The political silly season is now fully upon us and that can only mean one thing-politicians are going to be accusing each other of flip-flopping on key issues. While this is something we have come to expect in the political arena, I never thought I’d be placing FDA in the flip-flopper category. But there I was, minding my own business, a copy of FDA’s recently-issued Federal Register notice in my hand, and it hit me-FDA was flip-flopping (but I’m just as guilty for using a cheap political reference to get your attention)!

To understand how this came about, we need to first take a look at FDA’s draft guidance that was issued on June 11, 2014 entitled “Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification.” In the corresponding Federal Register notice, FDA estimated that 5,000 illegitimate product notifications would be made to FDA each year by all manufacturers, repackagers, wholesale distributors, and dispensers (including high risk of illegitimacy notifications from manufacturers). FDA also estimated that 50 percent of these notifications would be originating from manufacturers and repackagers, 45 percent from wholesale distributors, and the remaining 5 percent from pharmacies (i.e. dispensers). At the time, these figures did not catch my eye, probably because I knew they were only being used to support reporting burdens for these entities under the Paperwork Reduction Act (PRA) of 1995.

However, my perspective changed when I read FDA’s follow-up Federal Register notice, dated September 15, 2015. FDA announced in this notice that it had lowered the number of estimated annual agency notifications from 5,000 to 1,000. According to FDA, it made this change based on “a comment from a trade association representing a primary stakeholder that the estimate of 5,000 notifications was too high based on experience of its members.” FDA added it lowered the estimate to 1,000 notifications “in response to the comment and our reexamination of the data…” I don’t have an issue with this change because it wasn’t based solely on the comment; FDA did its homework by taking another look at the data.

Here’s where I have a problem though. FDA significantly increased the estimated percentage of annual illegitimate product notifications for manufacturers and repackagers from 50 percent to a whopping 80 percent, while dramatically decreasing its estimate for wholesale distributors from 45 percent down to a measly 16 percent. The percentage of notifications from pharmacies was only slightly modified from 5 percent to 4 percent. FDA explained it received a comment from “a major stakeholder group stating that they believed that the number of notifications estimated for wholesale distributors was too high based on their past experience. The commenter speculated that most notifications would be made by manufacturers.”  But there was no indication that this change was based on anything more than this comment and FDA’s stated belief that manufacturers are the only trading partners making high risk of illegitimacy notifications. Unlike the data-driven review FDA utilized to reduce the volume of annual notifications, there was no indication that any such effort was undertaken in this case. As a result, the agency’s newly-established estimates portray manufacturers and repackagers as being responsible for the overwhelming majority of annual illegitimate product notifications to FDA and relegate wholesale distributors and pharmacies to relatively minor roles in the notification process.

Based on my experience, FDA seems to have these numbers completely upside down. In my view, wholesale distributors and pharmacies are responsible for, or associated with, at least 80 percent of the illegitimate product incidents in this country. A review of the press releases on OCI’s web site would back this up. There you can find many examples of prescription drug diversion cases involving these two entities, but finding one involving a manufacturer is a completely different story (it’s worth pointing out that repackagers were associated with a massive counterfeit Lipitor case in 2005). I wonder if FDA consulted with its own internal experts in OCI before making these revised estimates. No doubt there are many who will say this is no big deal and there’s no need to accuse FDA of flip-flopping since these estimates are only for PRA purposes. Nevertheless, I’m raising it for the following reason which I consider to be quite significant.

These revised percentages make it appear that wholesale distributors and pharmacies are far less likely than manufacturers and repackagers to be in receipt of illegitimate product, which is entirely untrue. In fact, fraudulent transactions, one component of the four-pronged illegitimate product definition, have been a common thread in prescription drug diversion and counterfeiting cases throughout the last decade, and probably as far back as 1988 when President Reagan signed the Prescription Drug Marketing Act into law. It’s hard to think of such a case that does not involve some type of fraudulent transaction. But manufacturers and repackagers are typically not going to be in possession or control of the vast majority of illegitimate product that is distributed as a result of such cases (except for limited analytical purposes by manufacturers). Remember, illegitimate product determinations and corresponding notifications to FDA and all immediate trading partners that may have received such product are conditioned on the possession or control of the illegitimate product by a trading partner (excluding 3PLs). For instance, potentially hundreds of wholesale distributor and pharmacy customers could be in possession or control of illegitimate products received from just a single corrupt wholesale distributor supplier which obtained such products as a result of fraudulent transactions (consider this case as an example).

FDA amended its previously-established percentages of illegitimate product notifications attributable to manufacturers and repackagers, wholesale distributors, and pharmacies based primarily on a single stakeholder’s comment and without apparently engaging in any form of due diligence. As a result, FDA greatly downplayed the role of wholesale distributors in illegitimate product incidents, such as prescription drug diversion and counterfeiting, seemingly at the behest of an organization that may have been motivated to advance its own self-interests. There is no question that wholesale distributors and pharmacies have historically been responsible for, or fallen prey to, the lion’s share of supply chain crimes involving what are now defined as illegitimate products and are vastly more likely than manufacturers to be in the possession and control of illegitimate product. This FDA flip-flop probably went unnoticed by many, but it definitely has me scratching my head.