Systemic Security Protection through Pharmaceutical Traceability

• By Brian Daleiden
• Feb 20, 2009

Drug counterfeiting continues to increase and its global threat to patient safety continues to rise. The FDA estimates that 1 million deaths worldwide are the result of counterfeit drugs. While the United States drug supply is one of the safest in the world, it is not immune to these concerns. It is important for pharmaceutical manufacturers to understand not just the different types of threats they face but also the tools and technologies available today to prevent counterfeit drugs from entering the supply chain.

Once a drug leaves its manufacturer, it is left wide open to be adulterated, faked, diluted, relabeled, repackaged or manufactured without authorization. While the counterfeit is often physically indistinguishable from the genuine product, the counterfeit does not provide the intended therapeutic value.

In order for a manufacturer to the reach systemic product security, it’s important to take a holistic approach and understand the different types of drug diversion security threats:

• Theft: stolen from the legitimate distribution network

• Geographic: transported illegitimately into a country’s distribution network

• Counterfeit: unauthorized product introduced into the legitimate distribution network

• Contract: unauthorized sale of a product based upon contractual restrictions

• Fraud: fictitious sale of a product in order to claim financial benefits

Analyzing Counterfeiting, Diversion and Drug Distribution
Diversion is the means by which counterfeiters generate profit. Except for theft, all other forms of diversion are a manipulation of the flow and related transactions into the legitimate distribution network. In addition, stolen products are often also re-introduced into the legitimate distribution network. FDA’s Office of Criminal Investigation has stated that every case of counterfeiting is accompanied by diversion. The diversion provides the vehicle for introducing the counterfeit drugs into the legitimate supply chain. Therefore, measures need to be put in place to prevent the systemic diversion of counterfeit products into the legitimate distribution network.

By plugging the holes through which diverted counterfeit products can enter the legitimate distribution network, criminals will be thwarted from generating profits and threatening patient safety. It is crucially important to understand exactly what security threats are being targeted so the right selection of technology tools can be employed. For example, if attacking drug diversion is the focal point, companies may want to leverage electronic pedigrees, which capture the chain of ownership from manufacture to final patient dispensation of pharmaceutical products. The resultant chain of custody provided by ePedigree serves as a barrier to the reach and effectiveness of the drug diversion network.

The Drug Diversion Network
The introduction of illegal product into the legal distribution network occurs through three basic methods. All the methods involve a form of misrepresentation of the actual source of the product. The entity conducting the criminal act provides and/or accepts fraudulent information about themselves and/or the product. The entity can be:

• a company illegally participating in drug distribution,

• a seller misrepresenting the true origin of the product, or

• a buyer not verifying the true origin of the product or licensure of the seller.

Together, these entities form a "drug diversion network."

First, a company can be engaged in systemic criminal activity by selling into the drug distribution network without a license. Pharmacies, clinics, foreign distributors, repackagers and unlicensed wholesalers have been engaged in illegal sale of drugs to legal entities engaged in drug distribution and dispensation. Very often, these individuals change modus operandi by rapidly changing their physical location and through the use of shell companies. These companies are not always the producers of counterfeit products but they are the crucial vehicle through which illegitimate products are diverted into the legitimate distribution network.

Second, companies both with and without licenses have been caught creating forged documentation in order to portray the sale of legitimate product. The forgeries include invoices, purchase orders, shipping documents and paper pedigrees that purport a legitimate source of the drugs. The legitimate sources being claimed can be either the manufacturer, authorized distributor of record or another legal distributor (wholesaler, pharmacy or repackager). The product is sold to an unsuspecting buyer or a buyer that is willing to overlook the procedures required to verify the documentation.

Finally, both companies and individuals within a company have been found to knowingly purchase products from suspicious sources of dubious origin. The lack of licensure and transaction verification combined with limited internal controls enables an individual and/or an organization to accept illegitimate product into the legitimate distribution network.

These three methods combine to create the holes through which large volumes of illegitimate products can flow systemically and undetected into the legitimate distribution network. A counterfeiter seeks to exploit the diversion network in order to sell illegitimate product at volumes and prices that maximize profits. Many of today’s drug pedigree laws were enacted to target precisely these issues: to prevent, detect and help prosecute companies and individuals participating in drug diversion networks.

A Product Traceability Foundation for Today’s Supply Chain
The systemic nature of drug diversion and counterfeiting requires a systemic security approach to effectively combat these threats. Of the currently available solutions, electronic pedigrees provide a comprehensive set of tools to bear on securing the legitimate supply chain, even in today’s non-serialized product world. Product information such as NDC, lot number, and expiration date are gathered from the original manufacturing process and then securely linked to extensive transaction detail about the changes of possession that a drug undergoes from manufacture to final dispensation. As products are serialized, these serial numbers can also be incorporated into the pedigree. As a result, the ePedigree secures the chain of custody, preventing phony transactions and products from getting into or remaining in the legitimate supply chain.

This comprehensive nature of electronic pedigree provides the foundation for a systemic approach to product security. We see this in how ePedigree provides holistic prevention, detection, and investigation support. For example, electronic pedigree systems can detect counterfeited and diverted product by identifying forged pedigrees as they are received and analyzing transaction trails to identify suspicious patterns. The extensively documented product movement and links to financial transactions also drastically improve the effectiveness of criminal investigations.

As products become serialized in the coming years, serialized product authentication can be layered on as part of a complete pharmaceutical traceability strategy. In use today on certain high risk product lines, these authentication systems allow companies along the supply chain to verify product identity before that product is accepted into inventory or dispensed to patients. For pharmaceutical companies, these authentication events can be incorporated into a product security dashboard providing a heads-up display on supply chain issues.

Conclusion
With the many threats flooding the drug supply chain globally, it is important for drug manufacturers, 3PL / contract packagers, wholesalers, repackagers/kitters, pharmacies, hospitals and clinics to know that there are technologies available to help prevent harm to its customers. Given the broad range of security threats, the focus should be on establishing a foundation for systemic protection that is aligned to the specific challenges identified and the state of technology and process adoption throughout the supply chain.

In today’s supply chain, that foundation starts with electronic pedigree systems that establish a pervasive, protective shield for all products throughout the drug distribution network and provide a deep visibility into the movement of a drug throughout the supply chain, thus directly combating diversion by providing maximum protection from counterfeit drugs. On this foundation, selective serialized product authentication can be layered on to add specific point protection for identified high risk product lines. This combination provides a phased and cost-effective approach to systemic product security that can help protect patient safety today yet is extensible to meet future security and regulatory requirements.

This article originally appeared in the February 2009 issue of Security Today.