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U.S. Department of Health and Human Services


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Counterfeit Drug Task Force Report 2006 Section III: What is next for PDMA Implementation?

What should FDA do regarding the stay of 21 CFR §§ 203.3(u) and 203.50?


The PDMA as modified by the Prescription Drug Amendments of 1992 (PDA) amended the Food, Drug, and Cosmetic Act (the Act) to, among other things, establish requirements related to the wholesale distribution of prescription drugs. Section 503(e)(1)(A) of the Act requires that

"…each person who is engaged in the wholesale distribution of a drug***who is not the manufacturer or authorized distributor of record of such drug *** provide to the person who receives the drug a statement (in such form and containing such information as the Secretary may require) identifying each prior sale, purchase, or trade of such drug (including the date of the transaction and the names and addresses of all parties to the transaction.)"

PDMA defines an authorized distributor of record as a wholesaler that has an "ongoing relationship" with the manufacturer to distribute the drug. However it does not define "ongoing relationship."

In December 1999, the Agency published final regulations (1999 final rule) (21 CFR part 203) related to the PDMA6 that were to take effect on December 4, 2000. After publication of the final rule, the Agency received communications from industry, industry trade associations, and members of Congress objecting to the requirements in 21 CFR §§ 203.3(u) and 203.50. These provisions define the phrase "ongoing relationship" as used in the definition of "authorized distributor of record" (ADR), set forth requirements regarding an identifying statement (commonly referred to as a "pedigree"), and define the fields of information that must be included in the pedigree. Those objecting to the regulations explained that some secondary wholesalers may not receive pedigree information from their suppliers who meet the PDMA's definition of "authorized distributor" because the PDMA does not require authorized distributors to provide pedigree information. Without this information, they explained, secondary wholesalers would not be able to sell the drugs because they would be unable to pass a pedigree that met all the requirements of 203.50. Many secondary wholesalers are small businesses and expressed concern that their inability to meet the regulations' requirements would frustrate sales and drive them out of business.

Based on the concerns raised, the Agency delayed the effective date for those provisions until October 1, 20017 in order to reopen the comment period for the regulations and receive additional comments. In addition, the House Committee on Appropriations (the Committee) requested that the Agency review the potential impact on the secondary wholesale pharmaceutical industry and prepare a report to the Committee summarizing the comments and issues raised and the Agency's plans to address these concerns. The Agency's report, which was submitted to Congress in June 2001 (2001 PDMA Report to Congress), concluded that we could address some of the concerns raised by the secondary wholesale industry through regulatory changes, but that some of the changes requested by the secondary wholesale industry would require statutory change.8 Since submitting the report to Congress, FDA has continued to delay the effective date of these provisions.

In February 2004,9 FDA again delayed the effective date of the particular provisions until December 1, 2006, because we were informed by stakeholders in the U.S. drug supply chain that industry would adopt electronic track and trace technology by 2007. When widely adopted, this technology could create a de facto e-pedigree that would document the movement of the drug from the place of manufacture through the U.S. drug supply chain to the final dispenser. If properly implemented, e-pedigree could meet the statutory requirements in section 503(e) of the Act.

In our 2006 fact-finding effort, we sought comment on whether to continue the delayed effective date, let the regulations go into effect, amend the 1999 final rule, or take other steps.

What We Heard

Most of the comments10 to our February 2006 notice advised FDA to implement the regulations and let the stay expire. Some said the regulations should be implemented as currently written, without amendment. Others suggested amending the final rule to either 1) exempt the passing of pedigree along primary supply chain routes or the "normal chain of distribution," or 2) phase-in implementation, starting with requiring pedigrees for those drugs that are susceptible to counterfeiting and diversion, or 3) require a pedigree for "one forward-one back" in the distribution chain (as opposed to a pedigree that documents all prior sales transactions back to the manufacturer). A couple of comments suggested that we extend the stay in order to give industry more time to continue moving toward adoption of electronic track and trace technology and e-pedigree. A few wanted the stay to be extended in order to give time to amend the regulations. The amount of time requested for extending the stay varied from 5 years to indefinitely. We also received one citizen petition from a secondary wholesalers' trade association requesting that the stay be extended.

Some comments suggested that FDA work with Congress to eliminate the provision exempting the authorized distributor of record from having to pass a pedigree. They claimed that it was too confusing to recognize when a pedigree should or should not be passed.

Several comments asserted that implementation of the PDMA regulations would speed the development of new, less expensive ways to provide pedigree.


We carefully considered several options and recommend that FDA no longer delay the effective date of §§203.3(u) and 203.50 past December 1, 2006. Regulations defining "ongoing relationship" and "authorized distributor of record" are scheduled to go into effect thereafter. In our 2006 fact-finding efforts, we gave stakeholders and the public ample opportunity to provide their input, but we did not hear the same arguments that we heard on previous occasions regarding why we should further extend the stay. Rather, this time, an overwhelming majority of the comments favored allowing the stay to expire.

The PDMA was signed into law in 1988. We believe that FDA can no longer justify delaying implementation of these regulations. In its 2001 PDMA Report to Congress, FDA shared the concerns that were raised regarding implementation of the regulations. By recommending implementation of the stayed provisions, we are supporting the law that Congress passed and has since retained. Furthermore, our extensive experience with counterfeit and diversion drug cases reveals that the secondary wholesale market is where much of the illegal activity occurs. Allowing the stay to expire will provide clarity in the drug supply chain regarding who is and is not an ADR, requiring those secondary wholesalers who may be involved in illegal activity to provide pedigrees. Continuing the stay would perpetuate the current confusion and further allow opportunities for counterfeit and diversionary practices to flourish.

We do not intend to put secondary wholesalers out of business. We continue to be sensitive to the concerns that they raised several years ago, even though we did not hear these concerns during our current fact-finding effort. Therefore, as explained below, we recommend that FDA take an enforcement approach that focuses on products most susceptible to counterfeiting and diversion, which should relieve some of the burden that secondary wholesalers might confront when these regulations go into effect.

Most of the comments we received in this fact-finding effort recommended that the regulations be implemented as is, while others advocated a phased-in approach, whereby the regulations would apply to a limited number of drugs at first. We agree that the regulations should be implemented as is. Many of the recommended changes to the pedigree requirements would require a change in the law. We believe that the regulations as currently written appropriately interpret and implement the PDMA, as Congress intended.

Although the regulations do not provide for a phased-in approach, we propose that FDA publish a Compliance Policy Guidance (CPG) before the stay expires that will contain a list of factors for FDA field personnel to consider in focusing their efforts when carrying out their duties in enforcing the law. We propose that these factors reflect a risk-based approach in which FDA uses its limited resources to focus on drug products that are most vulnerable to counterfeiting and diversion. We do not propose the creation of a list of drugs that meet the criteria, but instead suggest that the CPG provide examples. However, we recommend that FDA not limit its enforcement to just those drugs that meet the factors. Rather, the factors would merely provide guidance for where our field personnel should target their enforcement efforts. The factors to consider for the enforcement focus may include drugs with a high value in the U.S. market, drugs with prior indicators (such as drugs that were involved in diversion cases or counterfeiting), and drugs that are easily counterfeited.

We believe that this CPG would be considered a Level 1 guidance under FDA's good guidance practice (GGP) regulations. (21 CFR §10.115.) Therefore, we recommend that FDA publish a draft version for public comment, evaluate the comments, and then publish a final guidance by December 2006.

We recognize that complying with the stayed regulations may require changes in business practices. Compliance may also require implementation of additional information technology systems to generate a pedigree. Each of these processes may take time to achieve. However, we note that, although the regulations at issue have been stayed since 1999, the fundamental statutory requirement to pass a pedigree has been in effect since PDMA was enacted. The regulations primarily serve to clarify who is an authorized distributor of record and what information a pedigree must contain. In addition, we believe that this report and the CPG we advocate herein will focus public attention on this issue such that any wholesalers who thought that they were not subject to the pedigree requirement will have adequate time to take appropriate steps to comply with the regulations.

Furthermore, many States have moved forward with their own pedigree requirements, which often contain requirements in addition to those in the PDMA. We are aware that stakeholders are preparing to meet these State requirements, both electronic (to meet California law) or otherwise. Consequently, they should be that much closer to meeting the federal PDMA requirements as well.


  • We recommend that FDA not continue to delay the effective date of §§203.3(u) and 203.50 beyond December 1, 2006.
  • We recommend that FDA issue a draft Compliance Policy Guide for public comment that would focus FDA's pedigree-related enforcement efforts on those drugs most vulnerable to counterfeiting and diversion.

664 FR 67720.
 765 FR 25639.
8See http://www.fda.gov/oc/pdma/report2001/ 
969 FR 8105.
10In this report, the term "comments" includes comments that we heard at the public meeting and written comments submitted to the docket.