HDMA Sets Guidelines to Further Protect Pharmaceutical Supply Chain

Oct. 1, 2003
RESTON, Va. The Healthcare Distribution Management Association (HDMA), issued recommended guidelines for pharmaceutical distribution system integrity,

RESTON, Va. – The Healthcare Distribution Management Association (HDMA), issued recommended guidelines for pharmaceutical distribution system integrity, new standards that further protects the safety and efficiency of the pharmaceutical supply chain by enhancing the industry's current tactics used to combat criminal activity and deter drug counterfeiting.

HDMA, which represents distributors of pharmaceutical healthcare products, submitted these landmark guidelines to a U.S. Food and Drug Administration task force considering ways to better track drugs through the distribution system. The FDA currently is evaluating the guidelines, and HDMA continues to work proactively with regulators to develop any and every protection required to guarantee patient safety.

The HDMA guidelines address the purchase of product between prescription drug distributors, and were created from best practices that its members currently have in place and follow. The new guidelines uniformly raise the standard of practice throughout the entire distribution system by providing recommendations for purchasers conducting tough due diligence, thorough background checks, and on-site inspections for compliance with federal and state laws pertaining to prescription drugs. The guidelines also recommend establishing systems and processes for reporting suspicious product and/or entities suspected of unlawful activity.

"Patient safety is the supply chain's top priority, and distributors who follow the HDMA recommendations will help ensure that only safe product enters the distribution channel," says Ron Streck, HDMA president and CEO. "These guidelines go a long way toward identifying and shutting out businesses who would seek to engage in criminal activity."

The guidelines include:


Distributors making first time purchases from another party should perform rigorous due diligence by obtaining:

--Copies of all federal and state regulatory licenses, registrations, inspection reports, and disciplinary actions, including documentation of compliance histories with the Prescription Drug Marketing Act (PDMA) and the Drug Enforcement Administration (DEA)

--A list of all states where the company has a presence, along with all affiliated businesses and "doing business as" names; relevant addresses; the date, place, and form of incorporation; and the number of years in business

--Financial statements/SEC filings, a complete list of corporate officers, and a list of all owners of 10% or more of the business, if privately held

--A list of company employees and the screening procedures taken during hiring

--A description of every distribution facility, including square footage, security/alarms, lease/own arrangements, and temperature/humidity controls

--A description of all drug import/export activities, including a list of companies dealt with, a list of products being imported/exported, and a description of how products for import/export are separated from domestic inventory

--A description of the process the company uses to certify suppliers

--Proof of liability insurance


HDMA recommends purchasers conduct:

--Criminal, driver's license, and social-security background checks on all company owners, officers, and key management

--A credit check of the company and its affiliates

--A check of civil/criminal lawsuits gainst the company, its principals, or owners


HDMA recommends verifying reported facts by conducting comprehensive, on-site inspections biannually in order to visually examine product samples and corroborate:

--The company's organization and number of employees

--Facility structure, year of construction, security, temperature monitoring protocols, procedures for stock rotation, and condition of medical inventory

--Policies for inspecting sample product purchases and for detecting adulterated/misbranded product


HDMA guidelines stipulate that purchasers continue their review process and document all findings with:

--Verification that the seller meets requirements for obtaining an "identifying statement" under PDMA, and that all statements contain required information

--Verification that the seller authenticates the integrity of the identifying statement

--Investigation when the identifying statement has more than three entities on it or when the price of the product sold is substantially less than market price

--Maintenance of an internal list of non-complying/at risk companies whose products the distributor would not purchase

--Maintenance of an internal list of products the distributor would not purchase from a non-manufacturing vendor or trusted source

--Reporting procedures to notify manufacturers and regulators of suspect business activities and/or stolen/counterfeit products

HDMA's mission is to secure safe and effective distribution of healthcare products, create and exchange industry knowledge affecting the future of distribution management, and influence standards and business processes that produce efficient healthcare commerce.