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HDMA Fact Sheet on PDMA
What is PDMA?
Congress enacted the 1988 PDMA to tighten the security of the supply chain and to prevent criminals from trafficking counterfeit, adulterated, diverted or stolen prescription medicines.
The PDMA affects distributors in three main ways:
- The law creates two types of distributors: those authorized by the manufacturer to distribute prescription medicines (Authorized Distributors of Record, or ADRs), and those not authorized by the manufacturer to distribute prescription medicines (non-ADRs). Under FDA’s rules, ADRs are defined as those that have written business agreements with manufacturers to handle and sell their products. Manufacturers solely determine who is and who is not an ADR on a product-by-product basis, depending on their unique business and distribution needs.
- Under the law, non-ADRs must provide an “identifying statement,” commonly called a pedigree, documenting all prior product sales. In FDA rules, the “identifying statement” must track sales going back to the manufacturer.
- Under FDA’s rules, all distributors must maintain records of every prescription drug transaction, and have these records readily available for inspection.
 Does HDMA Support PDMA?
Although certain provisions of the law have been challenged in court, HDMA is publicly committed to the full and fair implementation of PDMA. Our members have worked diligently to develop and implement systems that comply with the law, and that safely and efficiently enable them to deliver medicines and to meet individual customer needs.
Why does HDMA support PDMA?
HDMA views the PDMA as an important and welcome security advancement in our nation’s efforts to prevent and stop criminal activity. HDMA believes it is mission critical for manufacturers, distributors, pharmacies, regulators and law enforcement to monitor and maintain the safety and security of this system on behalf of consumers.
Why are there different requirements for ADRs and non-ADRs?
There have been a number of investigations and prosecutions involving diverted or counterfeit drugs across the country. In hearings before Congress, it was found that “most of the drugs that were counterfeits, stolen, expired, or obtained through fraud were handled by secondary wholesalers, who were not authorized to distribute that manufacturers product” (Source: House Energy and Commerce Committee Report to Congress, April 30, 1987).
To address this, the PDMA requires non-ADRs to provide additional information, in the form of a pedigree, documenting the origins of the prescription medicines they sell. Many state laws and regulations make comparable distinctions.
How does a distributor become an ADR?
Distributors work closely with the manufacturer to become an ADR, which typically entails convincing the manufacturer that it is firm of integrity, as well as a good business match. ADR status is an individual business decision granted by each manufacturer to the distributor or distributors that it wishes to do business with. Each manufacturer makes its own decision on how many ADRs it will have and which distributors it will designate as ADRs.
What is an ongoing relationship?
Under regulations, in order to establish the “ongoing relationship,” a distributor must enter into a “written agreement” with the manufacturer that “provides a clear and verifiable expression of the parties’ intent to engage in a continuing business relationship.” Further, the agreement must authorize the distributor to distribute the manufacturer’s products for a period of time or for a number of shipments. If the distributor is not an ADR for the manufacturer’s entire product line, the agreement must identify the specific drug products the ADR is authorized to distribute.
If a distributor buys products directly from the manufacturer, are they an ADR?
No, ADR status is not based on direct purchase from the manufacturer. In order to be an ADR, the distributor must enter into a written agreement with the manufacturer. The manufacturer must openly disclose these relationships, and make its list of ADRs publicly available. ADR status is an affirmative decision on the part of the manufacturer to rely on the distributor to handle its products.
Can non-ADRs ever buy directly from the manufacturer?
Yes. Manufacturers always have the discretion to sell to non-ADRs.
Is it true that only large companies are ADRs?
No. ADRs have a wide variety of business models, and include national, regional and small, family-owned businesses. Manufacturers typically designate many different types of companies to serve as their ADRs. There is also a great deal of variability between the different manufacturers’ ADRs, as their publicly-available lists demonstrate.
Any distributor may work with the manufacturer to obtain ADR status. For its own business reasons, each manufacturer may or may not choose to grant ADR status to all distributors desiring it.
Are all secondary distributors considered non-ADRs?
No. Secondary distributors may have ADR status for some of the products they distribute, even if they do not generally purchase products directly from the manufacturer.
Are all primary distributors considered ADRs?
No. Primary distributors predominantly buy prescription medicines from the manufacturers and predominantly distribute them directly to healthcare providers. While primary distributors are ADRs for most products, they may not have ADR status for all the products they distribute.
What is a pedigree?
Under PDMA, distributors who are not authorized by the manufacturer to handle and sell their products must provide an “identifying statement” to purchasers. That statement must document each prior sale, purchase or trade of the prescription medicine. It is important to know that although the identifying statement and pedigree have become synonymous, the federal guidance and regulations implementing PDMA never use the word “pedigree”.
The 50 states are required to follow PDMA as a baseline, but can enact additional regulation or legislation as they see fit. Current definitions and requirements for “pedigree” vary state by state. For instance, some states have outlined specific paper-based requirements, while other states plan to implement electronic track-and-trace solutions that can further address security issues with modern technology.
Do ADRs have to provide pedigrees?
Under the law, an ADR may sell prescription medicines to healthcare customers, such as pharmacy chains, hospitals, clinics, etc., without providing a pedigree. This prevents the customer from engaging in further distribution or resale of the product unless it can document each prior sale, purchase or trade of the prescription medicine, going back to the manufacturer.
An ADR who wishes to sell prescription medicines to a non-ADR will need to provide the pedigree information required by the law in order for the sale to have any value.
Is it true that non-ADRs have no way of obtaining pedigree information?
No. If the non-ADR buys from the manufacturer, it will have all the information needed to create the legally-required pedigree. If a non-ADR buys from an ADR, the ADR will need to provide the pedigree information required by the law in order for the sale to have any value.
How many ADRs are there?
Each manufacturer makes its own decision on how many ADRs it will have, and which distributors it will designate as ADRs. ADR status varies by company and by product. For example, some manufacturers have a large number of ADRs, while others designate only one or two. Similarly, manufacturers may grant ADR status for the entire product line, or for just a few select products.
Are HDMA members affected by PDMA requirements?
Yes. HDMA has approximately 40 distributor members. What they have in common is they predominantly buy prescription medicines from the manufacturer and predominantly distribute them directly to healthcare providers. While all HDMA members are ADRs for most products, some are non-ADRs for some of the products they distribute, and must provide pedigrees in these cases.
Regardless of ADR status, the PDMA also creates additional costs and added requirements for HDMA members, who may have to provide pedigrees to customers. Nevertheless, HDMA supports the PDMA as an important and welcome security advancement in our nation’s efforts to prevent criminal activity.
Does HDMA support the ADR exemption from the pedigree requirements of PDMA?
Although certain provisions of the law have been challenged in court, HDMA is publicly committed to the full and fair implementation of PDMA. Congress intended to create a legal distinction between ADRs and non-ADRs to address serious abuses in the non-ADR market and the problems posed by counterfeit and diverted prescription medicines.
Both the PDMA statute and the regulation make it very clear that non-ADRs must provide additional documentation, in the form of a pedigree, documenting each prior sale, purchase or trade of the prescription medicine. The law clearly intends to require pedigrees when and where they are needed, and avoids the requirement when it is unnecessary. Many state laws and regulations make comparable distinctions.
Until these laws change, HDMA encourages its members to comply with the current definitions and requirements.
What other anti-counterfeit measures does HDMA support?
HDMA has in place a broader anti-counterfeiting strategy, which also includes efforts in support of:
- Stricter distributor licensing standards;
- Tougher regulation, stronger law enforcement and harsher criminal penalties for the crime of counterfeiting medicine;
- The adoption of current and emerging track and trace technologies, such as RFID, that track patient medications from the manufacturer, to the distributor, to the pharmacy;
- Purchasing products directly from the manufacturer and ensuring a strong chain of custody for medicines.
- The development of new research and best business practices in the supply chain.
Read the June 9, 2006 HDMA Press Release - HDMA COMMENDS FDA FOR CONTINUED STRONG COMMITMENT
TO ENSURING PATIENT SAFETY, MEDICINE SUPPLY SECURITY |
