Johnson & Johnson Announces Plan To Revamp Its Quality Controls

On the heels of the massive recalls due to quality control issues with some of it most popular and profitable lines, J&J is announcing its plans to appoint Chief Quality Officers for each of its three major divisions.

J&J company spokesman Bill Price stated, "the chief quality officers and the creation of a new position are part of a 'more comprehensive remediation plan' for the company."

Given the state of the pharmaceutical supply chain, as globalization proliferates and even industry giants find themselves suffering from poor quality, raw material adulteration, fraudulent products and counterfeits, it seems logical that all members of the supply chain integrate technologies to authenticate and verify the product within its individual inventories is genuine, safe and clinically efficacious.

Stakeholders in the supply chain have too much at stake to rely solely on inventory control measures, pedigrees, bar codes and serialized numbers, they must take measures to insure the safety of the products that they sell. It is important to know where the box has been but it is vital to know what is in the box.


To learn more about pharmaceutical supply chain authentication technologies, visit: www.xstreamsystems.net.

K-V Pharmaceutical May Not Resume Sales Until 4th Quarter

K-V Pharmaceuticals announced last week that it will not resume sales until October 2010 at the earliest and may have to cut operations to stay in business.

K-V stopped all manufacturing and shipping in January 2009 after a series of product recalls and has closed its generic drug unit Ethex.

K-V pleaded guilty in February to charges it failed to inform regulators about manufacturing problems that caused some of its pills to be too large, which could have lead to accidental overdoses.

The K-V saga is a cautionary tale of a company who has suffered from a lack of product quality control, testing and verification. Had authentication technologies been in place at the point of manufacture, distribution or dispense the issue of manufacturing difficulties would have been discovered prior to the dispensing of the drug to any consumer.

XStream Systems encourages the entire pharmaceutical supply chain to employ authentication and verification technologies from end to end to protect inventories and consumers.

Hartford Courant: Rx Warehouse and Cargo Thefts on the Rise

In the March 28th issue of the Hartford Courant, Janice Posada reports in excellent detail about the rising trend of prescription drugs thefts and the rapid emergence of the lucrative criminal activity of cargo and warehouse theft of prescription drugs.

Presumably the break-in of the Eli Lilly & Company warehouse in Enfield, Connecticut, where over $75 million dollars of prescription drugs (without taking any narcotics and painkillers) was the impetus behind this story. In this act, the thieves made off with pallets of anti-cancer, schizophrenia, depression and prescription drugs to sell in foreign or black markets.

Until this most recent incident, many were not aware of this entire subset of criminal activity. The black market for stolen brand name prescription drugs has become one of the more lucrative parts of the illegal drug trade, once the stolen product is secured it can be shipped to a foreign country, re-sold into the legitimate supply chain or re-packaged for sale directly to consumers for extraordinary profit.

In the article, Ms. Posada details the financial motivation, sophistication, health risk to consumers and the easy money to be made in the theft and resale of prescription drugs. There were some great quotes in article from several industry and regulatory experts.

Marvin D. Shepherd a Professor at the University of Texas College Of Pharmacy at Austin and an expert in prescription drug theft and diversion:

• The theft of prescription drugs, from blood thinners to insulin, "has exploded in the last five years," The types of drugs thieves go after also has changed. Until recently, the most sought-after drugs were narcotics and prescription painkillers,”


• "It used to be small-scale stuff where some guy walked into a pharmacy with a gun looking for OxyContin. Now they're looking for brand-name prescription drugs.”


• "A couple years ago in Florida, they were stealing Procrit. From the records they found, police estimated the thieves made $40 million."


• "We haven't found a lot of these stolen drugs, which leads me to believe they're either going out of the country or they're being cleverly relabeled."

John Burke, President of the National Association of Drug Diversion Investigators, a nonprofit group that coordinates drug theft investigations comments on the Lilly theft:

• "These are very expensive drugs, it’s likely these thieves didn't just drop in and start grabbing stuff. It's almost as though they had an order for it. It's too well-planned. This is the biggest heist I can think of in many, many years.”


• "They'll make at least $20 million on the black market with these drugs. That's my guess. If a pill sells for $10, they'll get $3 or $4 for it."


• "It's all about the money. These drugs won't be peddled on the street in the same way you would peddle addictive drugs.


• "There are lots of options. They could go to a foreign market. They may be distributed by an unscrupulous wholesaler to U.S. pharmacies, in particular, independent pharmacies."


• "If you're a wholesaler and you get these drugs for an extraordinarily lower price than what you normally pay for it, and re-sell it to a pharmacy, you can make a lot of money. In fact, thieves are likely to make more money from the sale of stolen cancer drugs and antidepressants than from a similar cache of narcotics, such as OxyContin or Vicodin.

Ilisa Bernstein, the FDA's Director of Pharmacy Affairs, comments in the article about the theft of prescription medicines, over-the-counter drugs and medical devices:

• "Cargo and warehouse theft is an increasing problem that threatens the public health. And is one that the "FDA and law enforcement cannot solve ... alone. Participants in the supply chain must step to the plate and ensure that their security practices are as solid as they can be."


• Stolen drugs can deteriorate or lose their medicinal properties if they're improperly stored, creating a public health threat. And thieves do not abide by the storage recommendations for drug products.”


• "Patients can be harmed if these products are not stored or handled properly, or have been tampered with. We have received adverse reports of patients taking stolen insulin who could not control their blood sugar. The insulin probably was not stored and handled properly and lost its potency.”

This is an excellent article for those not in-the-know as it relates to this major criminal issue within the pharmaceutical supply chain. XStream Systems endorses the concept of verification and authentication at each step of the pharmaceutical supply chain to combat theft, fraud, adulteration and counterfeit medications and protect the healthcare consumer.


To read the article in the Hartford Courant, visit: http://www.courant.com/news/health/hc-stolen-drugs-0328.artmar28,0,5569692,full.story.

Turkish Serialization Plan Delayed Yet Again

In a SecuringPharma.com online article written by Phil Taylor and Keribar Duman they document yet another delay in Turkey’s efforts to adopt a nationwide serialization coding system for pharmaceutical products.

According to the article, the further delay is a result of pharmacies still not having implemented the necessary technology for the process to begin.

Turkish authorities have pushed for the serialization due to widespread fraud in the reimbursement of medications, which is thought to cost the government over $150 million a year and as a deterrent to counterfeit and illegal drugs.

This is the third official delay of the ITS (Ilac Takip Sistemi) system. It was first set to launch on January 1, 2009, then July 1, 2009 and now the latest implementation date was at the start of 2010.

The ITS system was to employ a 2D datamatrix coding to medications that are either produced or imported into Turkey. According to the article the lack of implementation is the “ability and willingness in some cases-of pharmacies to implement and use the system for reading the codes”.

The Turkish Pharmacists Association has been instrumental in pushing authorities for extensions for the regulatory mandate and are on record as saying that issues with the ITS system make the process unworkable.

The inability of Turkey to implement this process in a timely and efficient manner exemplify the issue of a regulatory authority mandating a single approach to fraud, adulteration and counterfeit within a pharmaceutical supply chain. A serialized approach is totally dependent upon an entire system and process adopting an end to end “daisy chain” which is expensive and cumbersome to implement and maintain and relies on total compliance to become effective. Without 100% cooperation the process loses nearly its entire effectiveness and value.

Secure Pharma Chain Blog and XStream Systems; endorse a layered approach of material authentication, pedigree, overt and covert marker technology and ultimately serialization as the most effective way to efficiently, economically and effectively protect an entire supply chain. A multiple technology solution does not require absolute compliance to make it effective and valuable. In a layered technology approach, each solution provides specific protection which overlaps without creating added costs or onerous mandates.

To read Taylor and Duman’s article, visit: http://www.securingpharma.com/40/articles/366.php.

To learn more about efficient pharmaceutical supply chain technologies, visit: http://www.xstreamsystems.net/.

Using EDXRD to Look Inside the Box for Pharmaceutical Safety

By: Alan Clock, Senior Vice President, XStream Systems

Until recently the only true way to test quality and identify fraudulent medications was through laboratory analytical methods. The inadequacies of these solutions are obvious. They are expensive and cumbersome, and usually require sending to an outsourced laboratory.

Additionally, laboratory testing requires highly trained personnel and typically destroys the product. The testing method generally requires that the tester be cognizant of a potential problem in order to properly focus the analysis.

Unfortunately, in this day and age, by the time the suspicious product gets to a laboratory environment, it has most likely already been in the supply chain for some time all the while placing consumers at risk. Furthermore, following laboratory testing, the only element of certitude is the exact product that was tested, but does not reveal any information about other similar products in the supply chain.
The best way to effectively purge the pharmaceutical supply chain of poor quality, fraudulent or counterfeit medications is to look inside the box to screen, verify and authenticate the product inside its package.

Ideally, a quality control and anti-counterfeit solution for the pharmaceutical supply chain should not require any alterations to the product or the package. The model remedy would allow packaged drugs to remain intact and be returned to the supply chain.

The perfect solution would be readily deployable with placement of the solution at strategic points within the supply chain or deployed throughout without onerous costs or extensive implementation.

This type of innovative technology would provide a level of confidence that public safety is ensured. Bottom line . . . it checks to see what is inside the box.
The One new technology which fits the definition of the ideal solution in this challenge within the supply chain is known as Energy Dispersive X-Ray Diffraction (EDXRD). This innovative technology allows the user to molecularly screen the product inside its original container without destroying or degrading the product and ultimately minimizes the need for Track and Trace technologies as the only robust solution.

EDXRD transforms the process from looking at the outside of the box with Track and Trace to looking inside the box with Molecular Screening. Ultimately, this truly provides all of the members of the supply chain, from manufacturer to consumer, the confidence to know that the medications in their inventories or that they are taking are safe and efficacious.

EDXRD was first proposed in the 1960's as a simple and high speed way to analyze remotely the crystalline structure of material within a container. EDXRD uses high powered X-Ray beams, thus generating very high penetration power. EDXRD was first tested as a detection tool in the late 1980's, for detection of explosives hidden within luggage/packages by Philips Medical Systems. EDXRD instruments function by matching the diffraction pattern obtained by the instrument with a library of patterns previously obtained for comparison. The EDXRD diffracted spectral patterns of crystalline substances are markedly different, even to an untrained eye. Much like a human fingerprint, although there may be a few features that are common to both patterns, they are nonetheless very different. In current iterations of the technology, which is fitted with a computer-based detection device, the system relies on a mathematical algorithm to extract a unique feature set from the pattern and use them to identify the material giving rise to that pattern.

In general, the EDXRD methods are highly material specific, since the diffraction patterns of crystalline materials are unique. As it relates to pharmaceuticals, the signature of diffracted aspirin is very different from ibuprofen, acetaminophen, codeine, etc. Equally important is the fact that the diffracted patterns of the excipients specific to the unique recipe of the formulation are unique and one can determine differences in manufacturer, packaging, dosage, etc. For example, acetaminophen, 325mg from one vendor, will differ from acetaminophen 325mg from another vendor unless they follow the exact same recipe, density, pill configuration and utilize the exact same packaging.

This material sensitivity of EDXRD has two important ramifications - high detection/verification rates and low false alarm rates. Under ideal conditions (i.e. - low absorption and high test mass), the detection rate is close to 100% and the false alarm rate is 0.1% or lower. In addition because it uses high powered X-Ray, EDXRD technology can penetrate through nearly all plastics, cardboard, wood and metals in order to screen the material.

XStream Systems has succeeded in its mission of taking EDXRD through its evolution to a robust Molecular Screening tool. XStream has conceptualized and architected the world’s first countertop EDXRD machine, the XT250 Material Identification System. This machine made a historically complex technology easy to operate for the average end user. The XT250 system is now fully deployed in drug wholesalers, pharmaceutical manufacturers and pharmaceutical reverse logistics companies. The system is designed to be used either in a standalone or integrated capacity anywhere along the supply chain; the deployment can be in a warehouse setting and operated by a non-technical warehouse worker.

EDXRD’s first intended use is in the pharmaceutical industry where the XT250 material identification system detects fraudulent, adulterated or counterfeit drugs. The system also enhances quality in the manufacturing processes and provides consumer protection to the end user. With its superior X-Ray penetrating power, fast results and scalability, EDXRD can verify and detect materials in both small and large packages. Also, due to the vast flexibility of the technology, EDXRD will be well suited for many other markets.

In subsequent versions, now in development, EDXRD technology will incorporate high speed and larger capacity. These improved systems will increase the scale and capabilities of the technology and allow for high levels of integration within all stages of supply chains from manufacturing all the way through, including dispensing.

In summary, EDXRD provides a near perfect what you see is what you get (WYSIWYG) environment for the pharmaceutical industry. While Track and Trace technologies like RFID, Serialization, Taggants and Pedigree’s are important elements in supply chain security, EDXRD is the ultimate “completer” for patient safety and supply chain integrity. With an aggressive Molecular Screening Program which is offered by XStream Systems, each member of the pharmaceutical supply chain can minimize risk to the consumer, severely undermine liability risks of all members of the pharmaceutical supply chain, and thwart nefarious criminal enterprises that prey on the healthcare of others.

To learn more about XStream’s EDXRD technology, visit us at: www.xstreamsystems.net.

Counterfeit Drugs: An International Safety Problem

In the current economic crisis, it seems counterfeits and knock-offs are on the rise. In the case of counterfeit or adulterated drugs, this causes a real safety issue. If the medication does not contain the correct amount of the active pharmaceutical ingredient (API), it may not be effective or may cause undesirable and sometimes very dangerous adverse reactions. Also any inexpensive substituted filler ingredients that the counterfeiters may use, are used for appearance only and can turn what was meant to be a remedy for the patient into a poison.

We at XStream Systems encourage all throughout the pharmaceutical distribution cycle to screen their products through molecular pharmaceutical authentication. By ensuring that the products that pass through your hands are genuine, you are doing your part to protect the public health.

Markets and Markets: Global Anti-Counterfeit Market for Food and Pharmaceuticals Worth US $79.3 Billion by 2014

According to a new market research report, ‘Global Anti Counterfeit Market for Food and Pharmaceuticals (2009-2014)’, published by Markets and Markets (www.marketsandmarkets.com):

• Increasing cases of counterfeiting have resulted in implementation of anti- counterfeit technologies. Anti-counterfeit technologies are of two types namely authentication packaging and track and trace packaging technologies. North America holds a major share of the global anti counterfeit market. Asia has the highest growth rate due to untapped market and significant level of counterfeiting. Europe has a lower growth rate due to a relatively lower number of cases of counterfeiting.


• The global anti counterfeit packaging market for food and pharmaceuticals market is expected to be worth US$79.3 billion by 2014, with an estimated CAGR of 8.6% from 2009 to 2014.


• The North American packaging market is expected to account for nearly 62% of the total revenues. North America is the largest segment in the anti-counterfeit market and is expected to reach US $49 billion by 2014, accounting for nearly 62% of the revenues growing at a CAGR of 6.8%.


• Asia is the second largest market and is expected to reach US$14 billion by 2014 with a highest CAGR of 19.7%.

While XStream Systems feels that the data presented in this report is valid it believed that Markets and Markets may have overlooked significant technology solutions in their research.

Most of the report seemingly centered on packaging technologies and ignored material screening technologies such as XStream’s XT solutions which allow the end user to verify the authenticity of a material inside its sealed unit of sale container.

How large is this market if material screening technologies were included in the mix?

To view a synopsis of the report, visit:
http://blog.taragana.com/pr/marketsandmarkets-global-anti-counterfeit-market-for-food-and-pharmaceuticals-worth-us793-billion-by-2014-5427/

UPS Supply Chain Survey: Nearly Half Worry about Product Tampering and Counterfeiting

In UPS’s 2nd Annual Supply Chain Survey, conducted by Harris Interactive, there was a somewhat surprising discovery as it relates to fraudulent and counterfeit products in the supply chain.

The survey was reported in the June 2009 issue of Pharmaceutical Commerce.

In the survey, decision makers at bio-pharma and med device companies were asked a variety of questions to identify supply chain issues beyond simple transportation and delivery.

The somewhat surprising discovery was that 48% of the large company respondents (companies with revenues in excess of $1 billion annually) while 34% of smaller companies, listed product tampering and counterfeiting as one of their biggest supply chain concerns for the year.

Pharmaceutical Commerce is quoted in the June 2009 issue:

It is worth noting that nearly half (48%) of large-company respondents cited product tampering and counterfeiting as a concern, which belies the relatively quieter scene in drug pedigree, tracking and tracing as a result of the postponement of the pedigree rules in California.

This survey validates much of what XStream Systems is finding in the pharmaceutical supply chain as well. Although much of the pressure has been lifted from the delayed pedigree rules, there is a realization among decision makers that there remains a significant amount of stress with few solutions within the supply chain as it relates to fraudulent, tampered and counterfeit product. To date many key executives have seemingly ignored the threat of increased liability and brand erosion because they have few if any solutions to adequately meet the issue. Pedigree and track and trace technologies although mandated in specific states, provides minimal protection against diverted products but do nothing to decrease their liability and protect their inventories from counterfeiting or tampered products.

XStream Systems, with its revolutionary EDXRD technologies, has a technology solution that enhances the ability of the members of the supply chain to authenticate the product, within its sealed container, without destroying or degrading the medication. This solution, allows the user to authenticate and verify the contents of the product, not just the package and properly secure their inventories and overall liability.

To read the June 2009 article in Pharmaceutical Commerce, visit: http://www.pharmaceuticalcommerce.com/frontEnd/main.php?idSeccion=1239.

To learn more about XStream Systems and it solution, visit: http://www.xstreamsystems.net/.

Business Standard: Validation Check Imposed on Medicine Exports in India

The August 5th edition of the Business Standard reports on Drug Controller General of India (DCGI) requiring all pharmaceutical contracted manufacturing exports will be required to furnish validation certificates of authenticity for importing firms overseas.

• The move, initiated by the office of the Drugs Controller General of India (DCGI), is expected to boost India’s image as a supplier of quality, low cost medicines.


• According to the official directive, all contract manufacturers exporting medicines using neutral code (which do not mention the name of the manufacturing or marketing firm) will have to present certificates from the regulators of the importing country to prove the genuine nature of the importing firm. In other words, the foreign regulator will have to endorse the product name and marketing registration these companies have obtained from the regulator.


• The drug exporters hailed the intention of the DCGI, but expressed concern over the sudden implementation of the circular. “There are hundreds of medicine products that are being exported to all parts of world”, they said adding: “ If DCGI wants the credentials of all the foreign sourcing companies from respected drug regulators, the consignments will not be cleared for the next three months. It will affect our credentials and credit worthiness.”


• The exporters wanted the directive to be confined to less regulated markets, where there is scope for mischief. Indian drug exports had recently come under regulatory scrutiny in several countries due to alleged complaints of spurious and counterfeit medicines.

XStream System applauds the move by DCGI and encourages screening and validation within all points of the supply chain as an important solution to counterfeit, substandard and adulterated pharmaceuticals.

XStream’s XT250 system can be easily deployed within the supply chain to screen, validate and authenticate pharmaceuticals within their sealed, unit-of-sale container without opening, destroying and degrading the product.

To view the entire article visit: www.business-standard.com

SafeMeds Weekly: Counterfeit Drug Sentencing Less Than Adequate

In an opinion piece posted on SafeMeds Weekly on August 10, 2009, Marvin D. Shepherd, PhD discusses the issue of light sentencing given to those convicted of counterfeiting medications around the globe. Dr. Shepherd asserts that inadequate sentencing “undermines the seriousness and true threat that counterfeit drugs pose to society and public health.”

Dr. Shepherd sites several examples:

• After nearly two years under investigation, the final sentence for running an international multi-million pound counterfeit medication operation was issued in the United Kingdom. The first four convictions were made in September 2007 and on July 6, the final member of the operation received a 12 month sentence, suspended for two years, for masterminding an industrial scale conspiracy of supplying counterfeit drugs between 2002 and 2005. In total, the seven convicted members of this international counterfeit drug ring received a combined 17.5 years imprisonment-an average of 2.5 years for each participant-for their part in the U.K. distribution arm of a global ring operating from China, India and Pakistan, extending to the Caribbean and the United States.


• In March 2009, an Arizona couple received at most eight years imprisonment for running an illegal drug business netting more than $2.5 million from 2004 to 2006. In comparison, convicted members of an illegal recreational drug ring would receive mandatory minimum sentences starting at 20 years up to life imprisonment for distribution in the United States.

In this article Dr. Shepherd questions the logic of not holding those responsible for the distribution and sale of counterfeit drugs to the same severity to those who commit similar offenses with illicit drugs. Basically he believes that until this is done the individuals and organizations responsible for this very real threat will continue to flourish.

XStream Systems favors stricter and more stringent enforcement and criminal penalties across the globe for those convicted of manufacturing, distributing or selling counterfeit or adulterated medications. XStream also encourages those within the pharmaceutical supply chain to screen and test their inventories with solutions such as XStream’s XT250 which allows the user to test and authenticate product inside its sealed container without destroying product or opening the container. The XT250 is designed to be deployed and used within the supply chain onsite and does not require technical resources to operate.

To read the opinion piece and to learn more about SafeMeds Weekly, visit their site at www.safemedicines.org.

To learn more about XStream Systems, XT250, visit us at www.xstreamsystems.net.

COMBATING THE SPREAD OF FAKE DRUGS

In the June 28, 2009 Online Issue Daily Policy Digest, the National Center for Policy Analysis highlights a very relevant policy document titled, "Keeping It Real: Combating the Spread of Fake Drugs in Poor Countries" by Julian Harris, Philip Stevens and Julian Morris of the International Policy Network.

XStream endorses the primary assertion that one of the most effective ways in combating this international problem is for the private sector of the pharmaceutical supply chain to take advantage of its innovative capacity to experiment with various technological solutions that enable it to protect the identity of its products. Members of the pharmaceutical supply chain need to utilize a variety of technologies, like XStream’s XT250 solution which allows the end user to verify and authenticate medications inside its sealed manufacturer’s unit of sale container without destroying or degrading the material.

The text of the Daily Policy Digest review on "Keeping It Real":

Counterfeit and substandard drugs are a serious and growing problem around the world -- especially in less developed countries. These fake drugs pose three direct threats to patients: failure to provide effective treatment; adulteration with toxic chemicals, often leading to death or injury; and if a drug contains some active ingredient but too little to kill all the disease agents, it can lead to the emergence of drug resistant strains of disease.

These problems are caused in large part by a combination of defective legal systems and government-imposed distortions of the pharmaceuticals market, say researchers at the International Policy Network:

Poor countries tend to have highly inefficient, slow and expensive legal systems, which makes it very difficult for people to be assured of the quality of the medicines they purchase.

Lack of enforceable trademarks and civil liability are instances of a wider problem; in such an environment, legal decisions tend to be arbitrary and designed to benefit the elite.

Price control measures, like tariffs, on imported medicines are very common in poor countries and drive up the price of high quality medicines creating opportunities for suppliers of fakes, who can then more easily undercut them.

Tariffs can also lead to unnecessary delays in ports, where improper storage conditions can cause drugs degrade.

However, bolstering the rule of law is a long term process in many countries. In the short-term, the private sector should take advantage of its innovative capacity to experiment with various technological solutions that enable it to protect the identity of its products. Governments, meanwhile, should reduce those interventions which undermine the supply of quality drugs, such as taxes, tariffs, price controls and other arbitrary regulations, say researchers.

Source: Julian Harris, Philip Stevens and Julian Morris, "Keeping it Real: Combating the spread of fake drugs in poor," International Policy Network, 2009.

The National Center for Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. The NCPA's goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.

To read the entire piece by Harris, Stevens and Morris, follow the link below:
http://policynetwork.net/uploaded/pdf/keeping_it_real_2009.pdf

Repeating the Dangerous Statistics of Counterfeit and Fraudulent Medications

In the past we have blogged on quite a few statistics and on these in particular. It seems reasonable and relevant to repeat some of these statistics as it relates to counterfeit, fraudulent and adulterated medications.

These statistics are taken from both the World Health Organization (WHO) and Peter Pitts who is the Director for Medicine in the Public Interest and are often quoted in presentations as it relates to this very dangerous subject. No industry thought leaders challenge these statistics:

• Globally 10% of Pharmaceuticals are Counterfeit or Adulterated
• $35 Billion in Sales of Counterfeit Drugs in 2006
• $75 Billion in Sales of Counterfeit Drugs Projected by 2010
• 12-16% Growth Expected Globally
• 1-2% Pharmaceuticals in the United States are Counterfeit or Adulterated
• With 3.4 Billion prescriptions (filled in 2008) in the United States
• 34 Million of these prescriptions were estimated to be filled with counterfeit medications

Given these startling statistics, we at XStream encourage all within the global pharmaceutical supply chain to deploy and variety of solutions and technologies to protect the worldwide consumer. Specifically XStream believes that by screening the contents of the medications inside its sealed container and authenticating the product protects the manufacturer, distributor, provider and consumer. XStream’s XT250 utilizes EDXRD which allows the user to verify the contents of the medication without opening the container, destroying the product or degrading the material inside.

Bi-Annual Cargo Theft Report: Value of Pharmaceutical Cargo Theft Has Skyrocketed in the First Half of 2009

FreightWatch International (USA), an international logistics security company, whose expertise is in identifying threats and vulnerabilities to high-value supply and distribution chains, publishes a Bi-Annual Cargo Theft Report that contains some very interesting statistics and observations.

The Bi-Annual Cargo Theft Report is available on-line and outlines statistics and vulnerabilities of various supply chains, specifically reporting on pharmaceutical cargo theft incidents.

As you read through the Cargo Theft Report it is striking how sophisticated and prevalent cargo theft has become. Additionally as it relates to the domestic pharmaceutical supply chain it is illuminating on how cargo theft can impact the amount of fraudulent, counterfeit and adulterated medications within our medication supply.

The following are some striking statistics from January to June 2009 as it relates to the pharmaceutical cargo theft incidents:

• The first six months of 2009 has seen a decrease in cargo theft incidents involving pharmaceuticals from 25 reported incidents in 2008 to 14 incidents in 2009. However, the total value of pharmaceutical products lost as a result of cargo theft has skyrocketed in the first half of 2009.


• From January to June 2009 over $73,000,000 in pharmaceutical products has been stolen. One loss was valued at $37 million, which was subsequently recovered, however, not after the chain of custody was broken for a short period of time.


• The average pharmaceutical loss for the first six months in 2009 is $6,712,500 per theft, a tremendous increase from 2008’s six month average of $704,685 per theft.

Both in 2008 and 2009, the vast majority of pharmaceutical thefts occurred on the East and South Eastern U.S., particularly along major interstate highways as well as in Florida.

The statistics and relevance of this Report supports XStream Systems’ assertion that it is important that pharmaceutical inventories be screened through a level of material verification that is available via our XT250 and its revolutionary EDXRD technology. This exciting technology allows the XT250 to authenticate pharmaceuticals inside their unit of sale containers without destroying or degrading the medication inside.

With so many millions lost each month in cargo theft and presumably re-introduced into the supply chain at various points, it is critical that the provider and consumer are assured that the medications they are taking are safe and effective.

To learn more about FreightWatch’s services or to view the entire Bi-Annual Cargo Theft Report January-June 2009, visit their website at www.freightwatchusa.com.

Why We Need A Suite of Solutions To Secure the Pharmaceutical Supply Chain — Now!

By: Alan Clock, Senior Vice President, XStream Systems

Gary Noon the CEO of Aegate, argues the case for mass serialization in an editorial titled “Why We Need Mass Serialization – Now!” which appeared in the June issue of Pharmacy Technology Europe. In this article, Noon explains why point of dispensing drug authentication is not only a guarantee of medicine integrity, but also a beneficial and cost-effective solution for the pharmaceutical industry.


Noon cites many compelling statistics in his piece, most of these are statistics are centered on the European medication supply chain but their points are global:

• Approximately 1.5 million counterfeit medicine packs enter the legal supply chain each year — in other words; one pack in every 20,000 is counterfeit.
• Between now and 2020, the spread of counterfeit drugs is estimated to rise to either an 'optimistic' 19.5 million or a pessimistic 192 million packs in the legal supply chain.

Noon also correctly points out the danger of products that hit the legitimate market and the costs:

• In 2005, 2,500 packets of fake Lipitor, Pfizer's widely used anti-cholesterol medicine, were believed to have entered the UK market. Research by Frost & Sullivan estimates that fewer than 15% of the packs were recovered. Aside from the potential danger to patients this inability to effectively recall drugs poses, the damage to the reputations of individual manufacturers and to the industry as a whole is vast.
• According to the EU Commission consultation on combating counterfeiting medicines for human use, released in December 2008, the annual direct and indirect societal costs of counterfeiting are approximately €950 million. The overall costs of inaction will reach €9.5 billion–€116 billion by 2020, and this does not take into account the intangible yet significant damage to brand reputation and trust.

After Noon points out the compelling need for a solution, he leaps to the assumption that the only solution for this problem is via mass serialization of the supply chain. Basically he asserts that only a complex serialization solution from manufacturer to dispenser, which according to the an EU Commission consultant would result in staggering set up and annual costs across the supply chain, is the best and only way to secure the Pharmaceutical Supply Chain:

• An industry wide one- time cost of €11.5 billion to set up the proper systems within all members of the supply chain in Europe alone.
• Annual “running costs” for serialization with European companies to be €185.5 million for non-OTC companies. There were no estimates of costs associated to OTC companies.
• EU pharmacies would incur costs of installing the right IT and reading devices to support serialization estimated to be €157 million. Noon offered no estimates on the annual costs of running this the system.

We at XStream take a different view, frankly it doesn’t matter with what currency or market that you are serializing, Euros or Dollars, the costs are astronomical, very unrealistic given the current global economic malaise and the solution is so complex to implement it is very unlikely to impact the problem. Additionally it doesn't seem a stretch to make the point that the estimated costs are overly optimistic and and he is only referencing Europe.

What Noon does not factor in or discuss in this piece are the basic realities necessary to make serialization work:

• Mass serialization requires that each member of the supply chain be perfectly in synch, every link in the chain and each company has to be in a virtual daisy chain process to make it work.
• Each member's system and technology has to work seamlessly to process and communicate the serialization throughout the chain.
• Although Noon makes this serialization synchonization sound simple and seemingly downplays the costs, practically it would prove to be nearly as impossible to globally integrate and effective as herding cats.

In any industry there is little hope that an entire supply chain could be efficiently managed, globally integrated and synchronized across the spectrum without significant effort and coordination. Mass serialization would require massive regulatory mandates, huge cost overruns in the billions (Euros and Dollars) and many years of significant legal arm twisting across multiple borders.

Even if, by chance, the supply chain was all properly serialized, integrated, managed and set up, all it would take would be one link failing in this “daisy chain” even temporarily for the entire system to fall apart.

Bottom line one single failure and the multiple billions in Euros or Dollars becomes wasted and the security and efficacy of the product in doubt.

Although we see limited merit in serialization, where we differ from Noon is that we realize, as most who have studied the issue of global pharmaceutical counterfeiting, is that there is no one single technology or solution to the problem.

Even though there is no technology or singular solution that can offer comprehensive protection from raw materials to dispensing and ultimately consumption by the consumer; it is a battle that all within the pharmaceutical supply chain should join in to solve.

Serialization, like other Track and Trace solutions such as RFID, Pedigrees and Bar Codes has its place and uses and we believe can and should be a part of any sophisticated supply chain. But in order to properly protect the supply chain and the consumer comprehensively, a system and process of screening the actual product, not just the transaction or package, is necessary to eliminate fraudulent and counterfeit medications.

In recent memory there have been a variety of fraudulent and counterfeit medications that have passed through the global pharmaceutical supply chain, in most cases nearly all would have passed a pedigree, packaging tag or serial code but their contents impacted the health of those who consumed it.

Analytical screening throughout the process takes away the “daisy chain” effect which mandates and requires participation by all to be effective. By using technology like EDXRD, XStream’s XT250 can screen and validate the medication inside its sealed container, creating an instant pedigree while authenticating the medication inside the package is efficacious.

Screening and authentication technologies do not require complex integrations and can be deployed anywhere within the supply chain to validate the safety of the inventories on hand. Additionally screening solutions, at the point of dispense, can assist providers from averting medication and dispensing errors. The cost of implementing screening solutions would be a fraction of a mass serialization solution and could be deployed almost immediately.

Overall, we are not completely dismissing Mr. Noon’s point as it relates to the need for a solution; we do however take exception to his conclusion that Serialization is the only answer. XStream Systems believes that governments and industry need to deploy a variety of tactics and technology to defeat fraudulent and counterfeit medications and we do not believe that it will requires tens of billions of Euros or Dollars to begin the process. XStream suggests that each member of the supply chain needs to understand their place and responsibility within the chain and deploy the proper tools to secure it so that we can all have faith that the medications we supply and consume are safe.

Considering the Source – WHO cracks down on GMPs of their suppliers BIG and small.

The finished product is only as good as the sum of its parts.

We are seeing a trend of stricter enforcement of Good Manufacturing Practices (GMPs). Even larger pharmaceutical manufacturers are feeling the pinch as the quality of their pharmaceutical ingredient suppliers are put to the test.

Recently The World Health Organization (WHO) announced they would suspend tuberculosis drugs from Wyeth Pakistan because they questioned the quality of the drug. Their shift in trust of the finish product stemmed from a switch in suppliers for one of its ingredients. The outsourcing of ingredients has become a challenge for manufacturers because consistent suppliers are not always accessible.

A summary of the article appears below and you can view the entire article at American Enterprise Institute website at: www.american.com.

Consider the Source
(Tuesday, May 19, 2009; by Roger Bate; Journal of American Enterprise Institute)
A recent case reveals that it is not only generic firms from middle-income countries that have problems with good manufacturing practice.

The World Health Organization (WHO) late last month announced it was suspending approval for all tuberculosis drugs produced by the Pakistan plant of a subsidiary of the U.S. drug company Wyeth, because it was “no longer assured of the quality of the product.” The drugs had been approved by WHO, which UN agencies, national governments, and other international organizations use to guide the procurement of millions of dollars of HIV/AIDS, malaria, and tuberculosis drugs for the world’s poorest patients.

According to a letter to the company posted on WHO’s website, Wyeth failed to inform WHO that it had changed suppliers for some of its active pharmaceutical ingredients (API) and had altered storage conditions. “They had been informed on a number of occasions”—directly and through communications to all suppliers—“about the importance of informing WHO,” Matthias Stahl, medical officer in charge of assessments at WHO’s drug approval program, told us. WHO’s most recent inspection of the site, in 2005, identified serious noncompliance with Good Manufacturing Practice (GMP), and since that time only limited corrective action had been taken.

The case reveals that it is not only generic firms from middle-income countries that have problems with GMP, as we have previously discussed regarding India’s largest drug company Ranbaxy. Wyeth and Ranbaxy, which are both reputable companies, will probably resolve their particular problems soon. But as more firms source more intermediate chemicals and API from myriad countries, we may be seeing the beginning of a trend.

XStream Systems understands this dilemma. A solution that addresses brand protection and integrity is the use of EDXRD technology for molecular pharmaceutical authentication. By screening products throughout the supply chain, authenticity and quality issues can be addressed on the spot before ever reaching the consumer. To learn more of this technology and how it can help visit: www.xstreamsystems.net.

Chinese Heparin Producers Get Warning Over Falsified Information

FDA issues letters to two more Chinese manufacturers regarding tainted Heparin

It reads like a bad sequel as more companies have been named in the tainted heparin scandal…

Two Chinese companies have been issued warnings from the FDA for falsifying information on Heparin. Shanghai No. 1 Biochemical & Pharmaceutical said they were manufacturing heparin, when in fact they were purchasing it from two outside companies. One supplier is no longer producing the medicinal product.

The other supplier, Qingdao Jiulong Biopharmaceuticals was also given a warning letter. Jiulong was found to have produced 19 lots of heparin contaminated with Over-Sulfated Chondroitin Sulfate (OSCS), a substance implicated in the U.S. deaths last year. The FDA further faulted them for not investigating how the substance got into the blood thinner and for exporting medicinal products without regulatory approval.

This warning letter was in response to the FDA’s inspection of Jiulong in August 2008. Jiulong told investigators that they did not ship directly to the United States. However, during inspections at U.S. facilities purchase orders were discovered indicating that the plant had been shipping heparin sodium to the U.S. since 2005. FDA also stated that in the past, the firm supplied heparin to Amphastar Pharmaceuticals Inc., a California company that supplies pre-filled syringes.

This story illustrates why analytical screening should be conducted throughout the supply chain – to ensure the quality of: those products supplied to your company, those products you supply to others, and ultimately the finished product consumed by the patient.

XStream's XT250 System Verifies WHO Figure for Counterfeit Drugs in U.S.

Based on XStream Systems' usage data from end user XT250 systems, they can verify that the World Health Organization’s (WHO) estimate of 1% of the United States pharmaceutical supply chain being counterfeit, is accurate.

XStream System’s XT250 Materials Identification System verifies and authenticates materials within its sealed, unit of sale container. The standalone system is currently deployed in several pharmaceutical distribution companies that distribute pharmaceuticals throughout the United States.

“Based on our macro look at the data from the end user, we can confirm that the WHO estimates are reasonably accurate”, stated Alan Clock, Senior Vice President at XStream. “Our system is the only technology that can accurately authenticate pharmaceuticals within the supply chain without destroying the product or packaging so we have excellent visibility on what is going on literally inside the supply chain .”

“The XT250 is the only materials analysis technology that can keep up with the tremendous flow of drugs throughout the supply chain. We are seeing data that suggest between 0.67% and 1.4% of receivables and returns within these pharmaceutical distributor end users are likely counterfeit products or fraudulent medications,” explained Mr. Clock.

From the data, XStream is learning that authentication rejection/failure rates vary between pharmaceutical products, and even within a given pharmaceutical product the rejection rates can vary significantly over time. In some cases isolated bottles have been rejected, while in other cases entire lots have been rejected. “You can’t predict when the counterfeits will show up,” said Mr. Clock.

XStream’s data validates that the members of the pharmaceutical supply chain (manufacturers, distributors and dispensers) should be using authentication technology more and taking steps to screen as many pharmaceuticals as possible, as often as possible. Currently many regulatory officials have been advocating more frequent inspections at foreign manufacturing facilities as the primary solution to the problem of poor manufacturing and counterfeit medications in the supply chain. While inspections are needed, given the sheer quantity of places to inspect and global nature of these sites, inspectors have little chance of catching counterfeits. In addition, XStream’s data suggests that counterfeits are inserted at a multitude of sources all along the supply chain. The point of production is not the primary starting point for fake medications. Verification and authentication at each point along the supply chain is the most effective way to detect and interdict fraudulent and counterfeit pharmaceuticals.

“The good news is that the United States is one of the last of the developed countries to see an increase in counterfeit medications. The United Kingdom has already seen an increase in the last three years and it stands to reason it will not be long till we see significant increases domestically as well. Because of this impending proliferation, the XT250 is essential for the protection of the consumer since it is one of the only tools available which can act as a roadblock to counterfeiters.”, said Mr. Clock.

Pirated Pills

The Sunday Leader reported that: Leading medical professionals claim that 30% of the medical drugs currently circulating in the country of Sir Lanka are fakes…

Several doctors at leading universities have voiced their concern over the validity of the drugs administered to patients and the difficulty in discerning the real version from the fake. “They (the counterfeiters) have all the packaging equipment — they look and feel exactly the same as genuine tablets even I, as a doctor, wouldn’t be able to tell them apart — but they are fake and sometimes harmful.”

The fake prescription can contain a variety of ingredients from sugar to borax, cement, toxic dyes, or other harmful chemicals. The scope of the counterfeits in Sir Lanka is enormous. At a current rate of $300 million in imports a year and a 30% counterfeit rate, the fake drug market would be valued at $90 million a year.

While counterfeit medicines are seen worldwide, two reasons cited for their prevalence in Sir Lanka is the lack of testing facilities locally and the lack of proper regulation. Regulatory authorities often rely on the importing pharmaceutical company testing and certification to document the medicines validity. (This in some cases is rather like putting the fox in charge of guarding the hen house.)


Disheartened, these doctors feel there is no valid way for them to check for substandard drugs in their county. We at XStream understand first hand the importance of pharmaceutical screening. There are options for checking the authenticity and quality of your medicines beyond packaging and traditional security measures. If you would like more information on this quick easy method of pharmaceutical authentication, please visit www.xstreamsystems.net.

Conference Attendees Share Concerns About Counterfeits

This month, XStream Systems’ Sales Team had the opportunity to discuss counterfeiting issues with pharmaceutical executives from pharmacy providers, manufacturers and pharmaceutical wholesalers at two industry conferences.

In an effort to ascertain industry thought leaders viewpoint on risk liability and current available anti-counterfeiting technologies, a voluntary survey was conducted. Though the survey was conducted on a relatively small statistical sampling, it represents an excellent cross section and a diverse variety of pharmacy experts from national entities, regional players, large corporations and small entrepreneurs.

The following are specific excerpts from the surveys:

• 2/3 of respondents consider the greatest vulnerability of the U.S. pharmaceutical supply chain is with pharmaceuticals from foreign countries, internet sales and loosely regulated suppliers.



• Nearly 75% of distributors and pharmacy providers who responded use some process of pharmaceutical supply security including pedigree tracking, sensor based technologies (RFID, barcodes, etc.), visual inspection, weight inspections and materials analysis but their methods are not uniform. All respondents who do use some procedure ultimately use a variety of processes because collectively they seem uncertain that the methods they have in place can properly protect their inventories from fraudulent or counterfeit products.



• 75% of all respondents were aware of drug identification and authentication system technology but 50% were not familiar with a specific technology or a particular solution.



• 75% of respondents are concerned about counterfeit drugs impacting medication safety to their distributors/providers/patients.

• 75% of respondents are concerned over their financial liability of counterfeit drugs within their inventories.



• 75% of respondents are concerned about their professional reputation being ruined if they were to have counterfeit pharmaceutical in their inventories.

• 2/3 of respondents expressed concern over the issue of counterfeit drugs within the supply chain.



• 75% of the respondents were concerned that their current methods and processes for supply security were not enough to protect their inventories.



• 50% of respondents fear a catastrophic counterfeit event within the U.S. pharmaceutical supply chain in 2009.

A complete report will available shortly on XStream Systems' website at http://www.xstreamsystems.net/

ZERO IS THE RIGHT NUMBER!

By: Pat Earl, V. P. Business Development, XStream Systems, Inc.

If you had a chance to speak with Katherine Eban, Author of DANGEROUS DOSES, a Rhodes Scholar and a notable speaker these days on the safety of pharmaceuticals in the U.S., I know she would respond “we need to do more because counterfeit, diverted and adulterated drugs are still a real threat to America’s public safety.”

Today, I had the privilege to catch up with Katherine at her home in New York and ask her what her thoughts were on the vulnerabilities of the American drug supply.

Since Katherine released her best seller book in early 2005, the nation’s largest manufacturers and distributors have taken major steps to make the path a pharmaceutical takes from the manufacturer to the patient much safer. The FDA and the State Regulatory Agencies have developed standards for Supply Chain Security that includes identification, tracking, tracing, authentication and validation. As we look today, February 2009, four years have passed since she stunned the pharmaceutical industry and the American public with the chilling reality that criminal counterfeiters and scammers were contaminating the American drug supply. But the story has not ended here.

Globalization of the manufacturing processes has increased the opportunities for drug counterfeiting, drug diversion and other intentional acts that can adversely affect drug quality and safety. I shared with Katherine some of the observations that have stuck with me in my travels to visit some of the largest players in the distribution channel. There appears to be a complacency that pushes the responsibility to ensure that the product is not a fake up the chain.

Wholesalers draft policies to only buy from manufacturers or their sole distributors of record. Large chains and pharmacy benefit managers rely on the contracts that state their suppliers only buy from manufacturers and so on down the line. It’s obvious that there is a very real need for anyone receiving the drugs to be able to validate the path the drug has taken and to verify its authentication. What we are experiencing at all levels is …see no evil, hear no evil, speak no evil – so everything is fine and the problem is fixed.

In the conclusion of Dangerous Doses, Katherine reported that she was asked: “How would you define success when it comes to the problem of counterfeit medicine. What lower-percentage chance of getting such drugs should we be aiming for?” Her answer then was the same as it still is today. “There is only one answer to that question: ZERO.”

There is no such thing as a partial solution to the problem of counterfeit medicine.” Authentication of pharmaceuticals can be accomplished in a quick and easy fashion. Each drug has a unique formulation and therefore a unique molecular structure fingerprint that can be matched against that true standard to validate that the medicine in the package is not a fake, but is, indeed, the real deal.