I know that I promised to take a blogging break, but I just can’t help myself.
Here is today's editorial: Time To Protect The Pharmaceutical Supply Chain.
Note this paragraph, which is clearly a rebuke to critics (like me) who argue that a national standard would be better:
“Other e-pedigree opponents have argued that
A new report from Accenture attempts to assess the financial costs of implementing a serialized track-and-trace system for the
Full report: Current Status of Safety of the U.S. Prescription Drug Distribution System
But even if we assume that Accenture did a credible and impartial job building their pharmacy cost models, the estimates in this report reflect an extreme situation that no one is seriously advocating. In other words, Accenture’s calculations may not be technically wrong (in the way that the recent AMP study was wrong), but its conclusions are highly misleading given actual proposals and practices regarding supply chain security. Thus, you should think of this report as the inflated, upper bound, "worst case" costs of a track-and-trace thought experiment. Caveat lector.
BAR CODES AND DOLLARS AND DATA! OH MY!
Accenture created detailed pharmacy cost models for a 100% compliant “complete track and trace system” that is federally mandated to be implemented at the unique unit-level for all products everywhere at the same time.
I can’t evaluate the assumptions hidden in the pharmacy costs models because Appendix F, a detailed Excel spreadsheet with all of the calculations, was not made publicly available. But my math (see footnote) shows that first-year implementation costs to be +/- 3% of revenues for the following four pharmacy archetypes defined by Accenture:
Note that these figures are much higher than Accenture's previous cost estimates. At the 2007 NACDS/HDMA RFID/Track & Trace Health Care Industry Adoption
I think that some of the newly-discovered costs come from additional pharmacy labor for scanning serialized products in the newer estimates as well as the assumption of complete year one implementation. But given the surprisingly large inflationary bump, I also surmise that NACDS and NCPA got their money's worth from Accenture.
SOMEWHERE OVER THE RAINBOW
Careful readers will note that Accenture’s “complete track and trace system” is much more comprehensive than anything being seriously proposed or considered right now. In my opinion, Accenture has defined a “track and trace” model in an unrealistic manner and then proceeded to explain that such a model is cost prohibitive.
In other words, the report is built upon the Straw Man logical fallacy, which goes as follows:
This fallacy plays out in the interplay between the actual study and the press release about the study:
I’ll mention just four important ways that the actual implementation of “track and trace” will likely differ from the models estimated in Accenture’s report:
To be fair, Accenture's language is fairly neutral regarding the implications of the study, whereas the NACDS/NCPA press release mistakenly links the "results" to a specific legislative proposal. Hence my view that this report represents unrealistic, upper bound costs of a track-and-trace thought experiment.
I'LL GET YOU, MY PRETTY...AND YOUR LITTLE BLOG, TOO!
I am very sympathetic to the motivation behind this study. A truly closed-loop, interoperable track-and-trace security solution based on serialization requires a massive infrastructure upgrade at the 150,000+ points of pharmacy dispensing in the U.S. I have persistently criticized the RFID hypesters who ignore this practical aspect of the pharmacy supply chain. I keep reminding technology firms, legislators, and regulators that pharmacies do not want to absorb the costs of reading pedigree or serialized data. (See Pharmacists Haggle over Pedigree Costs, among other posts.)
The report correctly highlights the fact that counterfeit drugs are still extremely rare in the
On the other hand, the report should spark some good discussion at this November’s NACDS/HDMA RFID Track & Trace Healthcare Summit. Notice that the word “adoption” has now been discreetly dropped from the event title!
Read the report, make up your own mind, and let me know what you think. Maybe you'll get an honorary degree of Th.D. (Doctor of Thinkology**), too!
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* Total Corporate Implementation Costs as % of Revenue = [(Cost Per Distribution Facility * No. of Distribution Facilities) + (Cost per Pharmacy Store * No. of Pharmacies) +
Example: Medium Pharmacy Chain = [($2,752,771 * 1) + ($103,939 * 100) + $2,288,265)] / $450,000 = 3.4%
** Yes, that's the honorary degree awarded by the Wizard of Oz to the scarecrow.
Please take a moment to read Peter Pitts’ comments about the dangers of repackaging pharmaceuticals in
Massive cross-border diversion in
Nevertheless, repackaging by parallel importers and exporters in
Click here to read the official press release from the European Federation of Pharmaceutical Industries and Associations.
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My review of Accenture’s track-and-trace report will appear tomorrow.
“Within the
and
“The federal government can and should take the lead in establishing a single federal standard for electronic pedigree.”
(You can read his full statement here.)
He’s absolutely correct. Complying with a grab bag of state laws does little more than add unnecessary costs without an equivalent increase in safety. Inconsistent state laws ignore the fact that today’s pharmaceutical supply chain is a national business for drug makers, large wholesalers, and multi-state pharmacy chains. Read my op-ed Securing the Supply Chain for more.
At the same time, pharmacists are mounting an effort to slow down or stop the movement to a national e-pedigree standard due in part to the implementation costs associated with track-and-trace. (See Pharmacists Haggle over Pedigree Costs.)
On Monday, I’ll look at the new NACDS/NCPA study that estimates first year track-and-trace costs to be $110,000 per pharmacy. Get ready for an industry-wide debate over a timely and heretofore unanswered question: How much supply chain security are we willing to pay for?
Looking for something fun to do on your summer vacation?
How about going to
Well, that’s exactly what Sharon Flank of Infratrac did. Even better, she wrote Anticounterfeiting And NIR: A Hong Kong Diary, a very entertaining account of her adventures that was just published in Pharmaceutical Manufacturing magazine.
Skip the first part of the article and jump to the fun part, which begins with the heading “Shopping for Counterfeits in
Dr. Flank's personal search for counterfeit drugs in
“I asked how to tell which shops had counterfeits. Would they be the ones without a ‘No Fakes’ pledge or authorized dealer stickers? Not at all: if you buy even one pill legally, you get a sticker, and the rest of your inventory may not be genuine. Price is the key. The profit margin on pharmaceuticals is thin, about HK$10, a little more than a dollar. So no one will bargain much on genuine product, because they’d lose money. He suggested that I offer to buy five or six, and see if the price started to move.”
SPOILER ALERT: By the end of the article, she has successfully purchased fake Viagra and some alleged Cialis made by “Lieel” (!).
All in all, this article is an intriguing and scary first-person account that will enlighten anyone who believes that counterfeit drugs are not a threat. John Lechleiter, President and CEO of Eli Lilly, got it right in yesterday’s widely-cited Bloomberg article: “It’s a big issue, it’s a global issue, it’s an insidious issue.'”
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Take a quick tour of great health care policy blogging from around the web in the latest Health Wonk Review edited by Jane Hiebert-White for the Health Affairs blog. Thanks to Jane for citing my recent extra-wonky posts on AMP!
I hope you are still paying attention to the
Yes, we all know that the CA Board of Pharmacy extended the e-pedigree implementation deadline to January 1, 2011. But SB1307, which was introduced by CA State Senator Ridley-Thomas in February, proposes the following new e-pedigree implementation timelines:
The manufacturers have a phased in serialization schedule under SB1307 because “the process of implementing serialized electronic pedigree for all prescription drugs in the entire chain of distribution is a complicated technological and logistical undertaking for manufacturers, wholesalers, pharmacies, and other supply chain participants. The Legislature seeks to ensure continued availability of prescription drugs in
Here is the proposed schedule by which a manufacturer must (1) designate the particular drugs that will be serialized, and (2) actually comply with the serialized electronic pedigree requirements:
I’m encouraged that
Where's Doc Brown when you need him?
READER OF THE WEEK
The Texas Startup Blog recently interviewed Jon Cameron, founder and President of Pop Technology. According to the article: “When Jon isn’t inventing cool gadgets for the retail industry he can be found reading Drug Channels…”
Gosh, your friendly neighborhood blogger is now someone’s hobby!
Thanks for the shout-out, Jon.
COMMENTS, WE GOT COMMENTS
There are many interesting comments on yesterday's analysis of the latest AMP study. Read them below the original post. Perhaps you'll even add you own $0.02?
Last week, the National Association of Boards of Pharmacy (NABP) named 79 online pharmacies that are not safe for patients. Rather than a general “watch out” message, the NABP actually listed the web addresses for these rogue sources.
Kudos to for naming names! I hope the NABP has a good firewall to repel the disgruntled spammers.
According to NABP, a site got on the bad guy list for one of the following three illegal activities:
NABP has accredited 15 legitimate online pharmacies though the Verified Internet Pharmacy Practice Sites™ (VIPPS®) program. In contrast, the 79 non-recommended sites are non-accredited through the Fake Online Outlets League™ (FOOL®) program. (NABP doesn’t seem to allow direct links. Go to NABP and click “Internet Pharmacies” to find the list.)
NOPE, NOT SCARE TACTICS
In this recent Drug Safety Hub post, Allen Coukell, Director of Policy and Strategic Communications for the Pew Charitable Trust-funded Prescription Project, implied that the dangers of counterfeiting were scare tactics. He asked: “If you were an uninsured patient unable to afford medication in the
If those are the only choices, you should go without. Primum non nocere. (“First, do no harm.”)
I find it incredible that a health professional such as Mr. Coukell would encourage personal importation via an online pharmacy given the risks.
Judging by his biography, Allen appears to be a Canadian pharmacist by training. So he should know that many so-called Canadian pharmacies are not actually in Canada. In fact, twenty-two of the sites on the NABP list have “
Last week, three major associations representing retail pharmacy – NACDS, NCPA, and FMI – came out with a joint statement opposing H.R. 5839 Safeguarding America’s Pharmaceuticals Act of 2008, a bill that would establish national standards for the pharmacy supply chain. I praised this bill last month in National Standards: It’s About Time.
Pay attention to this debate because it signals the inevitable divergence of interests as we get closer to actually paying for a system to track finished drugs in the pharmaceutical supply chain. I’ve been predicting this split almost since Drug Channels launched in 2006, so here are some thoughts on what’s really behind the phamacists’ opposition – and how much it might cost you.
CLOSING THE
Pharmacists are complaining that H.R. 5839 would “mandate an unproven, disruptive and costly ‘electronic pedigree/track and trace’ requirement that would severely interfere with pharmacies’ ability to effectively provide vital prescription medicines and health care products and services.”
Sure, anyone who understands the pharmacy supply chain will agree that authentication creates costs for retail pharmacies. (See Do Pharmacists want Pedigree?). Kevin Nicholson, VP of Pharmacy Regulatory Affairs at NACDS, highlighted the operation and administrative burdens of pedigree for pharmacies in his May 1 testimony to the House Committee on Energy and Commerce.
But unless I’m missing something, these costs will be even higher for a pharmacy forced to work with the hodgepodge of potentially incompatible state-level track-and-trace systems sprouting up all over the country. Wouldn’t NACDS and FMI members such as Walgreen (
According to this Drug Topics article, “pharmacy groups are split over federal e-pedigree legislation.” NCPA reportedly supports the “intent” of H.R. 5839 while NACDS opposes any bill.
Why the split? You may recall from my summary of the bill that it contains grants for technology upgrades to “small pharmacies,” which is effectively defined to be “anyone except large member companies from NACDS or FMI.”
So, how much will it take to get the support of NACDS members? Mr. Nicholson started the bidding at $30,000 per pharmacy in his May 1 testimony (see page 7). That’s about $180 million each to
True, such a figure may be a mere gratuity in the world of
We all know that the “business value” of track-and-trace for the manufacturer can only be fully realized when pharmacies authenticate at the point of dispensing. So, who wants to step up and fund pharmacy-level implementation and data transmission?
To paraphrase a quote often attributed to Winston Churchill: We have established what’s going on. Now we’re just haggling over the price.
The Heparin contamination has pushed the security of
Yesterday, the House Committee on Energy and Commerce accused the FDA of failing to protect Americans from contaminated Heparin. Rep. John Dingell said: "Our citizens can no longer trust that their food, drugs or medical devices are safe when the FDA says they are." (See Lawmakers Fault FDA on Heparin.)
This Thursday, the House Committee will hold additional hearings on the Food and Drug Administration Globalization Act, a draft bill that proposes new fees and increases FDA resources directed to the safety of food, drugs, devices, and cosmetics. (The FDA Law Blog has a good summary.) Fans of Congressional hearings (hey, who isn’t?) can catch the play-by-play video webcast on this page.
The newfound attention to supply chain safety is also bringing some new players to the game. Last week, New York Senator Chuck Schumer announced plans for seemingly redundant legislation for a “track -and-trace system for prescription drugs to prevent contamination.” (Read his subtle and self-effacing press release.)
Roger Bate of the American Enterprise Institute wrote a good editorial cautioning against the knee-jerk protectionist inclinations of many politicians in China's Drug Dilemma (from The Wall Street Journal Asia.) He argues that Chinese government officials are trying to solve the quality problems, but face an uphill climb:
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I want to let you know about www.DrugSafetyHub.com, a new blog about counterfeit drugs to which I am contributing content.
The official description: “The DrugSafetyHub blog aims to foster an open industry exchange on the subject of diverted and counterfeit prescription drugs in the pharmaceutical supply chain and the safety threats they pose to patients and consumers.”
DSH is a “hosted discussion,” which means there are multiple bloggers (8 so far). Check out the list of contributors – a veritable who’s who of pharma industry blogging! I’ll be writing a combination of proprietary material for the blog as well as occasionally cross-posting material from Drug Channels.
The site is sponsored by e-pedigree software vendor Supplyscape, but I have been assured that the content and topics will be free from any editorial meddling. The official blog policy reiterates this message with 9 cluetrain-worthy principles. As always, I'll call it as I see it.
Check it out for yourself and let me know what you think.
The movement to make the pharmacy supply chain safer just took a huge step forward with Friday’s introduction of H.R. 5839 Safeguarding America’s Pharmaceuticals Act of 2008. The bill is co-sponsored by Representatives Steve Buyer (R-IN), Gene Green (D-TX), Jim Matheson (D-UT), and Mike Rogers (R-MI).
I enthusiastically support this bill, which finally offers Federal preemption of the multiple disorganized, uncoordinated, and underfunded state-level mandates. Ultimately, patients will be the biggest beneficiaries of a more secure supply chain.
KEY POINTS
Federal Preemption with Uniform National Standards – “no State or political subdivision of a State may establish or continue in effect any requirement with respect to statements of distribution history, manufacturer packing lists, unique standardized numerical identifiers, or drug identification and tracking systems for prescription drugs that is different from, or in addition to, any requirement under this subsection.’’ Got that, States? The bill also establishes new Federal minimum standards for wholesale licensing.
Phased Implementation – The Bill sensibly requires earlier compliance for “High-Risk Drugs.” The precise timing will depend on when the bill becomes law, but it looks like High-Risk Drugs would not have to serialized until mid-2011. (I touted a risk-based approach last July.) There are many places in the bill where the speed of implementation will be based on sensible factors such as “operational and technical feasibility.”
Support for “Independents” – A truly closed-loop, interoperable track-and-trace system based on serialization will require a massive infrastructure upgrade at the 150,000+ points of pharmacy dispensing in the U.S. The bill permits grants for technology upgrades to a “small pharmacy,” which is defined as “a pharmacy which is not owned (or operated) by a publicly traded company.” Of course, some privately-held pharmacies can be quite large (um, Duane Reade?), so this language will need to be cleaned up.
And the pedigree starts with… The bill also clears up a major area of disagreement between various state and federal definitions of pedigree: Where does pedigree begin? According to H.R. 5839, it begins with the Authorized Distributor of Record (ADR) that purchased directly from the manufacturer, a.k.a. “Direct Purchase Pedigree.”
OBSERVATIONS
H.R. 5839 Safeguarding America’s Pharmaceuticals Act of 2008 is only a bill, just sitting there on Capitol Hill. Nonetheless, here are a few implications if this bill becomes a law.
Amateur hour will be officially over. Today’s crazy patchwork of pedigree regulations creates uncertainty for everyone involved in the pharmacy supply chain. These decisions need to be made in a structured, logical, and public manner. Supply chain security regulations are too important to be left to the personal whims of a few volunteers at an underfunded state agency. Yes, I’m thinking about you, California State Board of Pharmacy!
Serialization will not be optional. The momentum for serialization is now inescapable, which is one reason that I joined the Advisory Board of Secure Symbology. Track-and-trace at the unit level only becomes possible with serialization, which is complex and must begin with the manufacturer/packager. At a minimum, serialization with pedigree requires: affixing a unique number during the packaging process; capturing and managing petabytes of data; adding pedigree information as the product moves down the supply chain; and then making these data easily (but securely) accessible. It also requires substantial lead time since serialization must happen during the drug packaging process, which can be months (or longer) from the time that the product is dispensed to a patient.
The pharmacy lobby will oppose national standards. I warned in December that pharmacists do not want pedigree. State Boards of Pharmacy – composed mainly of independent pharmacists – don’t want to lose local control (read: influence, power) and want to avoid any additional burdens on pharmacy operations. In fact, before the text of H.R. 5839 was even posted online, Steve Anderson of NACDS leapt into action with this statement asking Congress to “refrain from mandating serialization, e-pedigrees or track and trace requirements, since they are still experimental and will prove extraordinarily costly for pharmacies and other supply chain operators.” Unfortunately, pharmacies must close the loop if we are all to benefit from complete track-and-trace and ensure that pharmacy purchasing is not the weak link in the supply chain. Plus, wouldn't a single national standard lower compliance costs for NACDS members such as CVS Caremark or Walgreens (WAG)?
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All in all, a very promising start for reducing counterfeits in the legitimate supply chain. Now, we just need to convince consumers to stop buying from shady online pharmacies.
BONUS FUN FACT: Did you know that "PEDIGREE" is a registered trademark of Mars, Inc., the makers of M&Ms? Woof!
As predicted, the California Board of Pharmacy today announced its decision to extend the deadline for implementation of e-pedigree laws to 2011.
The timing was unexpected but not the outcome. Apparently, my sarcastic mocking on the Drug Channels blog was just too much for them to bear. Plus, the Board now avoids the embarrassment of having a legislative or legal solution imposed on them.
Let's hope that the Board members can put aside their pharma-bashing and get on with the hard work needed over the next 33 months.
ADDENDUM
Here is the official announcement: DECISION OF THE CALIFORNIA STATE BOARD OF PHARMACY PURSUANT TO BUSINESS & PROFESSIONS CODE SECTION 4163.5
Today, the Food and Drug Administration (FDA) began soliciting comments and information about technologies behind pharmacy supply chain security. Here are the links for your commenting and informing pleasure:
Standards for Standardized Numerical Identifier, Validation, Track and Trace, and Authentication for Prescription Drugs (Request for Comments)
Technologies for Prescription Drug Identification, Validation, Track and Trace, or Authentication (Request for Information)
In an interesting coincidence of timing, the European Commission (EC) recently made a similar request regarding closely related issues. See the EC’s just-issued Public Consultation In Preparation Of A Legal Proposal To Combat Counterfeit Medicines For Human Use.
These requests provide a good opportunity to educate regulators about the progress being made in our industry along with the real-world implementation hurdles. So far, the clarity and professionalism of the questions posed by the EC and FDA offer an interesting contrast with a certain Board of Pharmacy’s approach to information gathering and assessment.
What’s Going On?
In the U.S., states currently have the greatest influence over the wholesale and retail distribution of drugs, presenting some practical hurdles for any manufacturer, wholesaler, or pharmacy that operates in multiple states. Say hello to 50 different pedigree requirements!
Last September's Food and Drug Administration Amendments Act of 2007 (or FDAAAAAAAAAAA) empowered the FDA to take a stronger hand in these matters with Section 913, entitled “Assuring Pharmaceutical Safety.” Download this handy-dandy 2-page extract to read this section for yourself. I first discussed the importance of this Act in PDUFA & Supply-Chain Security.
In plain English, Section 913 requires the FDA to “develop standards and identify and validate effective technologies for the purpose of securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs.” The deadline is March 2010. The most notable requirements include:
As I suspected, Cardinal Health’s (CAH) new role as supply chain enforcer is angering some of the customers who have been tagged as “diverters.”
According to Cardinal Health's Compliance Efforts Rile Some Customers, two pharmacies have so far sued Cardinal over the way in which the company is identifying purported diverters. (Alternate link from the Wall Street Journal site: Cardinal Health's Compliance Efforts Rile Some Customers.) Per the article:
“Community Drugstore, a specialty pharmacy focusing largely on pain management, said in a lawsuit filed in Delaware that Cardinal improperly stopped supply without any evidence that the store had engaged in wrongdoing. A federal judge in December ordered Cardinal to restore Community Drugstore as a customer.”
“In the other lawsuit, an Oklahoma federal judge in December ordered Cardinal to resume supplying controlled substances to Ken's Discount Pharmacy, a longtime Norman, Okla., pharmacy that had said it would go out of business in days without some action. The court said it appeared that Cardinal had stopped supplying the pharmacy and had placed the drugstore on an 'exclusion' list as an arbitrary reaction to compliance issues between Cardinal and the DEA. The plaintiff said the pharmacy, located across the street from a major medical facility, had suffered a hydrocodone shortfall after Cardinal limited its supply.”
You can read Cardinal’s PR spin in the article, but these stories echo the experience of Evergreen Professional Center Pharmacy that I describe in One Pharmacist’s View of Cardinal’s DEA Issues. I also want to give a shout out to regular reader PBMGuru, who was the first to predict legal action in a comment on Cardinal Sins (Again) from last November.
BTW, Dinah Brin of Dow Jones is the only national reporter who has been following Cardinal’s deepening problems with the DEA. Dinah is apparently a fan of my humble ol’ Drug Channels blog because she included a quote from yesterday’s post in her story. Thanks, Dinah!
Time for another installment in the continuing adventures of Cardinal Health and the Kingdom of the Crystal Meth, now showing in Stafford, TX!
Last Friday, Cardinal Health (CAH) told suppliers that it would discontinue all controlled substance and List 1 Chemical shipments from its Stafford distribution center for retail independent, Medicine Shoppe and Medicap pharmacies only. The move was announced to retail independent customers yesterday. Read Cardinal's letter online here.
As regular Drug Channels readers know, Cardinal had its license to distribute controlled substances suspended by the DEA in Washington, Florida, and New Jersey. While there’s no official DEA suspension, Cardinal has been negotiating with the DEA over the Company’s Stafford, TX distribution center (as I discuss in Fresh DEA News from Cardinal.)
The interesting twist -- and the likely reason that the facility's license was not suspended -- is that Cardinal will be discontinuing shipments only to the retail independent pharmacies from Stafford. The “legitimate controlled substance needs” (their words) of these customers will be serviced from another Texas facility. However, per Cardinal's letter: “We will continue to provide controlled and non-controlled products to acute care, regional chain and national chain customers out of our Stafford (Houston) distribution center.”
Yikes! I can't imagine that this statement will help Cardinal to regain or build market share among independents. Let’s hope that Cardinal’s “contingency plans” have progressed since their Washington license was suspended. (See One Pharmacist’s View of Cardinal’s DEA Issues.)
So what does this move signal about supply chain security? Are retail independent pharmacies now considered to be the weak link in guarding our supply chain against counterfeits and diversion—a demand-side security problem that just won’t go away?
Today’s lesson: If at first you don’t succeed, change the rules!
Two bills were introduced last week that would modify California’s pedigree legislation.
Just to be crystal clear: Don’t stop planning for January 1, 2009. Obviously, there can be no guarantee that either the proposed legislation will pass or that the Board of Pharmacy will vote for a delay to 2011. Nevertheless, the likelihood of a delay or phased implementation just went up again.
I'M JUST A BILL
You can read the text of the proposed bills at these links:
SB 1307 (introduced by CA State Senator Ridley-Thomas)
SB 1270 (introduced by CA State Senator Cedillo)
SB1270 is more interesting of the two because it potentially changes the January 1, 2009, implementation date. The text looks like a placeholder to me:
“This bill would instead impose the pedigree requirement and the prohibition against selling, trading, transferring, or acquiring a dangerous drug without a pedigree on an unspecified date, authorize the board to extend the compliance date to an unspecified date in those specified circumstances, and make conforming changes.” (emphasis added)
Right now, the CA Board of Pharmacy only has the ability to delay implementation of e-pedigree requirements until 2011 if the board determines that “manufacturers or wholesalers require additional time to implement electronic technology to track the distribution of drugs within the state.” (See CA Pedigree: Going to '11?) Unfortunately, the Board’s decision making process regarding the 2009 deadline seems dysfunctional and unnecessarily opaque, as I describe in Pedigree and Obscenity.
I’ve been told that additional legislation may be on the way, especially with regard to phased implementation such as a risk-based approach to serialization. You can read more about California’s legislative process here.
AND SPEAKING OF SERIALIZATION...
I will be attending SecurePharma2008 on Tuesday morning. If you'll be there, please stop by and see me at the Secure Symbology booth at 10:30 AM on Tuesday. I’m always looking for good story ideas and tips for Drug Channels.
I'll be at the booth with other members of Secure Symbology’s Advisory Board of Directors. But please don’t call us booth babes!
Uh oh.
Cardinal Health (CAH) disclosed yesterday that the DEA is now focusing on a fourth Cardinal facility in Stafford, TX. No suspension yet, but the DEA is clearly crawling all over the company, as I predicted two months ago.
Cardinal also announced a number of new actions that suggest (to me) that they are now treating these issues seriously. Nonetheless, I wonder to what extent a corporation should take on monitoring and enforcement activities that are typically the responsibility of state Pharmacy Boards or Health Departments.
CARDINAL DIVERSION UPDATE
According to a 10-Q filed yesterday (available from Cardinal’s Investor page):
“[T]he DEA issued an Order to Show Cause, dated January 30, 2008, pertaining to the license to distribute controlled substances held by the Company’s Stafford, Texas distribution center (the “Stafford Order”). The Stafford Order did not suspend the facility’s license to distribute controlled substances, and no hearing date has been set.”
For non-lawyers, an Order to Show Cause is “is a type of court order that requires one or more of the parties to a case to justify, explain, or prove something to the court. Courts commonly use orders to show cause when the judge needs more information before deciding whether or not to issue an order requested by one of the parties.” (Source: Wikipedia)
So if I understand the legalese correctly, Cardinal has to convince the court *not* to suspend its license to distribute controlled substances from Stafford TX, as the DEA has apparently proposed. However, there is not yet a date for this hearing.
BTW, I don't mean to pick on Cardinal. As I pointed out on Tuesday, McKesson (MCK) may have similar issues and is apparently "negotiating a temporary restriction of its authority to distribute some drugs from a limited number of its distribution centers, in hopes of avoiding
