Summer 2011
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Rx Forum: Interview With Douglas Scheckelhoff
Douglas Scheckelhoff, MS, RPh
Director, Pharmacy Practice Sections
American Society of Health System Pharmacists

What exactly is the supply chain? Can you describe the components?
The pharmaceutical supply chain generally starts with the manufacturer of the drug product, continues through the wholesaler/distributor, and ends when the product is ultimately sold to the pharmacy that dispenses it to the patient.

What exactly is "outside the primary distribution channel"? What does this mean?
Issues with the supply chain can arise when there are uncontrolled access points into the traditional pharmaceutical supply chain. In some cases, secondary wholesalers have been able to insert counterfeit or diverted product into the system, breaking the integrity of the chain and allowing unsafe products to be administered to unsuspecting patients.

Why is it that "specialty distributors" seem to have no problem supplying drugs in a shortage situation at exorbitant prices?
Specialty distributors often have drug products that are in short supply for one of two reasons. In some cases they have been able to anticipate a shortage, buy product and have it available when there is a shortage situation. In other cases, they may have obtained product through other means. There are reports of some wholesalers buying product from hospitals that have excess supply, and then reselling it at a higher price. It may be possible that counterfeit or diverted product may also show up in these situations, although there have been only a few reported cases of this happening. Regardless of the source, these specialty distributors typically charge much higher prices for the product because it is in high demand.

Is that legal?
It is legal for them to resell the product if its been acquired through legal means. Where they have purchased it from a hospital, there may be some question, because most hospitals are not licensed as distributors. If their prices are exorbitant, such as was found during the flu vaccine shortage of 2004, it may be illegal under individual state price gouging laws. Obviously, if the product is counterfeit, adulterated or imported from another country without FDA approval, it would be illegal.

What type of policies and procedures are required when purchasing from a source other than a regular wholesaler?
When purchasing products from a source other than your traditional prime vendor wholesaler, we suggest that pharmacies verify the legitimacy of that secondary source. Pharmacies should only buy from those distributors with whom they have an established business relationship. They should verify with their Department of Health or Board of Pharmacy, that it's a legitimate, licensed wholesaler and should attempt to confirm with the distributor that the product has been acquired through legitimate means.

If a hospital buys from a reputable wholesaler that they've regularly done business with, isn't it their responsibility and the manufacturer's responsibility to ensure that adulterated product does not enter the hospital? What more can the hospital pharmacist do?
Even if the hospital purchases product from a reputable wholesaler that they normally do business with, they still need to be on the lookout for product that may have been adulterated. There have been a number of cases where adulterated product has entered into the supply chain through one of the traditional wholesalers and ended up in the hospital. So even though the hospital itself did not purchase this product from a secondary wholesaler, ultimately they ended up with counterfeit product. Pharmacists and technicians need to be on the lookout for products and packaging that look unusual, different from what they are accustomed to, or of poor quality and follow up with the source to make sure those products are legitimate.

The hospital is liable for products they administer to patients. They have a responsibility to assure that the products that come into the pharmacy are from reputable and reliable sources, are made by a reputable manufacturer and that they have been stored and handled correctly. So ultimate responsibility does fall on the pharmacy and the hospital to make sure that what they give to patients is safe and effective.

What are the state and federal agencies I should contact if I suspect I have received adulterated or counterfeit product? How can they help?
At the state or local level, the Department of Health or the Board of Pharmacy, depending on what state you are in. At the federal level, contacting the FDA through their MedWatch reporting system would allow the FDA to be alerted to the problem. It will also give the individual reporting the problem an opportunity to review the FDA Website and look for other similar reports of counterfeit product. The FDA, then, will follow up with the manufacturer to verify that the product is, in fact, legitimate.

What steps can I take today to eliminate drug diversion?
Hospitals can take a number of steps to prevent drug diversion today, many that don't require spending a lot of money. First, we recommend reviewing the design of the pharmacy to make sure that there are not hidden areas or areas that are not well lit, where staff who might want to divert product could step away and put items into a backpack. Also, avoid a situation where there are staff lockers in a hidden area, to reduce the temptation of people putting things into a briefcase or a backpack. We also suggest that good inventory control procedures are used, including multiple accountable parties involved in the purchasing process, separating responsibility for placing the order, receiving the product and ultimately in approving the invoice. We suggest the use of sequential purchase order numbers, so that any one individual does not have complete control over purchasing product. We also suggest that when products are received into the pharmacy, especially for high-cost products, that the actual package or container be marked with an indelible "X" or that the top be torn off. By defacing the package in this way, it reduces the street or re-sale value considerably.

What drugs have a high "street value"? What should be my target when auditing my inventory?
Drugs that are considered to be at high risk for diversion or counterfeiting historically have been high-cost injectables that are commonly used in many locations (such as hospitals, dialysis centers, oncology clinics and for home care). One can go to the Website of the National Association of Boards of Pharmacy (, which maintains a list of drugs considered to be at high risk for counterfeiting or diversion. We also suggest that larger pharmacies with large numbers on staff consider using automated dispensing machines to track and control product movement.

Volume 20
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