rates,) a significant reason for this

delay is that RFID and some other sophisticated technologies will not work

without a system-wide infrastructure and an integrated database. An integrated

database is one that is accessible to all users in the distribution chain for viewing

data and contributing to the tracking of a particular product. Such databases and

the associated “reading” technologies could take several years to develop and

gain widespread adoption throughout the marketplace. Issues that need to be

resolved include: Who will create the database? Who will own the data? And,

who has access to the data?

If all entities in the drug distribution chain use RFID chips or other electronic

track/trace technology, an “electronic pedigree” will be created de facto for the

product. An advantage of an “electronic pedigree” is that it is harder to forge

than a paper pedigree. However, for an electronic pedigree to become

universally adopted, industry or national standards would have to be developed

and implemented.

The Task Force has learned that the use of authentication technologies varies by

pharmaceutical company and product. In general, authentication technologies

are more widely used than track/trace technologies. However, the way they are

used and the number that are used vary. For example, the Task Force has learned

that combinations or layers of authentication technologies are more likely to be

used in products at high risk for being counterfeited. On the other hand, products

considered to be at lower risk may have fewer anti-counterfeiting measures

incorporated into their manufacturing, packaging, or labeling.

Moreover, in the event that a suspect counterfeit product is found, there is a need

for FDA and stakeholders to rapidly identify whether the labeling, packaging,

and product are authentic. Currently, there is no database for FDA, other

government regulatory agencies, or stakeholders to use which contains up-todate information about authentic products, packaging, labeling, and utilization of

anti-counterfeiting measures. Such a database could expedite confirmation of a

suspect counterfeit drug product’s authenticity.

3. Cost/Benefit of Anti-Counterfeiting Technologies

The Task Force has heard a great deal about the costs of adopting anticounterfeiting technologies. These include costs associated with:

• Purchase of the technology;
FDA Counterfeit Drug Task Force Interim Report

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• Purchase of associated equipment (e.g., barcode scanners, RFID

receivers, access to electronic databases) and services;

• Integrating the technology into the manufacturing process;

• FDA review, if required, for the technology;

• Adopting new anti-counterfeiting measures as old ones are defeated;

• Creation of infrastructure throughout the distribution system.

To date, the Task Force has heard less about the potential benefits of adoption of

anti-counterfeiting technologies beyond greater assurance of drug safety. In

addition to the public health and economic benefits associated with a reduction

in the number of counterfeit drugs, other benefits may include:

• Improved inventory management and control (with resulting reductions

in inventory expenses for distributors and pharmacies);

• Reduced labor cost due to automation;

• Reduction in theft and product loss due to other causes;

• Reduction in the amount of diverted product;

• Improved ability to recall product;

• Protection of drugs from intentional tampering;

• Protection of drugs from being used in an act of terrorism.

An area of focus for the Task Force as it gathers more information on anticounterfeiting technologies will be to find ways to maximize the benefits of new

anti-counterfeiting measures while minimizing their costs.
FDA Counterfeit Drug Task Force Interim Report

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F. Background: Health Professional and

Industry Issues

1. Secure Business Practices

Given the complicated nature of many features of the drug distribution system,

the business practices of the entities involved in those transactions (e.g.,

wholesalers, repackagers) plays a critical role in determining the ability and

likelihood of introducing counterfeit drugs into the supply chain. These business

practices may also play a role in the ability of stakeholders to identify

counterfeits before they reach a consumer.

Industry practices in such areas as recordkeeping, inspection and examination of

drugs, facility and information security, package disposal, performance of ‘due

diligence’ on business partners, and establishing criteria for determining with

whom they do business are all crucially important for the integrity of the drug

distribution system.

Based on its research to date, the Task Force is not aware of any pertinent

benchmarks or industry standards for business practices among pharmaceutical

manufacturers, wholesalers, repackagers, and pharmacies with regard to the sale

and purchase of drugs. The lack of adequate benchmarked industry standards is

important because legitimate businesses are often involved in the purchase and

sale of counterfeit drugs and therefore can be involved, unknowingly, in

allowing counterfeit drugs to reach consumers. In addition, the lack of such

standards creates opportunities for criminals to introduce unsafe drugs into the

U.S. drug distribution system.

The Healthcare Distribution Management Association (HDMA) has submitted a

draft document entitled “Recommended Guidelines for Pharmaceutical

Distribution System Integrity,” which was endorsed by the Pharmaceutical

Distributors Association (PDA), for the Task Force to consider in its

deliberations. The document is a set of draft voluntary guidelines for

pharmaceutical wholesalers to use for screening another pharmaceutical

wholesaler prior to establishing a business relationship. It emphasizes the need

to perform “due diligence” by requesting certain information, performing

background checks, and inspecting the facilities of the potential business

partner.

The Task Force will continue to work with HDMA, PDA, and others to gather

information about current and best practices in the pharmaceutical industry prior

to considering any final recommendations about the nature and extent of any

changes to current industry practice that might reduce the risk of counterfeit

drugs entering the distribution chain
FDA Counterfeit Drug Task Force Interim Report

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2. Rapid Alert and Response Systems

Identifying suspect counterfeit drugs in the distribution system is important to

prevent sale of the counterfeit product to the patient. While consumers can help,

wholesalers, distributors, repackagers, and pharmacists are often best situated to

identify and report suspect counterfeit drugs. Recognizing this important role,

the Task Force believes that steps should be taken to facilitate reporting of

suspect counterfeit drugs and that a central FDA voluntary reporting mechanism

be used for reporting by the public.

Recently, a variety of industry groups have begun to take voluntary steps to

address this problem. For example, earlier this year, the pharmaceutical industry

announced a voluntary program, whereby Pharmaceutical Research and

Manufacturers of America (PhRMA) member companies agree to notify FDA’s

Office of Criminal Investigations (OCI) within five working days of determining

that there is a reasonable basis to believe that a product has been counterfeited.

OCI has received several reports since that April 2003. OCI is currently working

with industry to standardize reporting requirements and otherwise improve

communications. The program also applies to counterfeits discovered in foreign

countries if there is clear evidence that the counterfeits are intended for

distribution in the United States. HDMA recently announced similar steps that

their member companies will take in notifying FDA of suspect counterfeit drugs.

Currently, health care professionals and consumers use FDA’s MedWatch

system for reporting adverse events associated with medical products as well as

product problems. Policies and procedures are in place to ensure that the

information is conveyed to appropriate agency personnel for follow up. For

example, if there is a problem with a product (e.g., broken tablets, lack of

efficacy) the information is analyzed and/or investigated to determine whether

there are steps manufacturers may need to take to correct the problem.

Additionally, over 150 health care professional, consumer, and trade

organizations have partnered with MedWatch to help disseminate information

and alerts generated by MedWatch. The Task Force believes that this system can

be adapted to receive reports of suspect counterfeit drugs and communicate

important information in the event a counterfeit drug is identified.

As described below, the Task Force is exploring the creation of a counterfeit

drug alert network, which would draw on all of these elements and could be

utilized to disseminate information when a counterfeit drug is identified. Such a

network also could be used as a vehicle for educational messages.
FDA Counterfeit Drug Task Force Interim Report

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G. Background: Education and Public

Awareness Issues

The Task Force believes that an educated, vigilant public is an invaluable

defense against counterfeit drugs filtering into the U.S. pharmaceutical market.

Consumers and health professionals need to know how to proactively avoid

these counterfeits. They also need to be familiar with what to look for when

faced with a potential counterfeit and the steps that need to be taken if they are

suspicious that they have encountered one.

The Task Force explored what appropriate role FDA and its partners could play

to educate potentially affected groups. A logical first step to take would be to

identify specific stakeholders that would most likely be affected by counterfeit

drugs. The next step would be to craft appropriate messages and identify

effective communication tools to accurately reach these diverse stakeholders.

This step is very important because various communities and professional

groups receive health information in different ways.

The Task Force recognizes that once a counterfeit is identified in the stream of

commerce, public officials must quickly act to remove the counterfeit drug from

the marketplace. However, at the same time, while getting this information out

to the public, officials need to take care not to alarm unaffected consumers,

thereby causing them to discontinue necessary therapy. The FDA has long held

the position that protection of the public health will remain its number one

mission, even if public notifications of a counterfeiting scheme might hinder the

criminal investigation to determine who is responsible for the counterfeiting.

As part of its assessment of current communication channels, the Task Force

consulted with numerous agency components that oversee communication

channels potentially pertinent to anti-counterfeit communications. Information

from consumer groups, health care provider associations, media representatives,

trade organizations, and representatives of state governments/enforcement

groups was also reviewed to better understand the current information flow

processes between the FDA and outside stakeholders.

Based on this information, the Task Force made the following preliminary

assessment:

• There is a need for more comprehensive efforts to educate the public

about the threat of counterfeit drugs, how to identify them, and how to

minimize the risk of receiving counterfeit drugs. Figure 3 is an example

of the type of educational messages that may be used in an educational

campaign.

• Efforts to educate pharmacists and other health professionals about

current counterfeit events and how to handle these situations exist, but

could be improved.
FDA Counterfeit Drug Task Force Interim Report

23

• When a counterfeiting event occurs, there are sometimes delays of

varying degrees in alerting and updating the appropriate health

professional about the problem. When the messages are delivered, they

may not be adequately tailored to the various audiences to be helpful to

them. Also, stakeholders complain they have to work too hard to access

timely, accurate information - a proactive alarm system was named as a

potential solution

• There may be additional opportunities to work with health care

providers and manufacturers to capture data that may help identify

counterfeits.

What Can Consumers Do to Protect Themselves from

Counterfeit Drugs?

1. To avoid purchasing "buyer beware" drugs, it's safest to purchase ONLY

from U.S. state-licensed pharmacies, where the FDA and state

governments can assure the safety of drug manufacturing, packaging,

distribution, and labeling.

2. If purchasing over the internet, make sure the website has the Verified

Internet Pharmacy Practice Sites Seal (VIPPS).

3. Be vigilant about your medicine. Check for changes in packaging,

labeling, color, taste, or shape of a pill. Look out for unanticipated side

effects.

4. If you suspect you have a counterfeit drug:

a. Contact the pharmacist that dispensed the drug; OR

b. Call 1-800-FDA-1088; OR

c. Contact your doctor.
FDA Counterfeit Drug Task Force Interim Report

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III. Potential Options for Improving

Prescription Drug Security

Based on what it has heard and reviewed to date, the FDA Task Force on

Counterfeit Drugs is listing a series of preliminary options with the goals of:

• Preventing the introduction of counterfeit drugs and biologics into the

U.S. drug distribution chain;

• Facilitating the identification of counterfeit drugs and biologics;

• Minimizing the risk and exposure of consumers to counterfeit drugs

and biologics; and

• Avoiding the addition of unnecessary costs to the prescription drug

distribution system, or unnecessary restrictions on lower-cost sources

of drugs.

The potential options are premised on several interim conclusions reached by

the Task Force. First, there is no single "magic bullet" against the growing

number of sophisticated counterfeiters; rather, a multi-pronged strategy to secure

the drug supply could be much more difficult for counterfeiters to overcome

than any single method. It could also be less costly, because a “one-size-fits-all"

approach is unlikely to work for all parts of the complex prescription drug

supply system. Second, although drug counterfeiters today are more

sophisticated and better organized than ever before, there are many new

technologies and approaches that have the potential to prevent and contain

counterfeit drug threats. While most of these new approaches have not yet been

fully developed, implemented, and tested, they hold the promise of a more

secure drug distribution system in the years ahead. Third, because many of

these promising ideas have not been fully developed, the Task Force believes

that an opportunity for broad public comment is essential to guide its further

work.

The Task Force notes that these options are not mutually exclusive. In general,

these options could be implemented together or independent of each other.

A. Technology

The Task Force heard from many groups and individuals. According to what we

have heard, appropriate long term goals for the use of technology include

achieving an electronic pedigree and incorporation of authentication measures

for all drug products. However, due to the emerging nature of many of these

technologies, a phased in approach for their implementation should be

considered. With this in mind, the adoption of one or more of the following

options concerning the use of technology to deter and detect counterfeit drugs,
FDA Counterfeit Drug Task Force Interim Report

25

by the Federal government or the private sector, as appropriate, might reduce the

likelihood of counterfeit drugs from entering the U.S. drug distribution system

and/or reaching a U.S. consumer:

1. Package all finished dosage form drugs in unit of use packaging as

appropriate for the particular product (e.g., tablet, multi-dose vial) at

the point of manufacture, as is now done in many nations;

2. Use tamper evident packaging from the point of manufacture, with

labeling that notes the tamper evident feature, for all dosage forms,

active pharmaceutical ingredients (APIs), and bulk chemicals;

3. Incorporate for all drug products at least two types of validated anticounterfeiting technologies into packaging and labeling at the point of

manufacture with at least one of these technologies being covert (i.e.,

not made public, and requiring special equipment or knowledge for

detection) using a phased in approach starting with those products at

high risk of being counterfeited and where the introduction of

counterfeit product poses a serious health risk;

4. Incorporate for all drug products a taggant, chemical marker, or other

unique characteristic(s) into the manufacturing process that is only

identifiable with the use of sophisticated analytic technologies using a

phased in approach starting with those products at high risk of being

counterfeited and where the introduction of counterfeit product poses a

serious health risk;

5. Create an electronic database of drugs and biologics for authentication

purposes, which consists of photographs of the product, packaging and

labeling information, and the anti-counterfeiting measures utilized in

the packaging, labeling, and product itself;

6. Achieve the goal of the pedigree requirements by phasing in track and

trace technology (i.e., electronic pedigree) for all drugs and biologics

starting at a case and pallet level for products at “high risk of being

counterfeited” and progressively including all products at the case,

pallet, and package level. The technology should have an integrated

infrastructure that is able to track and trace products at all points in the

distribution chain from manufacturer to end user;

7. On an interim basis, because the technologies described above may

take several years to implement, all drugs and biologics “at high risk of

being counterfeited”, should be tracked and traced either (1) By

limiting the number of transactions of the product (e.g., shipping the

product from the manufacturer either (a) directly to the retailer or

health care entity, (b) to the retailer or health care entity through a

single licensed wholesaler who would sell the product directly to

retailers or health care entities, (c) identifying steps that multiple

wholesalers can implement to reduce the risk of counterfeit
FDA Counterfeit Drug Task Force Interim Report

26

introductions), or (2) By using available track and trace technology,

identifying the drug at least at the case and pallet level, and preferably

at the product level, throughout the distribution system;

8. Issuance of an FDA guidance document concerning the appropriate use

of anti-counterfeiting technologies as well as the FDA application and

review process for incorporating or changing taggants, chemical

markers, or other unique characteristic(s) of the product;

9. Issuance of an FDA guidance document concerning physical site

security and supply chain integrity.

B. Secure Business Practices and Regulatory

Requirements

The Task Force heard that the state requirements for licensure of wholesale

distributors need to be updated and that the standards for certain business

practices among the entities involved in the U.S. drug distribution system are

insufficient. The following options, based on what we have heard, relate to

secure business practices that affect the ability to deter and detect counterfeit

drugs:

10. Continue to work with NABP to update their Model Rules for

Licensure of Wholesale Distributors, using the Florida statute as a

model where appropriate, in the following areas: requirements for

licensure, qualifications of employees (especially those who handle

drugs), storage and handling of drugs, site security (both for facilities

and information), inspection and examination of drugs, record keeping,

availability of records to inspectors and law enforcement personnel,

due diligence with respect to business partners and contractors,

administrative subpoena power, and criminal penalties; update FDA

regulations under 21 CFR 205, as appropriate, to make it consistent

with updates to the NABP Model Rules for Licensure of Wholesale

Distributors;

11. Develop sets of “secure business practices” which would be voluntarily

adopted by manufacturers, wholesalers, repackagers, and pharmacies.

Best practices would be identified in areas such as: employee

qualifications, security of physical facilities and information systems,

package disposal, dealings with business partners and contractors,

inspection and examination of products, record keeping, etc.;

12. Designate, by entities such as manufacturers, wholesalers, repackagers, and pharmacies, an individual or team to coordinate security

and anti-counterfeiting activities. Such activities would include quality

improvement, monitoring and use of anti-counterfeiting technologies,
FDA Counterfeit Drug Task Force Interim Report

27

and regular review of the entities security and anti-counterfeiting

measures;

13. Timely sharing with FDA, by manufacturers, of relevant market

tracking and trending data and the analysis of these data for use as a

means of identifying counterfeit or diverted product in the marketplace.

C. Rapid Alert and Response Systems

The Task Force heard that there is a need to strengthen the systems used for

reporting by, and alerting of, stakeholders and the public as to the existence of

counterfeit drugs. The following options, based on what we have heard, relate to

alerts systems for counterfeit drugs.

14. Enhance the MedWatch Alert System for use as a tool to receive and

disseminate timely information about counterfeit drug products,

especially identification of suspect drug product;

15. Create a counterfeit alert network through use of existing, or newly

developed, communication tools that allow reception, dissemination,

and sharing of information about counterfeit drugs in a timely manner

(e.g., to pharmacists, manufacturers, wholesalers, and law enforcement

and public health officials);

16. Further enhance FDA’s internal processes for responding to and

investigating reports of suspected counterfeit products.

D. Education and Public Awareness

The Task Force heard from many sources that there is a great need to increase

awareness and education of stakeholders and the public concerning counterfeit

drugs. The following options, based on what we have heard, address these

issues:

17. Increase the efforts of the FDA, other government agencies, and

appropriate private sector partners to educate consumers and health

care professionals on how to reduce the risk of obtaining counterfeited

drugs before an event occurs. Helpful messages could include: (1) what

is a counterfeit drug and why U.S. consumers and health care

professionals should be vigilant, (2) the dangers of buying drugs over

the Internet or from other unknown entities, (3) good purchasing

practices that will decrease the chances of encountering counterfeits,

and (4) legitimate ways to obtain drugs (e.g. federal or state purchasing

programs, private sector purchasing programs for low income

consumers);
FDA Counterfeit Drug Task Force Interim Report

28

18. Educate consumers and health care professionals on how to identify

counterfeit drugs (including how to recognize anti-counterfeiting

technologies on packages, labeling, and drug products themselves) and

what to do when they believe they have identified a counterfeit product;

19. Assure flexibility as agency officials determine their outreach approach

and create a set of pre-established consumer and professional outreach

plans that can be utilized if deemed appropriate (based on risk analysis)

after counterfeits are detected in the stream of commerce;

20. Provide outreach efforts appropriate for the diverse elements of the

U.S. drug distribution system. We find that individual strategies for

educating and increasing awareness should be considered for diverse

stakeholders including: consumers, pharmacists, wholesalers,

repackers, doctors, nurses, the media, and public health officials. These

creative strategies could take the form of public service

announcements, educational fliers and communication tools that can be

distributed by pharmacists and PBMs, toll-free numbers on labels;

permanent messaging on appropriate industry and private group

websites to establish a permanent presence, as well as many other

potential tools.

21. Explore ways of improving and coordinating agency and industry

messages and efforts to address and contain a counterfeit event. Though

a drug manufacturer is not responsible for the creation of a counterfeit

of its products, ensuring health professionals are well informed about

the event and protecting the public from it should be a shared public

policy goal.

E. International Issues

The task heard that counterfeiting of drugs is commonplace in many countries.

The global nature of counterfeiting suggests that American stakeholders should

work with foreign stakeholders to better coordinate their anti-counterfeiting

efforts. The following options, based on what we have heard to date, relate to

these issues:

22. Strengthen international cooperation in law enforcement efforts,

identification of counterfeit products, use of anti-counterfeiting

technologies, and education of stakeholders and consumers;

23. Develop global standards for (a) the packaging of final dosage forms

and API’s, (b) the use of tamper evident packaging, (c) product

pedigrees, (d) the use of anti-counterfeiting measures, and (e) the use of

track/trace technologies.
FDA Counterfeit Drug Task Force Interim Report

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IV. Questions Related to the Potential

Options for Improving Prescription

Drug Security

A. Questions Concerning Technology (Options 1-9)

1. Discuss the advantages and disadvantages of unit of use packaging.

Please provide any information on the economic impact of requiring

unit of use packaging.

2. Should the European Union requirements be used as a model for unit of

use packaging?

3. Discuss the advantages and disadvantages of using tamper evident

packaging on drug products. Please provide any information on the

economic impact of requiring tamper evident packaging features on

these products.

4. What anti-counterfeiting technologies are currently being used? Are

there any data on which technologies are successful?

5. What, if any, minimum number of anti-counterfeiting technologies

should be utilized on packaging and labeling? Should technologies be

utilized on all dosage forms (e.g., APIs, finished dosage forms) and

products or just dosage forms and products at high risk of being

counterfeited?

6. Should any specific anti-counterfeiting technologies be utilized?

Should covert technologies always be utilized? Should overt

technologies always be utilized?

7. Should some anti-counterfeiting technologies only be identifiable by

the manufacturer and/or the FDA?

8. On what dosage forms and products should taggants, other markers, or

unique characteristics be utilized? All dosage forms and products?

High-risk dosage forms and products? Are there unique characteristics

of products that can be utilized in lieu of taggants or chemical markers

for forensic analysis?

9. What role should the FDA play in reviewing the use of (i) anticounterfeiting technologies incorporated into the packaging and

labeling, (ii) taggants, markers, and other unique characteristics

incorporated into the product itself, and (iii) track and trace

technologies?
FDA Counterfeit Drug Task Force Interim Report

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10. How should “validation” of an anti-counterfeiting measure or track and

trace technology be determined? Should only “validated” anticounterfeiting measures be used? Who should do the validation?

11. Should a database, as described in Technology Option 5 be created? If

so, who should develop the database? Where should it be housed? Who

should have access to the data? Who should be responsible for updating

and maintaining it?

12. Discuss the advantages and disadvantages and the role of track and

trace technologies, in particular bar codes and RFID.

13. What are the costs and challenges involved with setting up an

infrastructure for utilizing various track and trace technologies?

14. Tracking and tracing drugs and biologics throughout the drug

distribution chain may result in the creation of a large database that

includes tracking data from each entity that “handles” the product. Who

should create and maintain such data? Where and how should the data

be housed? Who should have access to the data? How can appropriate

confidentiality be assured?

15. Are there additional benefits beyond the ability to detect counterfeit

product that anti-counterfeiting and track/trace technologies can

provide for industry, (e.g., inventory control, facilitation of product

recalls, and identification of theft and product diversion)? Give specific

examples.

16. Discuss the logistic, economic, and public health effects of direct

shipment of product to retailers and other end users.

17. For products that are shipped directly from manufacturers to retailers,

would the use of track and trace technology on those products provide

any additional benefits?

18. Should all products be considered at high risk of being counterfeited?

How can products at high risk of being counterfeited be identified?

Which, if any, of the following criteria should be considered: (a)

potential impact on public health if the product were counterfeited, (b)

any history of, or the potential for, counterfeiting, tampering, or

diversion of the product, (c) wholesale and retail price of the product,

(d) volume of product sold, both on a unit and dollar basis, (e) the

dosage form of the product, e.g., injectable, (f) approved and

unapproved uses of the product, (g) current and potential misuse or

abuse of the product, e.g., “street value”, (h) other products in the class

with a history of being counterfeited, (i) the length of remaining patent

life for the product?
FDA Counterfeit Drug Task Force Interim Report

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19. Discuss what could be included in an FDA guidance on the use of anticounterfeiting technologies.

20. Should FDA conduct research on development or evaluation of anticounterfeiting technologies? If so what should this research focus on?

How should FDA integrate its research efforts with other public and

private sector efforts?

21. Discuss what could be included in an FDA guidance on physical site

security and supply chain integrity.

B. Questions Concerning Regulatory Requirements and

Secure Business Practices (Options 10-13)

1. Discuss the most effective ways to achieve the goals of the wholesale

distribution rule (21 CFR 203.3(u) and 203.50). Given recent or

impending advances in technology, comment on the feasibility of using

an electronic pedigree in lieu of a paper pedigree.

2. Discuss the advantages and disadvantages of the new Florida and

Nevada requirements for wholesale distributors, including the costs

involved with compliance.

3. Discuss the advantages and disadvantages of requiring a pedigree if

track and trace technology is also being utilized for a given product?

4. Identify areas where the NABP Model Rules for Licensure of

Wholesale Distributors could be strengthened. Please give specific

language for new provisions.

5. Discuss the strengths and weaknesses of a pedigree as a means of

tracking product integrity. Is there a deterrent value in having a

pedigree? What is the most cost-effective approach to obtaining reliable

pedigree information?

6. Discuss the advantages and disadvantages of increased penalties for

counterfeiting drugs?

7. Identify areas where business practices could be changed to prevent the

introduction, and facilitate the identification, of counterfeit drugs.

8. Describe the current use of designated personnel and teams to

implement and monitor anti-counterfeiting measures by manufacturers,

wholesalers, re-packagers, and pharmacies.

9. Comment on the advantages and disadvantages of manufacturers

sharing market data with the FDA for use in identifying counterfeit

products.
FDA Counterfeit Drug Task Force Interim Report

32

10. Comment on the need for FDA guidance dealing with site security and

supply chain integrity in light of the importance of drug treatment for

bioterrorism incidents.

C. Questions Concerning Rapid Alert and Response

Systems (Options 14-16)

1. What are the advantages and disadvantages of adapting the MedWatch

system for use in disseminating information about counterfeit drugs?

2. What are the current capabilities of private communication systems or

networks (e.g., association list-serves, websites) for handling

information about counterfeit drugs in a timely manner?

3. What current electronic communication systems or networks are being

used by the private sector to share information and can they be linked

with MedWatch?

4. What capabilities should a communication network have in order to be

part of a counterfeit alert system? For example: Should the system be

accessible to all stakeholders (e.g., pharmacies, wholesalers)? How fast

should the system be able to disseminate information about suspect

product? Should messaging be active? How should the system flag

messages about suspect product as opposed to less urgent information?

Should access be at no cost? Should all networks in the system have a

uniform method of presenting and distributing information? How

secure must the system be? Should access to information be selective?

Should the system be capable of direct linkage to the FDA? Should the

system be able to transmit educational information?

5. What are the costs associated with developing a new counterfeit alert

network? What are the costs associated with adapting current systems

or networks to be part of a counterfeit alert network? (In both cases,

having the features listed in (d) above)

D. Questions Concerning Education and Public

Awareness (Options 17-21)

1. How can FDA best assist in making sure the public knows what they

need to know to help them avoid counterfeit drugs?

2. What role should the private sector, professional/trade associations and

consumer representatives play in educating consumers and health

professionals? Are there other groups that FDA should solicit for help?
FDA Counterfeit Drug Task Force Interim Report

33

3. How should FDA interact with various private sector and trade groups

to educate consumers about the threats of counterfeits before they enter

the stream of commerce?

4. What education and communication tools are available? Which will be

the most effective and efficient for this effort?

5. Once a counterfeit drug is identified, what tools are available to the

agency to notify potentially affected parties without inappropriately

scaring other consumers from taking their medications?

6. How should these efforts be supported or funded? Is partnership with

potentially affected parties appropriate?

7. Are there additional long term messages, in addition to those listed

above, that the FDA should deliver to its targeted audiences? Similarly,

are there additional messages that the FDA should deliver when a

report of a counterfeit product is received by the agency?

E. Questions Concerning International Issues

(Options 22-23)

1. What measures have foreign governments instituted (or are planning to

institute) to address the problem of counterfeit drugs?

2. What global standards are needed to address the problem of counterfeit

drugs? Who should develop these standards?

3. What processes will be effective in setting global standards?
FDA Counterfeit Drug Task Force Interim Report

34

V. Request for Comments

FDA seeks comment on issues related to the potential options presented

here, as well as the specific questions posed above. Interested persons may

submit to the Division of Dockets Management (HFA-305), Food and Drug

Administration, 5630 Fishers Lane, Room 1061, Rockville, Maryland, 20852,

written or electric comments by November 3, 2003. Electronic comments can be

submitted to http://www.fda.gov/dockets/ecomments. Groups should submit two

copies. Individuals may submit one copy. You should annotate and organize

your comments to identify the specific options or questions to which they refer.

To ensure timely handling, the outer envelope should clearly state the docket

number, 2003N-0361.

REFERENCES

1. Profile of the Prescription Drug Wholesaling Industry. ERG. February

12, 2001

2. Florida Statewide Grand Jury Report, February 2003

3. The Prescription Drug Marketing Act Report to Congress, FDA, June

2001 http://www.fda.gov/oc/pdma/report2001/

4. NABP Model Rules
FDA Counterfeit Drug Task Force Interim Report

35

Appendix A: Table of Anti-Counterfeiting Measures

SECURITY TECHNOLOGIES

Features Type Description Benefits

Overt Security Features

Substrate

Conventional overt, tactile Cotton & linen fibers; no

UV fluorescence

Recognizable tactile

properties (feel)

Alternate

Laminate (paper-plastic

blend)

overt, tactile Synthetic & natural fibers Retains some paper tactile

properties

Synthetic overt Polymeric material Increased durability &

circulation life.

Watermark

Registered overt Portrait similar to the

intaglio portrait, at the

same location on each

note

Consumer authenticator

Overall overt Overall pattern not

registered to a specific

note location

Improves printability, does

not require an open area

on the note

Planchettes overt, covert Small tissue or polymer

discs incorporated in the

substrate, can carry

additional covert features,

e.g., fluorescence,

microprint.

Consumer verification
FDA Counterfeit Drug Task Force Interim Report

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SECURITY TECHNOLOGIES (cont.)

Features Type Description Benefits

Thread

Embedded overt, covert Thread indiscernible in

reflected light, visible with

transmitted light

Consumer authenticator,

machine readable, copier

reproduction difficult.

Printing overt Text/images on thread Consumer authenticator

Fluorescence

covert Fluorescent material on

thread

Machine readable

Magnetic

covert Magnetic material on

thread

Machine readable

Windowed overt, covert Thread discernible when

exposed on substrate

surface

Consumer authenticator,

degrades copier/scanner

reproduction, machine

readable

Printing overt Text/images on thread Consumer authenticator

Fluorescence

covert Carries fluorescent

material

Machine readable

Optical Pigments & Dyes

Up Converters overt, covert Material absorbs long

wavelength radiation and

re-emits at shorter

wavelength, e.g., absorbs

infrared radiation and reemits as visible light or

shorter wavelength

infrared light

Authenticator, Consumer

Authenticator, Machine

Readable

Down Converters overt, covert Material absorbs short

wavelength radiation and

re-emits at longer

wavelength, e.g., absorbs

ultraviolet radiation and

re-emits as visible or

infrared light

Consumer authenticator,

machine readable
FDA Counterfeit Drug Task Force Interim Report

37

SECURITY TECHNOLOGIES (cont.)

Features Type Description Benefits

Inks

Offset

Color Gamut overt Printing with colors which

cannot be reproduced by

the four color process of

current copiers and

printers

Digital reprographic

equipment not able to

reproduce certain colors.

Color Shifting overt Color changes with

viewing angle

Consumer authenticator,

color shift hard to scan or

simulate

Thermochromic overt Color change with

temperature

Consumer authenticator

Photochromic overt Color shift with light Consumer authenticator

General

Forensic Tag covert Marker for forensic

identification that provides

a unique product source

fingerprint, e.g., unique

submicron security

features on carrier

particles or deuterated

tracer materials

Authenticity test and

tracking

Intaglio

Magnetics covert, tactile Magnetic properties Machine readable

Infrared covert, tactile Infrared active Machine readable
FDA Counterfeit Drug Task Force Interim Report

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SECURITY TECHNOLOGIES (cont.)

Features Type Description Benefits

Other, Printed

Digital Watermark overt, covert A printed feature with

embedded encrypted

digital information that

can only be read by

software having the

correct decryption key

Authenticator, machine

readable

Latent image overt Variation in surface relief

of an intaglio print

resulting in an observable

image at very low angles

Consumer verification; will

not reproduce on copiers

Moire Inducing Patterns overt Printed patterns which

cause frequency

interference in low to

medium resolution digital

scans

Consumer authenticator,

degrades imaging on

copiers and low to medium

resolution

scanners/printers

Lenticular/Scrambled

Indicia

overt Printed, embedded image

viewable with a special

lens

Consumer authenticator,

machine readable
FDA Counterfeit Drug Task Force Interim Report

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SECURITY TECHNOLOGIES (cont.)

Features Type Description Benefits

Other, Non-printed

Microperf overt Laser perforations in a

grid pattern, acts as an

optically variable device,

visible when viewed in

transmitted light at 90°

angle

Consumer authenticator,

cannot be scanned, difficult

to reproduce

Holograms overt 3D-like images Consumer authenticator,

machine readable

Optically Variable Devices overt Devices that change

optical character via

viewing angle or

stimulation

Consumer authenticator,

machine readable

Radio Frequency

Identification Devices

covert Electronic device that

transmits, via radio

frequency over a limited

distance, encrypted info

when interrogated, info

resides in the computer

chip of the RFID tag

Machine readable, tracking

Passive covert No battery, power drawn

from reader

Machine readable, short

distance tracking

Semi-passive covert Battery powers chip,

transmitting power drawn

from reader

Machine readable

Active covert Self-contained battery for

chip and RF

transmissions

Machine readable
FDA Counterfeit Drug Task Force Interim Report

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SECURITY TECHNOLOGIES (cont.)

Features Type Description Benefits

Other, Taggants

Marker tags overt, covert Components which can

be added to fibers,

planchettes, inks, thread;

and provide specific

properties such as

fluorescence

Authenticator possible,

machine readable

Organic vapor overt Unique odor signature,

e.g., perfume

Consumer authenticator,

machine readable

Micro-barcode tag covert, overt Color layered barcode

patterns on 20 - 600

micron size particles,

which can hold

information

Authenticator, tracking,

machine readable

Organic tag covert Organic chemical

markers, such as DNA,

that can be detected by

instrument or animals,

e.g., quadrapole, ion

mass spectrometry

Machine readable, tracking

Inorganic tag covert Inorganic chemical

markers that can be

detected by instruments,

e.g., magnetometers, xray units, IR/UV/visible

spectrophotometers

Machine readable
FDA Counterfeit Drug Task Force Interim Report
FDA Counterfeit Drug Task Force Interim Report

U.S. Department of Health and Human Services

Food and Drug Administration

Rockville, Maryland 20857