Actavis Inc. - Comment

May 15, 2008
Division of Dockets Management (HFA‐305)
Food & Drug Administration
5630 Fishers Lane, Room 1061
Rockville, MD 20852
Submitted electronically via: www.regulations.gov
To Whom It May Concern:
Re: Comments for “Standards for Standardized Numerical Identifier, Validation,
Track and Trace, and Authentication for Prescription Drugs.”
Actavis Inc. is the parent company of 4 LLC’s which together represent the 5th
largest generic pharmaceutical manufacturer in the world. The company currently
sells over 420 Rx SKUs in the US, manufacturing them in four US plants as well
as through contract manufacturers.
The majority of prescription drugs dispensed in the US are generic. Because of
the much lower price points of these generic drugs compared to “branded “drugs,
less affluent Americans can procure the prescription drugs they need for their
health and quality of life. The business model of any generic manufacturer
is “higher unit volume / lower profit margin” when compared to the larger, “branded”
companies. Because the lion’s share of capital expenditures as well as operating
expenses in the ePedigree /Serialization model has to do with serializing units,
generics therefore are being asked to bear a disproportionate share of the cost of
implementing these systems when compared to “branded” companies. Further,
Actavis believes that generic drugs, due to their lower price points and “street
value” are less likely to be counterfeited than newer, highly publicized, branded
drugs. We believe that a risk‐based approach which takes both public safety and
economic considerations into effect is the fairest and most effective way to
implement methods to achieve a safer supply chain.
Actavis is actively involved in compliance strategies and implementation projects
relative to the various state laws mandating ePedigree for prescription drugs, most
notably California’s law. We submitted a compliance plan to the California Board
of Pharmacy during January 2008. Our project team is currently working to
achieve our goal of compliance to California’s existing law by January 1, 2011.
While Actavis has been a leader working towards compliance to the state
regulations, we believe that refined and standardized pedigree and serialization
initiatives enacted at the Federal level would allow more rapid and less‐risky
compliance efforts resulting in higher effectiveness towards reducing counterfeiting.
Actavis comments regarding drug serialization – May 15, 2008
2
“ePedigree”, as a component of the California law, is relatively straightforward to
implement. However, the California law also mandates serialization at the unit
level (“the smallest saleable container”) as well as the case level. It is this
serialized information that is the basis of the “interoperable drug record” known as
ePedigree. In addition, there is a third action, certification, which is also mandated
by the California law.
Actavis believes that implementation of ePedigree / Serialization per the California
law has an inherent weakness – the current state of readiness of RFID as a data
carrier in a full supply chain (non‐pilot test) environment. Under the California law,
a “parent – child” relationship between case and unit must be created and
maintained throughout the supply chain. Attachment 1 at the end of this
document explains this parent‐child relationship. RFID, or similar non‐line‐of‐
sight technology is the only way to certify the parent child relationship as well as
the actual contents of a case without physically opening that case. Actavis has
investigated the currently‐available RFID technologies and believes that the failure
rate in scanning RFID is unacceptably high. Attachment 2 at the end of this
document illustrates the serious supply chain ramifications that would result from
even a 1% failure rate – which we believe is extremely conservative. No doubt,
with industry acceptance, this rate will improve over time to acceptable levels;
however it is our belief that RFID cannot provide acceptable levels today. A list of
concerns with RFID technology appears as Attachment 4 at the end of this
document.
The alternative to RFID for serialization is a 2D barcode. This technology is mature
and much more cost effective than RFID, however it is line‐of‐sight, meaning that
in order to certify contents, a case must be opened physically by an operator. The
response to this problem by manufacturers like Actavis to comply with California’s
law is the use of “inference” for certification. Inference means that if a
manufacturer certifies the contents of a given case, and that case has not been
opened and standard business processes have been followed, that the supply
chain partners can “infer” that the contents of that case have not changed since
manufacture and packaging. Attachment 3 at the end of this document illustrates
how inference would be used in compliance to the California law where 2D
barcode was the selected serialization technology.
Given the limitations of RFID today, Actavis believes that the 2D solution is the
only deliverable one within the compliance period for California (January 1, 2011).
However, we also acknowledge that inference as a long term solution is not ideal
for maintaining supply chain security.
Based on these inherent weaknesses of the proposed supply chain enforcement
model, Actavis urges the Congress, FDA and other involved federal agencies to
adopt a multi‐step approach to making the supply chain safer for prescription
drugs.
Actavis comments regarding drug serialization – May 15, 2008
3
• First, we believe that one standardized concept and specification set forth by the
Federal government is necessary to alleviate the market confusion and huge costs
involved in compliance to the many state regulations around this topic.
• Second, we believe that a phased‐in approach is best where prescription drugs
are identified as high risk due to safety concerns as well as economic ones and
these drugs are first to be serialized and tracked through the supply chain with the
other less‐risky ones to follow eventually.
• Third, we believe that since RFID is not ready as a serialization technology
today, a model that uses 2D be implemented on an interim basis, while RFID is
phased in.
Therefore we suggest that the Federal government consider either “authentication”
or “inference” as an interim step on the way to RFID serialization and pedigree
throughout the pharmaceutical supply chain. Our approach to inference has been
discussed earlier in this letter. Our approach to authentication is discussed in the
following paragraph. We believe that either model should be in effect for at least
ten years, beginning with all prescription drugs – and as RFID is implemented on
high risk drugs – be gradually phased out in favor of RFID with track and trace.
We define an authentication model as very similar to what has been in effect in
three European countries. In this model, all drugs would be serialized at the unit
level using line‐of‐sight technology (2D barcode). The unique identifying number
would be entered in a web portal linked by index to allow lookup from a retail
location. This model would be analogous to the “InterNIC” model of assigning web
URLs to physical locations on the World Wide Web. When the drug is received by
the last “link” in the supply chain, a lookup is done as part of the drug dispensing
process. If the serial number entered matches a serial number in the vendor
database, the drug is sold. If it does not match – that drug unit is quarantined and
not sold. Using this model, many counterfeit drugs would never reach a consumer.
The entire “middle” of the supply chain would be excluded from compliance,
eliminating much of the cost and complexity. The cost would be much lower than
that for the existing ePedigree / Serialization model. Implementation would be
much faster as well as 2D barcode already exists as does the database
technology necessary to authenticate the serial numbers.
As business processes at all parts of the supply chain are integrated, after a ten‐
year period, the use of RFID (non‐line‐of‐sight technology with “track and trace”)
should be phased in, beginning with high risk drugs and efficiently moving to
include all prescription drugs.
Actavis comments regarding drug serialization – May 15, 2008
4
Actavis believes that this kind of phased‐in, risk‐based approach is one that will
quickly improve patient safety through the interim technology and allow for a
reasonable cost solution for the industry and enable technology development for
an orderly transition to future, more attractive technology solutions like RFID or a
successor. Actavis is committed to compliance in order to enable a safer supply
chain and would like to offer its participation in providing feedback or ideas to
Congress or any Federal policy‐making or enforcement body. Thank you for
allowing us to provide our opinion on this important topic.
Respectfully,
Douglas S. Boothe
EVP, US Commercial & Administration
ACTAVIS
Actavis comments regarding drug serialization – May 15, 2008
5
Attachment 1 – Unit / Case/ Pallet Relationship
Actavis comments regarding drug serialization – May 15, 2008
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Attachment 2 – RFID Error Rate Illustration
60,000,000Shipping Case4,000,000600,000Shipping Case600,0001% Error
Rate15% Error RateGiven Actavis’ average case configuration of 15 bottles per
case:A bottle failure rate of 1% translates to a case failure rate of 15%.
Actavis comments regarding drug serialization – May 15, 2008
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Attachment 3 – 2D Barcode serialization with inference
Actavis comments regarding drug serialization – May 15, 2008
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Attachment 4 – Concerns with RFID
Concerns over the viability of using RFID as the primary data carrier are based on
performance – specifically failure rate and interference. While it is expected that
these issues will be addressed as the technology matures, today’s supply chain
will not be able to support the technology.
Tag Failures. There are multiple places in the supply chain where RFID tags have
the potential to fail and become permanently unreadable. The primary activities
within the supply chain process are shown in the chart below.
Process
Description
Location
Inspection
Failed Tags
Label Conversion
RFID tag embedded into label.
Label Supplier
Part of label conversion process.
Removed
Prior to use, labels are inspected.
Since the labels are on a continuous roll, the entire roll is either accepted or
rejected.
Label Application
Labels applied to bottles on the packaging line.
Packaging Site
After the label is applied, the bottle is inspected.
The bottle will be rejected. Liquid and semi-solid products will be discarded.
Tablets and capsules can be repackaged.
Packing
Bottles placed into cases. Cases loaded onto pallets.
Packaging Site
After the case is packed, the case and bottle tags are inspected.
The case is removed from the line and reworked. Disposition of bottle depends on
the type of product as described above.
Order Fulfillment
Orders picked and shipped to downstream trading partners.
Distribution Center
Multiple points in the picking, shipping, and receiving processes.
There are many courses of action including inference, read 2D backup, or return
shipment.
The key areas of concern (in red above) are the label application and the order
fulfillment processes:
- Label application is a concern because most of the bottles are round. The tag is
forced to take the curvature of the bottle, placing stress on the chip and the
antenna.
- Order fulfillment is a concern due to the unknown conditions that will be
encountered. The data available to date is not sufficient to accurately predict what
will happen to billions of RFID tags subjected to actual shipping and handling
conditions.
While all failures will be able to be addressed in one manner or another, the
disruption that will be caused by these failures will significantly impact the
efficiency of the supply chain. The end result would very likely limit the supply of
pharmaceutical products.
Actavis comments regarding drug serialization – May 15, 2008
9
Interference. There are several concerns with the ability of a functioning RFID tag
to be read in a real-world environment. These concerns stem from interference due
to the following:
- Liquid product masking the signal.
- Metals in the product masking the signal.
- Tags on round bottles touching and masking the signal.
- Full pallets of 5,000 to 10,000 bottles being read at the same time on a shipping
or receiving dock.