CLS MedTurn Attends the RFID Health Care Adoption Summit
CLS MedTurn colleagues joined one hundred and twenty-seven companies and thirty-three vendors showcasing RFID capabilities in the U.S. Capital to focus on RFID technology, legislation, implementation/cost issues, and strategic value to pharmaceutical supply chains and reverse logistics. The following is their summary of the Summit highlights:

RFID

• Most of the major companies in the Pharmaceutical supply chain have active RFID pilots taking place.
• The largest manufacturers / distributors / and retailers are moving from pilot phase to normal operations with RFID.
• McKesson, Rite Aid, Pfizer, GlaxoSmithKline, Novartis, and Wyeth have combined their efforts into one big pilot called On Track. They meet regularly to set goals and review results.
• Adoption of RFID is gaining momentum and will accelerate through 2007.

Legislation - PDMA

• The Federal PDMA legislation went into effect on December 1, 2006. There is a court ordered preliminary injunction for certain sections of the act. As a result, certain aspects of the legislation have not gone into effect. The PDMA act states the pedigree must be maintained in the supply chain and can either be paper or electronic. The pedigree starts with the distributor. However, Authorized Distributors of Record (ADR) do NOT have to update or maintain the pedigree.
• Only 10 states do not have pending pedigree legislation.
• The amount of legislation and requirements for pedigree and item serialization are expected to increase in 2007.
• The HDMA is lobbying for a national policy. The expectation is that the California law will set the standard for a national policy.

Technology / Issues

• No defined technology standard exists for RFID. There are two different protocols: Ultra High Frequency (UHF) and High Frequency (HF). This is one of the biggest issues with RFID. Most companies are purchasing RFID readers that allow them to read all available RFID frequencies.
• No standard exists for the data to be on the RFID tag. The manufacturers and the FDA want a unique serial number. The distributors and retailers want NDC, lot, and expiration date encoded on the RFID tag.
• The standards for pedigree are defined from a data standpoint. However, who maintains the pedigree and where this information is hosted (manufacturer, distributor, or 3rd party) is not defined.
• Authentication against the pedigree is only being done in a batch process today. No one is matching pedigree at a transaction or scanning level.
• Several companies are piloting the use of 2D bar codes that contain NDC, lot number, and expiration date.
• The technology and standards are expected to continue to evolve over the next 24 months. Investments made today are for learning purposes versus for asset purposes. Investments in the technology and the system interfaces can be expected to continue over the next two years.

The Market

• No returns processors are participating in any of the standard bodies or active pilots at the current time. All pilots have focused on forward distribution. If there have been any reviews of reverse logistics, it has been done from an in-source perspective versus an outsourced perspective.
• The majority of the supply chain companies believe the payoff from RFID will occur in the returns / chargeback areas.

System Considerations

• Item serialization will provide the need to capture cost at the item level or at the pedigree level (which is invoice level). Serialization will create a huge data expansion which will demand greater storage requirements.
• Systems will need to be capable of reading at least four different types of electronic information, bar code, 2D bar code, UHF RFID, and HF RFID. Each type of scan has different considerations in terms of how close to the reader the product needs to be. Additionally, each type of scan represents different amounts of data returned.

Mike Campanaro, CLS MedTurn Senior VP Information Technology, stated “ At this point, the roll-out of RFID within the pharmaceutical supply chain appears to be directly tied to legislation. The cost for implementing RFID discourages most companies to adopt the technology in hopes of reducing supply chain costs. I expect it will be a couple of years before the industry starts seeing a significant percentage of returned products with RFID tags. Knowing change is on the horizon, CLS MedTurn is already implementing scanner technology that will read both 2D bar codes and RFID. Although 2D bar codes are more limited in the amount of data they can hold compared to RFID, they present a strong interim solution. CLS MedTurn is reviewing opportunities to run some limited pilots with manufacturers and wholesalers in testing RFID in the reclamation process in 2007.”

Can RFID Technology Address the Issues Associated With Counterfeit Drugs?
A recent RFID pilot program sponsored by Cardinal Health substantiates the feasibility of the technology for “tracking and tracing" item level drugs in the pharmaceutical supply chain. The program’s conceptual goal was to minimize or eliminate counterfeit drugs within the distribution pipeline using track-and-trace (e-pedigree) and RFID tools.

The pilot’s immediate objectives were two-fold:

1. Optimize manufacturers' tagging operations by integrating a printed tag application into packaging operations.
2. Gather production data (read rate accuracy, impact on current production processes, opportunities for improvements, and the cost impact of multiple facility scale-up) for internal and external publication. Provide feedback to manufacturers and share with legislative bodies regarding readability and any possible effects on current regulatory practices.

The findings of the pilot program indicated that RFID technology is feasible for tracking and tracing item level drugs in the pharmaceutical supply chain providing the following conditions and processes are met:

• Item level tracking reads are limited to individual each and case read processes with conditions managed to an ideal/consistent state.
• Inference is allowed to become an acceptable practice in the normal distribution process schemes.
• Barcode technology is used in a redundant/complementary strategy to allow “track and trace” in areas of privacy concerns, biologic product distribution and RFID tag failure.
• Implementation is measured and managed in a manner consistent with the technology's capability, the compliance risk and the financial impact on individual stakeholders.
• Higher levels of collaboration are initiated among stakeholders to identify opportunities in the supply chain to significantly improve efficiencies and reduce costs.

Source: RFID Healthcare Industry Adoption Summit, Cardinal Health Presentation, Julie Kuhn and Renard Jackson, November 14, 2006

Is the Future Bright for RFID?
While Cardinal Health’s pilot RFID program has shown promise, the historically strong advocate and promoter of RFID technology, Wal-Mart Stores, is experiencing a slower-than-planned rollout. Most of the issues are driven by the high costs of retrofitting warehouses and stores with electronic readers. Add to that consumer concerns that once the tags are on each item on a store's shelves -- they could be used to track individual buyers.

In response to questions about whether it was saving money with the technology, Wal-Mart spokesman, Kevin Gardner, replied that the tags had improved product availability on store shelves and store managers worked more efficiently in replenishing inventories. "We look for our RFID expansion to build on these results.” David Donnan, a manufacturing consultant and former president of radio-frequency-device maker Checkpoint Systems Inc., says “the technology faces a Catch-22. To get the cost-per-tag down to an affordable level, every retail product would have to be tagged. But there is currently no financial justification for a manufacturer to tag every product.”

The Bottom Line: “Without a demonstrable return on investment soon, suppliers may reduce their involvement, crimping potential savings”, states Gary McWilliams in his Wall Street Journal article Wal-Mart's Radio-Tracked Inventory Hits Static, February 15, 2007.

Tell us what you think? Send us your thoughts on the subject to cls.solutions@inmar.com.

Source: Wal-Mart's Radio-Tracked Inventory Hits Static, By Gary McWilliams, Wall Street Journal, February 15, 2007

RFID vs. Bar Codes...The Debate Continues
To read information from a distance, with its ultrahigh frequency radio wave, RFID has the edge over bar codes. RFID tags also can contain a lot of unique information about a product. Traditional bar codes, on the other hand, only identify the type of product and require close proximity to a scanner. With the more advanced 2-D bar codes, more unique identifying information about an item can be captured.

The industry is leaning toward RFID at the case level since it means less manual labor and a faster distribution process. Because of the cost of the RFID tags, about 10 cents per tag, it is less certain if and when the tags will be appropriate for reading individual bottles of drugs. Although prices are dropping on the tags, many pharma companies feel the need to make decisions sooner rather than later due to pedigree mandates across the country.

For item level identification, the one-dimensional (1D) bar codes are far more affordable, less than a penny each. But, they contain minimal information. With the two-dimensional (2D) bar code symbols, data is encoded in both the height and width of the symbol, and the amount of data that can be contained in a single symbol is significantly greater than that stored in a one-dimensional symbol. The main advantages of using 2D bar codes are the cost and that a large amount of easily- and accurately- read data can "ride" with the item to which it is attached.

One of the important features of two-dimensional symbols is their potential durability. To sabotage the readability of a conventional 1D symbol, one only has to add another bar to the beginning or end of the symbol or draw a line through the symbol, parallel to the stripes. This throws off the check and balance built into the decoding algorithms of a 1D bar code decoder and makes the symbol unreadable. By comparison, many degrees of redundancy can be built into a 2D symbol. While it makes the symbol somewhat larger, the symbol is remarkably secure.

With these current options under consideration, item-level identification is possible and in some states will be mandated for pedigree tracking. California's pedigree laws, which are stricter than the Federal PDMA, will require item-level identification of drugs in the marketplace by January 2009. As California goes potentially so goes the rest of the country. Those in the industry say this means processes will have to be in place as early as one year from now.

Without a standard at this point, “manufacturers will take either one of two approaches for item-level tagging. This is going to result in some complexity in the supply chain,” said Shay Reid, VP of integrated solutions at drug wholesaler AmerisourceBergen, during a presentation at RFID World in Dallas on Wednesday, March 28, 2007. "It's probably going to begin with a barrage of technologies at item level," Reid said. "We at the wholesaler level are trying to understand how to accommodate these technologies manufacturers will use."

Source: InformationWeek, article by Mary Hayes Weier, Wednesday, March 28, 2007, http://www.disusa.com/pdf/education%20bar%20codes.pdf

HDMA Facts on Returns
The following statistics were published in the three most recent annual HDMA Factbooks.

The most notable trend is the dramatic increase in the use of reverse distributors by both manufacturers and distributors. This trend is not surprising as the outsourcing of non-core services is a trend seen across industries not just in pharmaceuticals. From those manufacturers reporting data, the percentage of returned controlled substances more than doubled from 2004 to 2005. Another dramatic increase reported by manufacturers was a quadrupling of returns sent back for credit. This statistic was reported as a percent of sales and occurred from 2004 to 2005.

To order your full copy of the latest report, go to www.hdma.net

Source: 2004 - 2005 HDMA Factbook for Logistics & Operations
Source: 2005 - 2006 HDMA Factbook for Logistics & Operations
Source: 2006 - 2007 HDMA Factbook for Logistics & Operations

Prescription Drug Marketing Act (PDMA) Pedigree Guidelines on Returns Warrant Observation
The PDMA Pedigree Requirements have primarily focused on the forward distribution of the product. However with many of the individual states enacting their own programs, the pedigree requirements for returns are starting to generate more discussion. The following will summarize some key facts about the pedigree requirements for returns, as well as provide a summary of some of the state guidelines that warrant ongoing observation.

Key Facts

• Retail pharmacies that are not an “Authorized Distributor of Record” (ADR)* for prescription drug products sold will be required to provide a pedigree when they transfer drug products between pharmacies
• A chain pharmacy warehouse does not have to provide a pedigree for drugs that it sends to its retail outlets (Intra-company transfers are considered intra-company sales).
• Pharmacies do not have to verify the accuracy and authenticity of the pedigree but they are encouraged to perform due diligence in verifying accuracy of information.
• A pedigree is required for prescription drugs that are returned from a pharmacy or a physician’s office to a wholesaler.

Pharmacies can return drugs that are expired, damaged, recalled or in some other non-saleable condition, without having to provide a pedigree; provided that...

• They return the drugs to the wholesaler or manufacturer from which they purchased the drugs, or to a licensed reverse distributor for destruction, and...
• They maintain records for a period of three years that document each return and the source from which the pharmacy originally purchased the drugs.

NOTE: If the returned prescription drugs are in saleable condition and may subsequently be sold, purchased, or traded by the wholesaler or reverse distributor, then that wholesaler or reverse distributor would be required and expected to pass a pedigree if they are not an ADR for those prescription drugs. Any subsequent pedigree should reflect that the drugs were sold, purchased, or traded to the pharmacy and subsequently returned. Because the wholesaler to which the drugs are returned originally sold them to the pharmacy, the wholesaler would have all the necessary information to provide a pedigree, even without the pedigree from the pharmacy.

*To be an “Authorized Distributor of Record” (ADR) requires a written agreement with the manufacturer recognizing the distributor as the ADR. The agreement must include a list of the specific products that the distributor is authorized to distribute. Products would be identified by name, dosage form, and strength of drug or by the NDC number. The agreement would include the period of time the ADR is granted ADR status or the number of shipments for which the wholesale distributor is an ADR.

State Guidelines

Individual states are considering or enacting more restrictive laws than at the Federal level.

There are common features for pedigrees in most state programs to date:

• Use of pedigrees
• Increasing licensing requirements
• Bonds required for wholesalers
• Financial/criminal background checks for wholesalers
• Wholesalers must designate a representative
• Increased inspections
• Accreditation of wholesalers required by National accreditation body

But, when it comes to the application of pedigree rules for returnables, state guidelines vary:

• Florida does not require a pedigree upon the return of a prescription drug to the wholesale supplier, or when the drug is adulterated or otherwise unusable and is transferred to a licensed reverse distributor or destruction facility. Complete details of return requirements can be found in 64F-12.012(3)(f), Florida Administrative Code (F.A.C.). (Source: The Florida Department of Health website at www.doh.state.fl.us)
• In the state of California, the initial electronic track and trace pedigree rules were delayed until January 1, 2009. In the interim, effective January 1, 2007 manufacturers and wholesalers must use their best efforts to provide the best information possible on all transactions including returns.
• Texas is proposing revisions to pedigree regulations related to returns. In an effort to police and ensure that returns come only from known sources, customers must return product to the original wholesalers.
• The Oklahoma Board of Pharmacy is requiring product returns go to the original manufacturer or a returns company.

Click here for a status of states now in support of PDMA and where they are headed in tracking the legitimacy of drugs in the supply line.

The HDMA plans to provide an update on the latest state guidelines at the upcoming HDMA Distribution Management Conference.

Source: HDMA, Government Affairs Weekly Activity Report, February 20, 2007; HDMA, Government Affairs Weekly Activity Report, January 29, 2007; Pharmaceutical Commerce, Date: 2006-10-15; Healthcare; RFID Healthcare Industry Adoption Summit, Cardinal Health Presentation, Julie Kuhn and Renard Jackson, November 14, 2006; HDMA Returns Task Force Report, Washington, DC, March 1, 2007 – CLS MedTurn attendees: Sharon Joyner-Payne and Robert Reid; Guidance for Industry Report, U.S. Department of Health and Human Services, FDA, Center for Drug Evaluation and Research, Office of the Commissioner, Office of Regulatory Affairs, November 2006

Rodney Bias is Named CLS MedTurn’s New VP of Regulatory Compliance
Rodney’s credentials, and over eight years experience with the healthcare industry, specializing in regulatory compliance and security for wholesale pharmaceutical distribution, give him a unique perspective on federal, state and local regulatory compliance issues and regulations.

Rodney received his Bachelor’s Degree in Criminal Justice from Marshall University in Huntington, West Virginia and his Master’s Degree in Loss Prevention and Safety from Eastern Kentucky University in Richmond, Kentucky. This educational background served him well as a Business Crimes Unit Investigator for the Lexington, Kentucky Police Department. After eight years in the public arena, Rodney moved to the private sector becoming the Director of Regulatory Affairs at PSS World Medical, a leading national distributor of medical supplies and equipment to office-based and long term health care providers.

To broaden his understanding of industry regulations, and to validate his commitment to industry compliance, Rodney earned his Certified Protection Professional credentials from the American Society for Industrial Security’s (ASIS). He expanded his commitment by becoming a member of the ASIS Pharmaceutical Security Council; an authorized OSHA General Industry Outreach Trainer; a member on several Healthcare Distribution Management Association committees; and a member of HIDA’s Pedigree Task Force.

Rodney Bias brings strong experience and leadership skills to all CLS facilities pertaining to federal, state and local regulatory compliance. His department is responsible for DEA, EPA, FDA, USDA and State Regulatory Compliance Programs (i.e., Department of Health, Board of Pharmacy, and state and local agricultural agencies). Having Rodney on board helps CLS build on its commitment to applying all state and federal regulation that impact both supply chain and reverse logistics. Rodney’s comprehensive understanding of conditions, rules, regulations, and the responsible applications of guidelines will mitigate the risks and potential fines for non-compliance as well as protect the integrity of MedTurn clients’ brands and reputations.

We welcome Rodney to our CLS family!

HDMA Returns Task Force to Share Results of Projects at the HDMA DMC Conference
The HDMA Returns Task Force has been a busy group over the past year. In total, they have three major projects that they plan to share at the upcoming HDMA Distribution Management Conference on June 10-13 in Boston, Massachusetts.

The following projects will be discussed at the conference:

• Returned Goods Update
• Recalls & Withdrawals Update
• Returns Best Logistics Practices Update

During the HDMA Distribution Management Conference 2007, the returns task force will have a 2-hour slot to highlight, release or discuss results of the three projects. We encourage you to attend the conference for a detailed update. You will find the information to be very useful for managing your returns program.

For more information about the HDMA DMC conference, go to http://www.healthcaredistribution.org/meetings/dmc/2007/index.asp.

CLS MedTurn Attending FMI Pharmacy Conference
CLS MedTurn will be attending and exhibiting at the upcoming FMI Pharmacy Conference. The meeting will be held on May 4-7, 2007 in Chicago, IL. If you are planning to attend, please take time to meet with the following CLS MedTurn representative that will be at the conference:

Sue Willard, Business Development Manager sue.willard@medturn.com

For more information on the conference, visit http://www.fmi.org/events/confmain.cfm?meetings_id=460

News in Consumer Level Pharmaceutical Returns
Recently, the White House Office of National Drug Control Policy (ONDCP), the Department of Health and Human Services (HHS), and the Environmental Protection Agency (EPA) jointly released new guidelines for the proper disposal of unused, unneeded, or expired prescription drugs.

The new Federal prescription drug disposal guidelines urge Americans to:

• Take unused, unneeded, or expired prescription drugs out of their original containers
• Mix the prescription drugs with an undesirable substance, like used coffee grounds or kitty litter, and put them in impermeable, non-descript containers, such as empty cans or sealable bags, further ensuring that the drugs are not diverted or accidentally ingested by children or pets
• Throw these containers in the trash
• Flush prescription drugs down the toilet only if the accompanying patient information specifically instructs it is safe to do so
• Return unused, unneeded, or expired prescription drugs to pharmaceutical take-back locations that allow the public to bring unused drugs to a central location for safe disposal

For more information, please visit:

http://www.whitehousedrugpolicy.gov/news/press07/022007.html

Need Help With a Reverse Logistics Challenge?
If so, contact us and let us work with you to develop a solution that best fits your needs. Contact us at cls.solutions@inmar.com.