2006 RFID Health Care Industry Adoption Summit
November 13, 2006
Mark W. Parrish

Good morning. I am pleased to welcome members and friends of NACDS and HDMA to this second annual RFID Health Care Industry Adoption Summit. I have the honor of speaking to you today as the chairman of the HDMA and as a Board Member of the NACDS.

I am particularly gratified to see HDMA and NACDS demonstrate collaboration and mutual support for the advancement of the safety and security of the pharmaceutical supply chain at this important conference.

This morning, I want to talk with you about the bold move we announced at the HDMA Annual Leadership Forum, why it is necessary, what we’ve learned through conversations throughout the industry since then, and what role you can play. Also I will address the impending PDMA pedigree provisions.

My goal is to engage you in helping create a future that effectively addresses pharmaceutical supply chain integrity. Because no matter where you work or what business you represent, we are all allies on behalf of a common customer – patients.   

Those patients must have the confidence their drugs are safe -  that we are remaining vigilant in our efforts to ensure the high standard of safety and security of the supply chain endures.

Your activities this week at the summit will advance this cause and I applaud you for being here. 
 
At the recent HDMA meeting, I asked for a bold move. I stated that  we – as an industry – the manufacturers, wholesalers, retailers, hospitals, providers of the hardware to read the technology, the software providers, the regulatory bodies and the standards bodies- need to declare a target date,  by when we will be ready to implement a track-and-trace system that meets the needs of all stakeholders.

Ensuring the integrity of the healthcare supply chain is not only our commitment – it is our responsibility as its guardians.  It’s the right thing, and probably the most important thing, to do to maintain the high level of confidence the public and the patient have placed with us.

Since I announced this “call to action,” HDMA President and CEO John Gray, Senior Vice President of Industry Relations Perry Fri  and the HDMA Staff have been working to create a broad coalition of constituents of the pharmaceutical supply chain to establish a target date for industry-wide implementation of a consistent track-and-trace system.  Moving forward, we will continue to discuss this initiative with GPhA, APhA and NCPA.   

The response of those who attended HDMA and those whom we’ve talked with subsequently has been very positive.  They’ve told us this call is the right thing, it’s a natural progression for the good work that has been done up to this point and that it makes sense for the industry to respond to the requests of the legislators and regulators by establishing a target date for implementation that it is committed to meet.

In speaking with a number of you about this idea, we have come to realize one key thing. You’re in agreement and you get it. You have wanted to take action and move forward with an industry-wide adoption of electronic track and trace technology. 

You want to take action.

So the next question, is, why aren’t we there?  The answer you gave us is that we have to broaden the reach of our message.  The best way I can illustrate the situation is to use the analogy of the proverbial preacher who is preaching to the choir.

The choir already gets it. 

Instead, we need to reach out to the congregation, who, in this case is the senior management within your companies, and help you spread the word as to why this is the right thing to do.   

We heard that there are three critical issues that need to be addressed – in order to achieve true progress, we need a business case that is compelling, we are “victims of our own success” – which I’ll explain in a moment, and, finally, in those cases where there is already support, we need agreement on a set of technology standards.

Let’s deal with each point separately –
 
We all use a business case methodology of one type or another that demonstrates the economic reality of an idea.  As I listen to people talk about this issue, I fear that some companies are considering the question of electronic track and trace technology with a business case that is too narrow and yielding a result that is too heavily influenced by the direct payback.

Now don’t get me wrong, the numbers are important, you may even say that the business case is everything at my company – nothing happens unless it’s right. 

I understand that … and demand the same from my organization.

My point here is that we need to be sure the business case is complete and addresses all of the issues, including the critical environmental issues. 

We need to consider the safety and security of the supply chain, as well as the activities of U.S. Federal and State governments and foreign governments. These agencies are growing impatient.  It’s my belief that we face a mandate from this frustrated constituency of our industry unless we act swiftly.  It’s likely that we won’t be happy with the result of a mandate. 

Let’s make sure the business case is complete and examines the entire landscape.  As much as our respective finance organizations may object, the direct payback doesn’t always drive our decisions.

As an example, look at the question of package inserts, I venture to say that the business case on the direct payback for package inserts wasn’t particularly compelling, but for dealing with issues of liability and the needs of the public, it is clearly the right thing to do and a
good business decision.

The second issue we heard was a very interesting one, this is the case in which I believe we are victims of our own success.

It’s best illustrated by examining the California situation from earlier this year.

When California passed legislation requiring an electronic track and trace solution on pharmaceuticals, the announcement received tremendous attention and reaction. Whether the direct payback in the business case was compelling or not, finding a solution suddenly became a top priority throughout the industry.

This year, the entire healthcare supply chain worked together in California and made clear that the e-pedigree system envisioned by the state was not yet ready for widespread implementation. The state agreed, and extended the implementation date for e-pedigrees until 2009. The call, however, is clear: The state expects progress.  I’m told that in the offices of some companies in our industry, there was a sigh of relief when the implementation date was delayed.  Some began to believe that our need to implement an electronic track and trace had “blown over.”  - the belief being that we can just delay it again in 2009. 

Well, I don’t think that’s the case.

We’ve had many successful efforts in explaining why the technology and the industry aren’t ready, but we cannot follow this road any longer.

Not with legislators, regulators and others becoming increasingly impatient.  The elections last week seemed to make one thing clear:  The nation is looking for change and has installed new leadership in both the House and the Senate.  We must deliver on their expectations of our industry or face the consequences of a mandate.

Finally, there are a number of organizations in the industry who are ready to move forward with electronic track and trace and are already conducting pilots and demonstration projects. 

This is encouraging, but we are learning that while they are ready to move forward, progress will be stalled without a common standard.  Companies don’t want to make continued investment until the standard is established. 

So further investment will be restrained, or even worse in my view, is that we will find ourselves in a situation similar to the videotape industry some time ago with a battle between multiple technologies – as happened with Betamax vs. VHS -  for those of us in the room old enough to remember that one.  The industry cannot afford that.
 
So, with all of these dynamics, how do we come to a point at which we can establish an accepted target date? At HDMA, we believe the answer is to direct the call to action and our efforts to move it forward at the association and senior management levels of the industry, with your support. 

The arguments in favor of a comprehensive business case, the reality of an impending mandate and the need for a standard are the right ones. We can help you with through our efforts at HDMA.  And you have my commitment that we will do so.

That said, you may wonder how we integrate this with the work that will be done at this Summit this week.  The answer is that as the industry moves toward the establishment of a deadline for implementation, the work that you are doing this week couldn’t be more important.

Questions around PDMA, product pedigree, the standards we should adopt, the sharing of data in the healthcare supply chain and privacy issues all need answers in order to create the pathway necessary to reach full adoption.

These issues are not easy, but tremendous progress has been made and you will advance those efforts further by your participation this week.

This is my challenge to you this week - to advance the work on the issues.

You have been charged by your companies with responsibility to become involved with this process.  You are the “they” people are referring to when questions are asked such as “What are they doing about a standard for the technology? What are they doing about data sharing?”

You are – they -  ladies and gentlemen. You are the ones we are looking to for recommendations on these issues.
 
As you work this week to advance the efforts to answer those questions  - the work on the call to action will be focused on creating the environment where your recommendations can be considered and brought to a conclusion. 

It will take all of us working side-by-side on the issues to ensure that the people of America can feel confident in a pharmaceutical industry that is among the finest in the world.  It’s a lofty goal, but it’s the right one and your support is critical and highly appreciated.

Now let me turn to the implementation of PDMA, since it is right around the corner and a topic of conversation at this Summit.  HDMA has been clear in its support of the FDA in requiring that pedigree provisions be enforced December 1, and taking this step to further ensure patient safety, prescription drug integrity and supply chain security.  HDMA has been actively working with the FDA to provide feedback on the details of implementing the provisions.

When the PDMA Q&As become available, HDMA will develop a position statement and will continue to work with the FDA, state regulatory authorities and all links stakeholders to help ensure a safe and secure pharmaceutical supply chain. Additionally, the organization also wants to ensure that patients have access to the medications they need, and that the marketplace is robustly competitive.

In support of the spirit of HDMA and the membership’s intent, here’s what my company – Cardinal Health – is doing to prepare to comply with the PDMA pedigree provisions as we understand them.

PDMA requires that wholesalers who do not have the standing as an Authorized Distributor of Record with a given manufacturer must have pedigree information so they can further distribute product.

At Cardinal Health, we currently service a number of wholesalers who are not ADRs for the product they purchase and resell to end users.  Cardinal Health will continue to serve the majority of our wholesaler customers by providing this information, through a manual process, as of December 1.  

For the small group of wholesalers who we will no longer be able to serve efficiently under the new business model, we will develop an electronic solution for providing pedigree information. We expect to have this completed and available within the first half of 2007.

Cardinal Health remains committed to protecting the integrity of our nation’s supply chain and intends to fully comply with the PDMA in the most efficient manner possible. Note that it has been our practice to service wholesalers who distribute to end users, and we will formalize that as part of complying with the PDMA.
 
In summary… I spoke in October about the responsibility we have as stewards of the supply chain.

It is our duty to ensure supply chain integrity and continue to fight diligently and boldly against counterfeit products entering the system.

So, let’s go forward with the knowledge that healthcare providers and future generations are looking to us to focus on the safety and security of our nation’s pharmaceutical supplies.

A dedication to safety should be our top priority, and a responsibility we all share. We have a level of supply chain integrity that is the envy of the world.

Let’s keep it that way.

You have an exciting week ahead of you where you will learn a great deal from formal presentations and networking. 

I encourage you to take advantage of the access and the time you have to advance the work that will bring forward an electronic track and trace system the entire industry can embrace.

HDMA will support your efforts to carry the message within your organizations and work toward the creation of a broad coalition to establish a target date for industry-wide implementation of a consistent track and trace system.

Your role is to take responsibility for making sure you have your organization or business poised and ready when the technology solution is selected and the deadline for implementation is set.

Thank you for your attention and have a great time at the summit.