Senate Bill S3904

                                BILL NUMBER:S3904

TITLE  OF BILL:  An act to amend the public health 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 270 of the public health law  by  adding  a
new subdivision 15 which defines the term pedigree.

Section two amends the public health law by adding a new section 280-a
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 health (the department) in  consultation  with  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
repackager, and received by the pharmacy or another person furnishing,
administering, or dispensing the prescription drug.

Certain  transactions,  including  intracompany  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 the department and 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 in
consultation with the  department  of  education  and  shall  be  made
available  for  inspection by the department and SED. A pedigree shall
be maintained in an electronic pedigree tracking or alternative system
determined by the department in consultation with SED to be  feasible.
The  provisions  of  this section shall become operative on January 1,
2016 (the pedigree effective date), provided that  the  department  in
consultation  with 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, 2016, or if an electronic pedigree
tracking or  alternative  system  is  not  feasible  by  the  pedigree
effective  date,  such date as the department in consultation with 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,  2017,  or  if  an
electronic  pedigree tracking or alternative system is not feasible by
the  pedigree  effective  date,  such  date  as  the   department   in
consultation  with  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 three provides the effective date.

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 drug
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 Amendments Act
of 2007 includes a  provision  that  requires  the  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 the department,  in  consultation  with
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,
nonproprietary,   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 interoperable 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 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 repackage  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,  2016  (the  pedigree
effective  date),  provided  that the department, in consultation with
SED, has determined that the system is feasible at that time.  Pending
determination  by  the  department, in consultation with 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  July 1, 2016, and for pharmacies or other persons furnishing or
dispensing a prescription drug, July 1, 2017. In each case,  the  bill
allows the department, in consultation with 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  to be feasible on the pedigree effective date. By
providing for a  pedigree  effective  date  of  January  1.  2016  and
phase-in  dates of compliance for wholesalers and retailers of July 1,
2016 and July 1,  2017,  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:    Similar  to: S.5290-C, 2007 and 2008 prior to
revisions.

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. The department, in
consultation with SED, shall promulgate rules and  regulations,  issue
foams  and take any other action necessary to implement the provisions
of this act on or before the pedigree effective date.