Senate Bill S5287A

                                BILL NUMBER:S5287A

TITLE OF BILL:
An act
to amend the education law, in relation to pedigree for prescription
drugs

PURPOSE:
To protect the public by establishing a system that will help ensure
that drugs that enter the market and are purchased by consumers will
be unadulterated by counterfeiters.

SUMMARY OF PROVISIONS:
Section one amends section 6802 of the education is amended by adding
a new subdivision 24.

Section two amends the education law by adding a new section 6810-b
which provides that every manufacturer shall establish and maintain a
pedigree for each prescription drug, and every wholesaler, pharmacy
or other person who furnishes or dispenses a prescription drug shall
maintain a pedigree for each prescription drug. This section also
provides certain definitions and requires a pedigree to be in a form
and contain such information as shall be determined by the department
of education (SED), including certain minimal information outlined in
the section. The section further provides that each pedigree shall
include every change of ownership of a prescription drug from its
              

initial manufacture through to its final transaction to a pharmacy or
other person for furnishing, administering, or dispensing the
prescription drug, and that the pedigree shall track each
prescription drug at the smallest package or immediate container
distributed by the manufacturer, received and distributed by the
wholesaler or re packager, and received by the pharmacy or another
person furnishing, administering, or dispensing the prescription drug.

Certain transactions, including intra company sales or transfers,
prescription drugs received by the state or a local government entity
from a department or agency of the federal government specifically
authorized to deliver prescription drugs to the state or local
government entity, the provision of samples by a manufacturer's
employee to an authorized prescriber provided the samples are
dispensed without charge only to a patient of the prescriber, are
exempt from the pedigree requirements. If a manufacturer, wholesaler,
or pharmacy has reasonable cause to believe that a prescription drug
in, or having been in, its possession is counterfeit or the subject
of a fraudulent transaction, the manufacturer, wholesaler, or
pharmacy shall notify SED within 72 hours of obtaining such knowledge.

Every pedigree shall be maintained for a period of three years, or a
reasonable period of time as determined by the commissioner of
education and shall be made available for inspection by SED. A
pedigree shall be maintained in an electronic pedigree tracking or

alternative system determined by SED to be feasible. The provisions
of this section shall become operative on January 1,2017 (the pedigree
effective date),provided that SED shall issue one-year extensions of
the pedigree effective date if the electronic pedigree tracking or
alternative system is not feasible by the pedigree effective date.
Certain outlined criteria shall be considered in determining the
feasibility of the system used.

A wholesaler or other person furnishing a prescription drug shall not
sell, transfer, distribute or deliver a prescription drug without
providing a pedigree, or acquire a prescription drug without
receiving a pedigree, commencing on July 1, 2017, or if an electronic
pedigree tracking or alternative system is not feasible by the
pedigree effective date, such date as SED shall determine in its
discretion that the provisions of this paragraph shall become
operative.

A pharmacy or other person furnishing or dispensing a prescription
drug shall not sell, transfer, distribute or deliver a prescription
drug without providing a pedigree, or acquire a prescription drug
without receiving a pedigree, commencing on July 1, 2018, or if an
electronic pedigree tracking or alternative system is not feasible by
the pedigree effective date, such date as SED shall determine in its
discretion that the provisions of this paragraph shall become
operative.

The provisions of this section that are inconsistent with federal
legislation or a federal regulation governing the form or content of
pedigree or the standards and technologies for the identification,
validation, tracking and tracing and authentication for prescription
drugs shall become inoperative upon the effective date of such
federal legislation or the adoption of such federal regulation. If
the federal Food and Drug Administration enacts any rule or standard
or takes any other action that is inconsistent with any provision of
this section governing the form or content of pedigree or the
standards and technologies for the identification, validation,
tracking and tracing and authentication for prescription drugs, such
provision of this section shall be inoperative.

This section provides that certain units of prescription drugs in the
possession of a wholesaler or pharmacy, or of a manufacturer, for
which the manufacturer does not hold legal title on the pedigree
effective date shall not be subject to the pedigree requirements.

Any person who violates any provision of this section shall be subject
to a maximum fine of $2,000 per violation.

Section 3 This act shall take effect on the one hundredth eightieth
day after it shall have become law. The department of education shall
promulgate rules and regulations, issue forms and take any other
action necessary to implement the provisions of this act on or before
the pedigree effective date, as provided in paragraph b of

subdivision 9 of section 681O-b of the education law, as added by
section two of this act.

JUSTIFICATION:
The marketing of counterfeit drugs has become prevalent throughout the
United States as well as around the world. The World Health
Organization (WHO) estimates that counterfeit drugs make up 10% of
all drugs sold worldwide, with the percentage much higher in
developing countries. January 2009 Report by the American Council on
Science and Health, "Counterfeit Drugs: Coming to a Pharmacy Near You
with an Update for 2009" (ACSH 2009 Report). According to the National
Association of Boards of Pharmacy (NABP), counterfeit drug sales
accounted for $75 billion in global sales in 2010, with an estimated
1 to 2 percent of drugs in North America being counterfeit. Moreover,
counterfeit drugs have contributed to the increasing drug resistance
of the most deadly infectious diseases such as HIV/AIDS,
tuberculosis and malaria.

Despite the view that the U.S. drug supply is among the most secure in
the world, the growing size and sophistication of counterfeit drugs
rings have allowed them to penetrate the legitimate drug supplies of
the United States. In the last five years, counterfeit drug
investigations by the Office of Criminal Investigations of the Food
and Drug Administration (FDA) have increased almost ten-fold, from 6
in 2000 to 59 in 2004.

There is, however, no way to know the true degree to which counterfeit
drugs have contaminated our drug supply. Most of the incidents go
undetected since the evidence is usually destroyed when the drug is
consumed and the results of taking the counterfeit drug are blamed on
other causes, such as incorrect diagnosis, or in the case of HIV/AIDS
further complications and death are expected. We have recently
experienced two highly publicized examples of counterfeit drugs:
Lipitor tablets used to lower cholesterol, where in New York State
alone, in 2005 New Yorkers received an estimated 100,000 dosage units
of counterfeit Lipitor; and Procrit, an injectable drug used to
stimulate red blood cell growth to treat sever anemia and anemia
related to treatment for HIV/AIDS. Counterfeits of other well-known
brands as well as drugs used to treat critically-ill patients were
found distributed in U.S. in the last few years to hundreds of
thousands of unwitting patients, including:

*Combivir, used to prolong the life of HIV/AIDS patients by
preventing the virus from reproducing-replaced with another HIV
medication that can cause fatal allergic reactions

*Serostim, a human growth hormone used to prevent HIV/AIDS patients
from wasting-replaced with dangerous levels of a fertility drug

*Celebrex, used to treat arthritis--replaced with vitamins

*Viagra, used to treat impotence--over 700,000 counterfeit pills were
manufactured

*Zyprexa, used to help prevent hallucinations and delusions in
schizophrenic and bipolar patients-replaced with aspirin

*Neupogen, an injectable used to boost the immune system of cancer
patients-replaced with saline

ACSH 2009 Report. In addition, there have been multiple incidents
involving counterfeit versions of Tamiflu, used to treat seasonal or
avian flu. Aside from the obvious direct result of receiving the
counterfeit medicine, treatment from counterfeit versions may also
increase the risk of causing the virus to develop a resistance to the
Tamiflu drug.

The nature of the drug supply system in the U.S. makes our drugs ripe
for diversion and counterfeiting. The path of a drug from
manufacturer to distributor to pharmacy more often than not is not a
single or linear one; in fact, a substantial portion of our drugs
flow through a complex network of distributors, intermediaries and
secondary wholesalers. When wholesale distributors buy drugs without
knowing all the previous owners of the product, the integrity of the
product cannot be assured. This was the case for Long Island youth
Timothy Fagan, who was only 16 years old when he took a single vial
of what he thought was Epogen, a medication to increase red blood
cells, to help him recover from a liver transplant.
However, at some point in the distribution of the drug from
manufacturer to pharmacy the drug had been tampered with and the drug
was a counterfeit. Timothy suffered through several months of
excruciating pain before his physicians discovered that he had
received a counterfeit medication and is now forced to take
medication for the rest of his life.

Although a federal law, the Prescription Drug Manufacturing Act
(PDMA) was enacted more than 20 years ago to assure the safe and
effective distribution of prescription drugs and to minimize the
risks to consumers from taking counterfeit or adulterated drugs by,
among other things, imposing a requirement on wholesale distributors
to maintain either a paper or electronic pedigree of prescription
drugs, the FDA delayed the effective date for implementing the
regulations relating to the pedigree requirements until December
1, 2006. At the request of a group of secondary wholesalers, the
federal district court for the eastern district of New York in
December stayed the effective date of certain of the pedigree
requirements.

To better secure the drug supply system pending implementation of
federal law, we must adopt at the state level a multi-layered
strategy that combines establishing pedigree requirements in the
context of the developing anti-counterfeit technology, in addition to

strengthening the licensing requirements of wholesalers and
increasing penalties for those who violate the law.

Three states, Idaho, North Dakota and South Dakota, signed into law
legislation that tightens licensure requirements of wholesalers and
establish pedigree requirements for prescription drugs, requiring
their respective boards of pharmacies to set a target date for
implementation of electronic pedigree technology to track
prescription drugs through the supply chain. In addition, nineteen
states, including California, have enacted laws or regulations
establishing pedigree requirements. The Food and Drug Administration
development of a standardized numerical identifier be applied to a
prescription drug at the point of manufacturing and repacking at the
package or pallet level, sufficient to facilitate the identification,
validation, authentication and tracking and tracing of the
prescription drug.

It is the intent that a standardized numerical identifier, when
available, established at the point of manufacture and contained in
the electronic pedigree, will allow us at that time to track and
trace the movement of prescription drugs throughout the entire
distribution system, from manufacturer, to wholesaler, to retail
pharmacy or .other person furnishing, administering or dispensing a
prescription drug. In order to track prescription drugs all the way
through the distribution system to the retail pharmacy, it is
important that the electronic pedigree tracking or alternative system
use technology that includes each product's standardized numerical
identifier at the point of manufacture and that allows the tracking
to occur at the retail level.

It is acknowledged that while some of the technologies that would
allow us to track the movement of prescription drugs throughout the
distribution system have been developed, remaining technologies
necessary to fully accomplish such tracking are currently being
developed in the industry. To ensure that the electronic pedigree
tracking or alternative system required by this bill accomplishes the
intent of the legislation, it is important that the system be
determined to be acceptable by SED. In order for the system to be
determined "feasible," it is critical that the system use a
standardized numerical identifier at the point of manufacture for
each prescription drug, using state of the art technology, be readily
available with respect to all prescription drugs, be compatible with,
and provide information that can be read by and in a format and
architecture that is standardized, non-proprietary, and widely
available and uniformly used by, manufacturers, wholesalers and
retailers, including chain and independent pharmacies and hospital
pharmacies, for the electronic pedigree of prescription drugs, and
that it be inter-operable among all members in the distribution
system. While the electronic pedigree tracking system that is currently
being developed is sometimes referred to as "track and trace," the
legislature recognizes that the system that is ultimately determined
to be "feasible" as provided in the bill may be referred to as

something different than a "track and trace" system.or may be in a
different format. Accordingly, the bill refers to the system as an
"electronic pedigree tracking or alternative system." It is the
intent in all events that the pedigree system that is ultimately
determined to be feasible by SED be electronic.

The legislature further acknowledges that the FDA is in the process of
developing standards for identifying, validating, tracking and
tracing, and authentication for prescription drugs, particularly a
standardized numerical identifier to be applied to a prescription
drug at the point of manufacture and at the package level. The bill
recognizes that in determining the feasibility of the electronic
pedigree tracking or alternative system, such system must at minimum
be consistent with federal standards for a standardized numerical
identifier. In its January 2009 Guidance for Industry, "Standards
for Securing the Drug Supply Chain Standardized Numerical
Identification for Prescription Drug Packages," the FDA provided
guidance for standards for prescription drug standardized numerical
identifiers at the package level. For that purpose, the FDA considers
the package to be "the smallest saleable unit placed into interstate
commerce by the manufacturer or the repackager for sale to the
pharmacy or other dispenser of the drug product." The industry
continues its efforts to develop a system that will meet the needs of
all members in the distribution chain as well as the standards for
the technologies to identify, validate, track and trace,
and authenticate prescription drugs through the entire distribution
chain.

A pedigree shall be maintained in an electronic pedigree tracking. Or
other alternative system beginning January 1, 2017 (the pedigree
effective date), provided that the SED has determined that the system
is feasible at that time. Pending determination by SED that the
electronic pedigree tracking or alternative system is feasible, the
bill does not require the acquisition or adoption by any member of
the distribution system (namely, manufacturers, wholesalers and
retailers, including chain and independent pharmacies and hospital
pharmacies, and other persons furnishing, administering or dispensing
a prescription drug) of any interim technology to comply with the
electronic pedigree requirements of the bill. Rather, the intent.of
the bill is to require that members of the distribution system
utilize the technologies they currently utilize (or intend to utilize
regardless of the enactment of this legislation) in conducting their
businesses in accordance with business practice and federal and state
laws in effect in order to meet the electronic pedigree requirements
set forth in this legislation. In fact, in an effort to provide
additional time and flexibility for the industry to meet the
electronic pedigree requirements set forth in
this legislation, the electronic pedigree provisions requiring
compliance by wholesalers or other persons furnishing a prescription
drug do not become operative until
January 1, 2017, and for pharmacies or other persons furnishing or
dispensing a prescription drug, January 1, 2018. In each case, the

bill allows SED to further extend the applicable compliance date as
it shall determine in its discretion in the event that the electronic
pedigree tracking or alternative system is not determined by SED to
be feasible on the pedigree effective date. By providing for a
pedigree effective date of January 1, 2017 and phase-in dates of
compliance for wholesalers and retailers of January 1, 2017 and
January 1,2018, respectively, the legislature expects and intends
that the industry will have more than sufficient time to meet the
electronic pedigree requirements set forth in this legislation. In
addition, the bill's implementation dates provide consistency with
the dates of compliance required by California's electronic pedigree
law.

This bill will establish a system to help ensure that drugs that enter
the market and purchased by consumers will be unadulterated by
counterfeiters. By establishing a system for electronic pedigrees and
establishing criminal penalties for violations of this article, we
will better ensure that the drugs we purchase will be safe. Since the
bill provides that all manufacturers establish and maintain an
electronic pedigree for each prescription drug, and all wholesalers,
pharmacies and other persons furnishing, administering or dispensing
a prescription drug maintain an electronic pedigree for each
prescription drug, the bill will avoid facing the same legal
challenge by secondary wholesalers that the FDA faced in the federal
district court.

Without enacting legislation at the state level to address the
weaknesses inherent in our drug supply system, we will continue to
leave the public vulnerable to individuals who are willing to harm,
and even kill, people for profit.

LEGISLATIVE HISTORY:
2011: S.5287 - Higher Education/ A.1075 - Higher Education Similar to
A.6546-A, 2009 and 2010 referred to higher education. Similar to
A.781O-C, 2007 and 2008 referred to higher education. Same as
S.5290-C, 2007 and 2008 referred to health. Similar to A.2957-B, 2005
and 2006 referred to higher education. Same as S.3278-A, 2005 passed
senate and 2006 referred to higher education.

FISCAL IMPLICATIONS:
None to the state.

EFFECTIVE DATE:
This act shall take effect on the one hundred and eightieth day after
it shall have become law. SED shall promulgate rules and regulations,
issue forms and take any other action necessary to implement the
provisions of this act on or before the pedigree effective date.