In the 1970’s and 1980’s, who was the only person ever to play for the Milwaukee Brewers (baseball), the Milwaukee Bucks (basketball), and the Milwaukee Admirals (hockey).

The answer: Frank Charles, the very talented organist. He “played” for all three teams.

Photo Above: Frank Charles (left) and Donald Dobert, Milwaukee County Stadium, 1973.

Photo Below: Frank Charles and Doug Czarnecki (ATL Project Engineer, then 9 years old), Milwaukee County Stadium, 1973.

Today I take time to thank Frank Charles for all of the wonderful memories he provided for baseball, basketball, and hockey fans. Mr. Charles played the organ for many, many years and was very kind to me when I was a young man.

In my everyday business world I use some of Frank’s great examples in my dealings with people, for Frank was always friendly and paid attention to things I was interested in. The small things he always did (for everyone) has been something that I fondly remember, even after nearly forty years.

Frank, thank you for all of the kindness, entertainment, and memories.

Photo Below: Frank Charles at Miller Park for the 2002 (Twenty Year) reunion of the 1982 Milwaukee Brewers team.

Photo Below: Frank Charles, forever a Brewers fan, in his Florida home (along with greats Paul Molitor and Robin Yount). He calls this room his “Wisconsin Den”.

This story courtesy of Gus G. Sentementes, “The Baltimore Sun”.

Ocean City’s boardwalk is known for small shops hawking salt water taffy and souvenirs to vacation-goers. But a major luxury brand has accused more than a dozen shops of doing brisk trade in an illegal market: counterfeit handbags and accessories. Over two days in June, an investigator with Coach Inc. entered 13 stores overlooking the beach and bought counterfeit bags, wallets and other items for prices ranging from $20 to $75, according to lawsuits filed by Coach in federal court in Baltimore this week. Authentic Coach handbags in a similar style are sold for more than $300, according to the company’s website.

In some cases, the investigator said the shops had dozens of imitation Coach products for sale. And, in at least one instance, a shop employee admitted to the undercover investigator that the items were fake, according to the lawsuits.

“To those who traffic in counterfeit goods the message is simple: Coach is looking for you and, once found, will seek the maximum penalties available, including substantial monetary payments,” said Nancy Axilrod, associate general counsel for Coach, in an email to The Baltimore Sun.

Coach and other big-name brands – from Chanel to Louis Vuitton – routinely work with federal and local law enforcement to fight a multibillion-dollar trade in counterfeit goods, many of which originate from China through organized crime networks.

But the fight against counterfeit goods has been complicated in recent years by sellers of illicit products moving online and beyond the traditional hubs of black market knockoffs in New York and Los Angeles to other foot traffic-heavy locales like Ocean City, experts said. In at least one case this year, Coach sued a municipality – Chicago – for not doing enough to crack down on street vendors selling counterfeit company products at a city-run public market.

According to the International AntiCounterfeiting Coalition, a nonprofit based in Washington, the worldwide trade in counterfeit goods amounts to about $600 billion a year. In the U.S. alone last year, Customs and Border Patrol and Immigration and Customs Enforcement seized $260 million worth of counterfeit goods. The top categories of seized counterfeit goods included footwear, consumer electronics, apparel, computer hardware, pharmaceuticals, toys and electronic games, according to the federal agencies.

Companies “are all very serious about it,” said Robert C. Barchiesi, president of the International AntiCounterfeiting Coalition in Washington, which represents more than 200 companies. “Most consumers think it’s a bargain when they buy these goods, but they need to think again because the societal costs are enormous.” Counterfeit goods lead to lost tax revenue and jobs as well as the diminishment of brands in the eyes of consumers who interact with imitation goods, Barchiesi said. “If people are walking around with inferior bags, that doesn’t go far toward protecting the reputation of these quality brands,” Barchiesi said.

In its investigation in Ocean City, Coach alleges that the shops sold handbags, wallets, key chains and wristlets. The shops named in the lawsuits are: Maytalk; Beach Break; Hot Topik; Ocean Reef; Summer Breeze; Surf Beachwear; the Fashion Shop; Ocean Waves; Sunset Beachwear; New York New York; Jewel of the Ocean; Oceanfashion Boutique; and Sunglass City. According to online federal court records, the owners of the shops had not been served with the lawsuits as of Tuesday.

Employees at several locations declined to comment, and management at those stores did not return phone calls. A manager at Oceanfashion Boutique, who refused to give her name, denied that the shop sold Coach counterfeit products. Coach is seeking $2 million in damages for each counterfeit violation at each store or, alternatively, a court order for the store owners to pay Coach all of the profits earned from the sale of the items.

Coach’s lawsuits against the Ocean City shops come as the company has launched its own nationwide campaign, now in its second year, to crack down on the sale of imitation products. Last May, the company kicked off “Operation Turnlock,” a zero-tolerance civil litigation program targeting producers, wholesalers and retailers of Coach fakes. The New York-based company is actively fighting the illegal trade of knockoffs in lawsuits against stores across the country, according to federal court records. So far, Coach has filed about 250 lawsuits and has secured court judgments and settlements for hundreds of thousands of dollars in damages, according to Coach’s Axilrod.

High-profile busts of smuggling rings are routine. Earlier this month, federal authorities shut down a ring in San Francisco that was selling imitation Coach, Kate Spade, Armani and other luxury brands, worth potentially $100 million.

In March, nine people were indicted in federal court and accused of transporting, in 33 shipping containers, hundreds of thousands of fake Nike shoes, Coach bags, Cartier watches and Gucci shoes through the port of Baltimore.

Photo Above: On Broadway in New York, shoppers can pick up items of questionable authenticity, and not just of the top luxury brands.

After years of knocking off luxury products like $2,800 Louis Vuitton handbags, criminals are discovering there is money to be made in faking the more ordinary – like $295 Kooba bags and $140 Ugg boots. In California, the authorities recently seized a shipment of counterfeit Angel Soft toilet paper.

The shift in the counterfeiting industry, which costs American businesses an estimated $200 billion a year, plays to recession-weary customers looking for downmarket deals, the authorities say. And it has been fueled in part by factories sitting idle in China. Almost 80 percent of the seized counterfeit goods in the United States last year were produced in China, where the downturn in legitimate exports during the recession left many factories looking for goods – in some cases, any goods – to produce. “If there is demand, there will be supply,” said John Spink, associate director of the Anti-Counterfeiting and Product Protection Program at Michigan State University. In China, he said, “It’s all of a sudden them saying, ‘We have low capacity. What can we make?’ ”

The answer is increasingly knockoffs of lesser-known brands, which are easy to sell on the Internet, can be priced higher than obvious fakes, and avoid the aggressive programs by the big luxury brands to protect their labels, retail companies and customs enforcement officials say. The results: Faux Samantha Thavasa bags for $113 and Ed Hardy hoodie sweatshirts for $82.50. And, bizarrely, imitations that are more expensive than the real ones: In 2007, Anya Hindmarch sold canvas totes that said “I’m Not a Plastic Bag” for $15. Now fakes are available on the Web for $99. “If it’s making money over here in the U.S., it’s going to be reverse-engineered or made overseas,” said Jonathan Erece, a trade enforcement coordinator for United States Customs and Border Protection in Long Beach, Calif. “It’s like a cat-and-mouse game.”

The traders in mid-price fakes are employing another new trick: by pricing the counterfeits close to retail prices – which they can do when the original product is not too expensive – they entice unsuspecting buyers. Any savvy shopper, for example, knows a Louis Vuitton bag selling for $100 cannot be the real thing. But when NeimanMarcus.com, an authorized retailer for Kooba bags, sells them for $295, and a small Web site sells them for $190, a deal-hunting consumer could think she has scored a bargain. (She hasn’t. The $190 bag is a fake.) “If the price points are somewhat close, some consumers get duped into believing they’re getting a real product,” said Robert Barchiesi, president of the International AntiCounterfeiting Coalition, a trade group. “They might be looking for a bargain, but a bargain to buy real goods.”

Photo Below: At the Port of Long Beach, an officer at the Customs and Border Protection office inspects a toy for entry into the country.

The counterfeiters are also lifting photos and text from legitimate Web sites, further fooling some shoppers. “The consumer is blind as to the source of the product,” said Leah Evert-Burks, director of brand protection for Ugg Australia’s parent company, the Deckers Outdoor Corporation. “Counterfeit Web sites go up pretty easily, and counterfeiters will copy our stock photos, the text of our Web site, so it will look and feel like” the company site, she said.

While all of it is illegal, the authorities do not publish statistics on what brands’ products are being counterfeited. But designers and trade experts said the downmarket trend in counterfeiting became more noticeable over the last year, as counterfeiters got more inventive. The field is big: the total value of counterfeit goods seized by United States customs officials increased by more than 25 percent each year from 2005 to 2008, using the government’s fiscal calendar. In fiscal 2009, as imports over all dropped by 25 percent, the value of counterfeit products seized dropped by only 4 percent to $260.7 million. The official statistics capture only a piece of the problem, companies and experts say, because so many counterfeiters market directly to customers on the Internet and many of those sales go undetected by the authorities. “Online is much harder” to patrol and enforce, said Todd Kahn, general counsel for Coach, the handbag and accessories company. That is particularly true for smaller brands, as Anna Corinna Sellinger, co-founder and creative director of the New York clothing and accessories company Foley & Corinna, learned.

A couple of years ago, she began checking out which Foley & Corinna items were selling on eBay. Her city tote, which now retails for $485, was a popular item, but on some listings “there was something off – it’s a color I never did, or a leather I never did,” she said. As other sites proliferated, and Ms. Corinna Sellinger noticed more and more Internet fakes, she stopped looking altogether. “It’s just too frustrating,” she said. “You can try to do something, but it’s so big and so fast.”

While Ms. Corinna Sellinger basically had herself and a computer to patrol for fakes, big companies use legal teams who train customs officials on the nuances of their product, monitor the Web, ask Internet service providers to take down copycat sites and file lawsuits against sellers. (The brands only go after sellers; the law in the United States does not prohibit consumers from buying counterfeit products.) Ugg Australia, the popular boot brand, developed a full enforcement program after it realized how prevalent copies of its boots were. In 2009, 60,000 pairs of boots were confiscated by customs agents globally, Ms. Evert-Burks said. In the same year, the company took down 2,500 Web sites selling fake products, along with 20,000 eBay listings and 150,000 listings on other trading sites like Craigslist and iOffer. That’s despite the relatively low price of real Ugg boots, which cost around $140 for a basic model. Under similar programs, Versace won $20 million in a recent lawsuit against counterfeiters, while Gucci, Louis Vuitton and other luxury brands have been pursuing similar cases. Coach last year announced “Operation Turnlock,” in which it would file civil lawsuits against counterfeiters, and it has sued 230 times, Mr. Kahn said. At Liz Claiborne Inc., which owns brands like Juicy Couture and Kate Spade, the company has gone after 52 Web sites selling counterfeits, and removed 27,000 auction listings so far this year.

Photo Below: Counterfeit boots are destroyed in Australia after a court sided with Deckers Outdoor, owners of the Ugg boot line.

The lesson for many counterfeiters has been that they have a better chance of getting away with it if they copy smaller brands like Foley & Corinna – even though Foley & Corinna, while popular with celebrities and fashion types, is not widely recognized as a status brand and its bags can be had for as little as $126 on the brand’s own Web site. “Once it’s out there a lot, people won’t even want the real one because then they’re like, ‘People are going to think it’s fake,’ ” Ms. Corinna Sellinger said. “It takes the product away from the designer.”

By: Angie Drakulich. This story is courtesy of ePT–the Electronic Newsletter of Pharmaceutical Technology.

The US Food and Drug Administration announced plans to revise the current good manufacturing practice (GMP) regulations at a conference held jointly by the agency and Xavier University in Cincinati, Ohio, June 13-16. Brian Hasselbalch, representing the Office of Compliance’s Division for Manufacturing and Drug Product Quality within FDA’s Center for Drug Evaluation and Research, was speaking as part of the first joint annual Global Outsourcing Conference at the school.

According to Haselbalch’s presentation, which is available on the Xavier website, a draft of new CGMP regulations focusing on component controls is expected before the year’s end. Potential revisions include requiring pharmaceutical manufacturers to physically audit their suppliers (i.e., no more paper audits), test containers in each shipment received, implement tamper-evident packaging and security features, notify FDA of contaminated shipments and lots, and to use only those components recognized as safe for their intended use or listed in an already approved application.

In addition to increased enforcement and information-sharing, FDA also plans to play a stronger “guiding role” in corporate responsibility. Hasselbalch offered some recent guidance documents as examples of FDA’s role in encouraging corporate responsibility: process validation, pharmaceutical quality systems, and testing of glycerin for diethylene glycol. It seems the agency will go even further by issuing a second phase of revised CGMP regulations that focus specifically on corporate responsibility. These revisions might include requirements that management assures compliance, performs self-inspections, evaluates and investigates problems, implements change control, and documents training and effectiveness, according to the presentation.

What’s behind the proposed changes? Hasselbalch’s presentation noted growing gaps in quality control caused by factors such as globalization, new technologies and processes, distribution challenges, and increased outsourcing of production. Between 2001 and 2007, he pointed out, the number of products manufactured outside the United States and the number of manufacturing sites abroad doubled. Some of the new products being imported into the US come from countries with “less developed regulatory systems,” according to the presentation. Along with these more complex supply chains, there has been an increase in pharmaceutical cargo thefts and in drug counterfeiting. More preventative measures are therefore needed.

Industry will have a chance to comment on the proposed revisions once they are issued.

Note: On June 24, 2010, an FDA press officer clarified that the agency is “considering requiring finished pharmaceutical manufacturers to conduct on-site audits of the original manufacturers for components (i.e., ingredients) that they use in manufacturing.”

The End.

Digest Break – Quotes To Make You Think.

“When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” — Henry Ford

“Make crime pay. Become a Lawyer.” — Will Rogers

“Few things are more satisfying than seeing your own children have teenagers of their own.” — Doug Larson

This article courtesy of Stephen Barlas and Contract Pharma Magazine

The FDA’s publication of the final guidance on a standard numerical identifier (SNI) for pharmaceutical packages at the end of March awoke the drug industry from its track and trace slumber. Manufacturers, distributors, pharmacies and their vendors had been snoozing since September 2008, when California pushed back its e-Pedigree implementation date, an action with significant national implications. Instead of having to put unique serial numbers on packages starting January 1, 2011, California, responding to pleas from an ill-prepared drug industry, pushed back that e-Pedigree deadline to January 1, 2015. One-half of all drug packages arriving in the state on that date will have to have unique serial numbers printed on them. The other half will have to follow suit one year later.

“Everybody took a deep breath when the California Board of Pharmacy delayed its e-Pedigree requirement,” agreed Ruby Raley, director, healthcare solutions, Axway, a company that provides the software to run the data repositories that hold information about drug package pedigrees as an individual package moves from the manufacturer to (perhaps) a repackager to a wholesaler and on to the retail or hospital pharmacy. Axway is involved in numerous track and trace pilots with a number of major pharma companies. “Nothing happened last year,” she remarked.

Now, publication of an FDA-approved package serialization scheme has given the pharmaceutical industry a reason to restart its version of California Here I Come. Whereas the California Board of Pharmacy provided no specifics on package serialization, the FDA has; manufacturers no longer have to wait and guess what might be acceptable in the Golden State come January 1, 2015, a date that, given the complexities of e-Pedigree compliance, isn’t so far away.

James McCrory, vice president, products and technology at rfXcel Corp., said, “The SNI guidance is a big deal in three ways. It reflects new interest in federal government safety of prescription drugs, provides endorsement of GS1, which is pretty big since people have been hanging back waiting to see what happens, and matches what leaders and distributors and manufacturers are doing in their own pilots.” The SNI essentially endorses the serialization standard adopted by the international standards group GS1. GS1 has one serialization standard for numbers printed in 2D barcodes (GT10) and a second one for numbers printed on radio frequency identification (RFID) tags (G10).

An agreed-upon format for an item-level SNI is only the first step in a closed-loop e-Pedigree (often used synonymously with track and trace) system such as the one adopted by California, and likely to be endorsed by Congress. Other follow-on elements include:

Security framework for data exchange,

Record retention policies,

SNIs at the pallet and case level,

Standardized chain-of-custody data to be tracked by logistical units,

Standardized electronic data exchange format,

Data carriers with specific encoding formats identified,

Guidelines for reporting exceptions noted by supply chain participants, and

Hierarchy of the SNIs expected in a shipment.

The FDA SNI provides a first-step level of certainty to manufacturers, in terms of compliance with federal expectations, and assures them that the U.S. is moving in the same basic direction as other countries, many of whom are far more advanced in their national track and trace requirements. That is all true despite the limitations of the FDA guidance: it is a suggested package identification formula. There is no federal requirement that drug manufacturers follow it, much less put a serial number on each item-level package.

The limits of the FDA guidance, some of its nuances and its failure to address the important issue of which technology should be used to print the SNI have all combined, apparently, to seal the lips of pharmaceutical manufacturers who just three years ago were touting their track and trace efforts. Prominent proselytizers such as Pfizer, Abbott and Purdue Pharma have declined to comment on the FDA final guidance on an SNI. “I ran this request up the flag pole and have learned that we are unable to grant interviews on this topic,” explained Libby Holman, spokeswoman for Purdue Pharma, which has been an aggressive track and trace experimenter because of its manufacture of OxyContin, a popular target of drug diverters.

Tom McPhillips, vice president, U.S. Trade Group, Pfizer Inc., did not return an e-mail requesting comment. Mr. McPhillips, in his comments to the FDA after the draft guidance was published, asked the agency not to require manufacturers to print the national drug code (NDC) as part of both the machine readable and human readable SNI. The FDA rejected that request.

Nonetheless, manufacturers support the specificity of the SNI, and its agreement with GS1 standards, which gives them more certainty than California’s prescription for a unique serial number. The only guidance in the Golden State law, according to Virginia Herold, executive officer of the California Board of Pharmacy, is that the number be part of an “interoperable” track and trace system. The FDA-recommended SNI is a unique combination of two numbers printed on a package label that identifies the drug inside the package. The FDA final guidance specifies that half of the SNI is the national drug code (NDC), which is essentially unique for each drug made by each manufacturer, coupled with a unique serial number for the second half, generated by the manufacturer or repackager for each individual package. Serial numbers should be numeric or alphanumeric and should have no more than 20 characters. The SNI should be both machine and human readable.

The use of a GS1-compatible SNI means that manufacturers following the FDA guidance are very likely to comply with European, Brazilian, Norwegian and other national requirements for drug package serialization. Meanwhile, other countries are putting track and trace requirements into place, in some instances with more speed than the U.S. Ms. Raley explained that governments footing the bill for public healthcare (e.g. the EU, Brazil, Turkey) are especially concerned about counterfeit product sneaking into the country, since the government does not collect taxes on those transactions. “People are sneaking product in at the border, that is driving government concerns,” she explained.

In the U.S., the FDA has been more concerned about the prospective impact of counterfeit drugs on public health and safety. The 2007 Heparin recall underlined the value of track and trace (had it been deployed by the pharmaceutical chain) with regard to drug recalls. Preventing thefts is an important affiliate benefit, too. In March, thieves broke into an Eli Lilly warehouse in Enfield, CT and stole $75 million worth of prescription drugs. The crooks took pallets of the anti-cancer drugs Gemzar and Alimta, the schizophrenia drug Zyprexa, the antidepressant Cymbalta and other prescription medicines. Theoretically, those stolen drugs could not come back into the legal distribution chain if they had SNIs printed on 2D barcodes or RFID tags on each package’s label.

It is clear that manufacturers are the big winners, relatively speaking, from the final guidance. Scott Melville, senior vice president for government affairs for the Healthcare Distribution Management Association (HDMA), said, “The FDA guidance provides manufacturers and the entire pharmaceutical supply chain with needed clarity.” But while the HDMA has welcomed the guidance, it clearly did not get everything it wanted. For example, the HDMA had not wanted the FDA to endorse an “alphanumeric” as a serial number option.

However, Anita Ducca, senior director, regulatory affairs at HDMA, acknowledged the FDA was responsive to her group’s concerns. “We had a number of things we wanted the FDA to change from its draft guidance and for the most part the agency did that,” she states. “Our members are ready and willing to work within the parameters of the guidance.”

Neither did hospitals and pharmacies get exactly what they wanted. Some pharmacy groups had also pushed for a different SNI. The American Society of Health System Pharmacists (ASHP) had urged the FDA to modify the NDC number so that its components included the RxNorm CUI as the drug/form/ dose component of the code. Justine Coffey, JD, LLM, director, federal regulatory affairs, said, “Currently, ASHP members are struggling with inconsistencies relating to the National Drug Code (NDC) and its application to barcode point-of-care, clinical information systems, and hospital financial systems.”

Axway’s Ms. Raley noted that hospitals are particularly concerned about avoiding medication errors, especially given the passage of the health care reform bill, which mandates a number of new payment methodologies based on the hospital reducing errors of all kinds. She explained that many drugs come in many formulations and doses, information which will not be gleaned from the SNI endorsed by the FDA. Ms. Raley pointed out that hospitals are particularly sensitive to this issue given the publicity generated by the misadministration of Heparin to twins born in November 2007 to the actor Dennis Quaid and his wife.

Minor reservations aside, the HDMA’s Mr. Melville emphasized that the final guidance allows his members and everyone else to move forward. “The first step in an e-Pedigree system is putting a number on the package,” he said. “The second step is what you do with that number.”

For distributors a big issue is how the SNI is printed on the item-level package label. The two options that have emerged over the past half-decade are a 2D barcode or a radio frequency identification (RFID) tag. Distributors have generally favored RFID tagging, since they could check in packages to their warehouses without a reader having to be “in the line of sight” with the individual package. This saves them time, which is important because any e-Pedigree requirement costs the distributor money and earns the company no profit. But RFID tags are expensive, and manufacturers have generally pushed for printing serial numbers within 2D barcodes, not just because the labels are cheaper, but because the packaging lines can run faster than they could if RFID tags are printed on the package. Moreover, RFID tags cannot be used on some products.

The final guidance on the SNI appears, however, to endorse 2D barcode serialization without actually saying so. “The FDA landed on 2D,” stated Ms. Raley. “It is very clear they talked about the total acceptability of 2D although they did not rule out RFID.” RFID does have some significant shortcomings when it comes to package use, such as its deleterious effect on biologics.

Robert Celeste, director, healthcare, GS1 US, said that in fact all the manufacturers who have done pilots, and are doing them now, are putting serial numbers on packages via 2D barcodes. Some are also putting RFID tags on the product label, and on cartons and pallets. He believes it is possible that RFID tags on item-level packages may have utility – if their per unit price comes down – in certain applications, for example, where products must be kept at certain temperatures.

The final guidance, however, is silent on serialization of cartons and pallets, which the California Board of Pharmacy, just to cite one interested party, had pushed for, and on which the FDA had asked for comments.

While the pharmaceutical supply chain now knows that the SNI is the baseline for complying with California’s e-Pedigree requirement, everyone up and down the chain is pushing for federal legislation that would make the California requirement, or some close version of it, national law and might resolve outstanding technology questions as well. The 2007 congressional law that required the FDA to publish some sort of SNI within 30 months – it did not specify guidance versus more legal regulation – also told the FDA to “develop standards and identify and validate effective technologies for the purpose of securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs.” The FDA received comments but has done nothing to impose a technology solution, which various players in the drug distribution chain would probably oppose, but which is clearly necessary.

In the 2007-2008 session of Congress, Reps. Steve Buyer (R-IN) and Jim Matheson (D-UT) introduced the Safeguarding America’s Pharmaceuticals Act, which would have established a federal e-Pedigree mandate. That law has not been reintroduced in the current Congress, perhaps, suggested Ms. Herold of California’s Board of Pharmacy, because members of the House and Senate have been overwhelmed with healthcare reform, financial reform and economic recovery. Also, the same sense of urgency that disappeared in California in September 2008 disappeared from Congress at about the same time.

As the HDMA’s Mr. Melville put it, “We want a uniform federal pedigree standard. We can’t have barriers to movement of products.” He added that Reps. Buyer and Matheson, at a hearing on March 10, stated they are working on a redrafted version of their bill. “We are very hopeful it will be reintroduced soon,” said Mr. Melville. “We expect it to look like the California implementation schedule.”

The End

Stephen Barlas is a freelance writer who has written several articles on pharmaceutical packaging for Contract Pharma. He can be reached at sbarlas@verizon.net.

The photo below is of ATL Special Project Engineer Doug Czarnecki (age 9) with Merle Harmon and Bob Uecker, also from 1973.

COUNTERFEIT PRODUCTS WORTH $263 MILLION SEIZED IN TWO MAJOR INVESTIGATIONS. The Washington Post (4/27/2010) reports on the announcement Monday of the seizure of “$263 million worth of counterfeit products — much of it smuggled through Baltimore — following two long-term investigations. The National Intellectual Property Rights Coordinator Center, a partnership among several government agencies, spearheaded the so-called Operation Spring Cleaning, which resulted in more than $44 million in seizures of fake products, including DVDs, circuit breakers, luxury goods and medications, from ports across the country over the past three weeks. In addition, 45 people were arrested on federal and state counterfeiting charges as part of the operation. Immigration and Customs Enforcement officials also seized $219 million in counterfeit merchandise made in Asia and shipped through Baltimore this month as part of a separate investigation over several months.”

U.S. Seizes Big Batches of Fake Goods. Wall Street Journal (4/26/2010) notes U.S. law enforcement “made their biggest-ever seizures of counterfeit goods this month in two operations that netted more than $240 million in total as part of a broader federal offensive against the trafficking of pirated products. Federal, state and local law enforcement officials, part of the National Intellectual Property Rights Coordination Center, confiscated about $40 million worth of counterfeit goods, including fake Rolex watches, Coach handbags, and Nike shoes, as well as pirated DVDs and fake pharmaceutical products, in a sweep of more than 30 U.S. cities. And as part of a separate, long-running investigation, federal officials confiscated $200 million in fake goods made in Asia and smuggled through the port of Baltimore. “Intellectual property theft steals a whole lot. It steals jobs, creativity, it funds organized crime, and it’s a serious risk to public safety,” said John Morton, assistant secretary for U.S. Immigration and Customs Enforcement, or ICE, at the Department of Homeland Security.”

Pirated DVD Salesmen Busted. The McAllen (TX) Monitor (4/27/2010) reports, “Three pirated DVD salesman arrested at a Starr County flea market are among 45 people netted in a nationwide dragnet against counterfeiting operations, US Immigration and Customs Enforcement announced Monday. Agents detained Mauro Bazan Jr., Esteban Trevino Ramirez and Rodolfo Sanchez Vela on April 17 after finding them in possession of nearly 6,700 forged DVDs. Legitimate DVDs would be worth an estimated $127,000.” The men were arrested “as part of the nationwide ‘Operation Spring Cleaning’ which resulted in the seizure of $263 million in fake merchandise in cities such as San Antonio, Houston, Dallas, Seattle, New York, Miami and Detroit.”

Fake Rolexes Bulldozed In Philadelphia. The Philadelphia Daily News (4/27/2010) reports on the bulldozing on 7,000 counterfeit Rolex watches marking “the grand finale of an international multimillion-dollar federal counterfeiting case some 20 years in the making – unveiled on World Intellectual Property Rights Day.” Counterfeit Rolex manufacturer Binh Cam Tran “started as a legitimate watchmaker on Jewelers Row on Sansom Street near 7th, then got into the counterfeit world, said John Kelleghan, special agent in charge of the Office of Investigations for US Immigration and Customs Enforcement here. He ended up manufacturing the watches in his North Philadelphia rowhouse and kept moving to better quarters – ending up in Elkins Park, where he owned a fleet of Lexus cars.” WCAU-TV Philadelphia (4/27) and KYW-AM Philadelphia (4/27, Glovas) cover the bulldozing on their websites. WCAU-TV Philadelphia (4/26) aired a report on the bulldozing, as did WTXF-TV (4/26/2010).

KRGV-TV Rio Grande Valley (4/27/2010) reports approximately “$1.1 million of counterfeit merchandise was seized from two locations in the South Texas area in April. It was part of a nationwide seizure announced by the federal partners of the National Intellectual Property Rights Coordination Center (IPR Center). In total, more than $263 million worth of counterfeit merchandise was seized around the country.” DHS Assistant Secretary for ICE John Morton “revealed these results at an observance of World Intellectual Property Day at the IPR Center in Arlington, Virginia.” KABB-TV San Antonio (4/26/2010) also aired a report on the results of Spring Cleaning.

Counterfeit Nikes Seized In New Jersey. The AP (4/27/2010) reports ICE officials announced the seizure of “15,000 pairs of fake Nike shoes at Port Elizabeth as part of a nationwide sweep of counterfeit products. … They say more than 700,000 fake items were found in 30 cities during Operation Spring Cleaning. The counterfeit goods included medicines. … ICE spokesman Harold Ort said the Nike sneakers found in two shipping containers in New Jersey were worth $1 million.”

7 Mile Fair Seizures Noted. WITI-TV Milwaukee (4/26/2010) aired a report on ICE’s bust of counterfeit goods at 7 Mile Fair as part of Spring Cleaning.

Photo above: Michael R. Bloomberg

Mayor Michael R. Bloomberg, Chief Advisor to the Mayor for Policy and Strategic Planning John Feinblatt and Director of Special Enforcement Shari C. Hyman today announced a $800,000 payment to the City that settles the “Counterfeit Triangle” case and reopens a key block of Manhattan’s Chinatown.

The City will receive the payment from the owners of a single triangular block that was notorious for the sale of counterfeit goods. The lawsuit, a civil nuisance abatement action, was filed after a February 26, 2008 raid that shuttered 32 storefronts selling counterfeit goods. Under the terms of the settlement, the property owners must use the building, bounded by Canal, Centre, and Walker Streets, for legitimate purposes.

“Property owners should know that they are responsible for what goes on in their buildings and that hosting illegal activity like counterfeiting is a losing proposition,” said Mayor Bloomberg. “Counterfeiting deprives legitimate businesses of customers and their employees of their paychecks. We will continue to go after the street-level counterfeiters, the wholesalers, and the property owners that look the other way.”

In the raids that triggered the lawsuit, the Mayor’s Office of Special Enforcement seized counterfeit trademarked products, including counterfeit watches, jewelry and handbags purporting to be from Rolex, Tiffany, Coach, Gucci, Chanel and others. These products had an estimated street value of over $1 million.

“Selling counterfeit goods is a form of organized crime it is built on forced sweatshop labor, often done by children and frequently accompanied by violent turf wars,” said John Feinblatt, Chief Advisor to the Mayor for Policy and Strategic Planning. “Counterfeiting has been involved in every illegal enterprise from money laundering to supporting terrorism. This remains an ongoing problem, but we will continue to go after any property owners that look the other way while their tenants flout the law.”

“Counterfeit goods are inferior products that cheat everyone, from the consumer who purchases a poorly-made item, to the legitimate business owners cheated of sales, to the City who loses tax revenue,” said Shari C. Hyman, Director of the Mayor’s Office of Special Enforcement. “Property owners should know that if they play host to illegal vendors, we will use the Nuisance Abatement law to shut down the buildings and exact a serious financial penalty.”

As part of the Mayor’s Office of Special Enforcement investigation, 42 undercover purchases were made in a series of the buildings’ 32 storefronts. The investigation uncovered counterfeits of Coach, Gucci, Dolce & Gabbanna, Dior, Prada, Rolex, Fendi, Burberry, Calvin Klein, Dora the Explorer and Oakley. The building addresses in the Counterfeit Triangle are 224 – 230 Canal Street; 232 Canal Street; 234 – 238 Canal Street; 106 Baxter Street; 112 – 116 Walker Street; 118 Walker Street; 120-124 Walker Street; and 152-156 Centre Street.

Photo above: examples of fake goods.

Mayor Bloomberg created the Office of Special Enforcement by Executive Order in December, 2006. It replaced the former Office of Midtown Enforcement and expanded its activities to all five boroughs. The Office of Special Enforcement is responsible for coordinating enforcement efforts across City agencies to address quality of life issues related to notorious adult use locations, lawless clubs, trademark counterfeiting bazaars and illegal conversions of apartment buildings into hotels.

The Office of Special Enforcement and its predecessor has, since 2003, shut down 36 counterfeiting locations, seized some $52 million in knock-off goods and forced building owners and counterfeiters to pay $3 million in fines to the people of New York City.

Before the Committee on Energy and Commerce Subcommittee on Health, U.S. House of Representatives, March 10, 2010

INTRODUCTION

Mr. Chairman and Members of the Subcommittee, I am Dr. Joshua M. Sharfstein, Principal Deputy Commissioner at the Food and Drug Administration (FDA or the Agency) in the Department of Health and Human Services (HHS). Thank you for the opportunity to discuss the safety of the American drug supply.

Protecting Americans from unsafe or contaminated drugs is not just an important responsibility of FDA-it is our core charge. Drug safety was the primary reason for the passage of our guiding statute. In 1937, more than 100 people, including many children, died from ingesting Elixir Sulfanilamide, which contained the deadly poison diethylene glycol. Congress then passed, and President Franklin D. Roosevelt signed, the Federal Food, Drug, and Cosmetic Act (FD&C Act) to prevent future catastrophes.

And yet, as you know, the threat remains.

I would like to thank the Subcommittee for its leadership on this issue. Numerous hearings in this chamber have helped the public understand the challenge of regulating a global marketplace. Members of this Subcommittee, along with the Chairman of the full Committee and the Chairman Emeritus, were key architects of the Food and Drug Administration Amendments Act of 2007 (FDAAA), which gave the Agency significant new authorities and resources to address postmarket safety. In this testimony, I will address two important issues: import safety and the implementation of the drug safety authorities in FDAAA.

IMPORTS

As the Subcommittee’s work has documented, globalization has created new risks and challenges for the safety of the drug supply. Where Americans once used drugs that were mostly manufactured domestically, now up to 40 percent of the drugs we take are imported, and up to 80 percent of the active pharmaceutical ingredients in the drugs we use are from foreign sources. In addition to the growth in the sheer volume of imports and foreign facilities, there has been an increase in the variety and complexity of imported products, and a large expansion in the number of countries involved in producing these products-including many with less sophisticated regulatory systems than our own. Simultaneously, the supply chain from raw material to consumer has become more and more complex, involving a web of repackagers and redistributors in a variety of locations. This makes oversight significantly more difficult and leaves weaknesses through which counterfeit, adulterated, and misbranded products might infiltrate the legitimate supply chain.

A few examples:

* In 2007 and 2008, contaminated heparin (a blood-thinning drug) came from China and was linked to deaths and a number of serious allergic-type reactions here at home.

* Counterfeit Tamiflu (oseltamivir phosphate) was discovered during the novel H1N1 outbreak.

* In 2007, Xenical (orlistat) capsules ordered over the Internet were found to be composed only of talc and starch.

* In January 2010, counterfeit Alli (orlistat) was discovered, which did not contain the active ingredient but instead contained varying amounts of the stimulant sibutramine, which can lead to serious toxicity if used by people with certain cardiac diseases.

These are global problems. Contamination and counterfeit drugs represent a much greater threat in the developing world, where the systems of laws and regulatory oversight do not afford much protection. And these problems can pose a risk to us at home, when, for example, patients do not get fully treated for infection abroad because of ineffective drugs and as a result, drug resistance intensifies.

Photo above: Fake drugs are made on equipment like this in filthy conditions.

Photo below: Fake drugs are re-labeled and re-packaged so they look “genuine”. This puts you at risk. This could kill you.

When the modern FDA was created in 1938, imports were a tiny part of the products used in our country. Our focus was on stopping harmful products at the border through inspections of imported goods. This approach is adequate to the challenge when the volume is small. But it fails when an estimated 20 million shipments of FDA-regulated imports come into the country each year. To fulfill our public health mission in a global age, FDA must adopt a new approach-one that addresses product safety by preventing problems at every point along the global supply chain, from the raw ingredient through production and distribution, all the way to U.S. consumers.

We are moving from an approach based on reacting to problems to one that proactively prevents such problems from ever occurring. In the food arena, this approach to prevention is embodied in legislation passed by this Committee and the full House of Representatives, and which is now awaiting action in the Senate. This bill would for the first time allow FDA to establish basic preventive controls throughout the food production process and give the Agency strong enforcement authorities and resources to meet these obligations.

In the arena of drugs and other medical products we are taking a number of steps to begin making this shift within our current authorities.

First, we are seeking better controls at the point of production, wherever that may be.

We now have permanent FDA offices in Beijing, Shanghai, and Guangzhou, China, in New Delhi and Mumbai, India, in San Jose, Costa Rica, Mexico City, Santiago, Chile, and soon, Amman, Jordan. These offices enable us to have a regional presence around the world, a home base from which to undertake a range of important activities, including building regulatory capacity. We now have more than 30 agreements with foreign counterparts to share inspection reports and other nonpublic information that can help us make better decisions about the safety of foreign products. So if a shipment of contaminated drugs shows up in a port in Italy, we will hear about it swiftly and be on the lookout for products from the same shipper.

Second, we are working with industry to help them strengthen the safety of their supply chains. In this day and age, companies should be able to effectively demonstrate that safety, quality, and compliance with international and U.S. standards are built into every component of every product and every step of the production process. Some companies already do a terrific job at this, tracking where and how their products and their components are made and the path taken to reach our shores. In fact, I have met with some companies that react with incredible swiftness to questions about the integrity of their supply chain. Obviously they have a vital interest in ensuring confidence in the safety and quality of their products and their brand. These best practices need to become standard practice throughout industry.

There is much more to be done. As Secretary of Health and Human Services Kathleen Sebelius noted when she appeared before this Committee on February 4, 2010, FDA needs additional tools to move our oversight capabilities into the 21st century. FDA needs to access regulatory information quickly, hold all parties responsible for the quality of products in the supply chain, and have reasonable and reliable options for enforcement.

DRUG SAFETY AUTHORITIES IN FDAAA

I will now turn to the drug safety authorities in FDAAA, a milestone legislative achievement that has helped the Agency protect the public health in many different ways.

Because no amount of premarket study can provide the full information about what the benefits and risks of a new drug will be when it is used by the general population, FDAAA provided important new authorities to enhance our ability to monitor approved drugs after they are marketed and to take definitive action when needed. Under FDAAA, FDA can require drug sponsors to conduct postmarketing studies and clinical trials, make certain safety-related labeling changes, and develop and put into place risk evaluation and mitigation strategies (REMS)-all with the goal of better identifying and managing the risks of drugs on the U.S. market.

Here are some details.

With respect to label changes, as of February 28, 2009, FDA had used its new authorities to require safety label changes in individual or classes of drugs 32 times since March 25, 2008. For example, FDA required safety label changes to add the risk of a life-threatening neurological disorder to the prescribing information for certain antidepressants, and changes to the prescribing information of a class of antibiotics to warn about the risk of tendon rupture.

With respect to risk management, if FDA determines that a REMS is necessary to ensure that the benefits of a drug outweigh the risks of the drug, FDA can require manufacturers to have a REMS in place when a drug comes on the market, or implement one later if FDA becomes aware of new safety data . The authority to require REMS provides FDA a very useful set of tools that can be used to reduce the risks of marketed products, while allowing patients to benefit from lifesaving and other beneficial treatments that could not be safely marketed without a risk management program.

In the design of REMS with elements to ensure safe use (the most comprehensive REMS programs), FDA is mindful of the provisions in FDAAA stating that the elements to ensure safe use must be, among other things, commensurate with the specific serious risk listed in the FDA-approved labeling of the drug, not be unduly burdensome on patient access to the drug, and be designed to be compatible with established distribution, procurement, and dispensing systems for drugs.

Most of the REMS with elements to ensure safe use include educating prescribers about the risks and appropriate use of the drug as a condition of certification or enrollment in the REMS program. Other programs require enrollment by pharmacists and sometimes patients as well. Some programs require the prescriber to monitor the patient immediately following drug administration and for a period of time afterwards. Each of these programs is designed to provide critical information to clinicians without unduly restricting access to the drugs.

We have learned that designing and implementing the most comprehensive REMS requires a careful balancing of the need to adequately manage risks and also to maintain patient access to important medications. Since using this authority is a work in progress, FDA is committed to addressing the concerns we have heard from prescribers, pharmacists, distributors, and payers about their roles in implementing REMs and from patient groups about the effects of REMS on access to needed products, and are planning to hold a public meeting to hear from these and other stakeholders. Additional implementation challenges include ensuring consistency in the handling of safety problems with all products, including over-the-counter (OTC) products and generic drugs; the lack of clarity in certain provisions of the law with respect to REMS; and burdens imposed on application holders and FDA that do not contribute significantly to drug safety. We would be very happy to discuss the lessons we have learned over the last two years with Congress and work together to fine tune the program so that it can be even more effective in improving public health.

Sentinel Initiative

FDAAA requires the HHS Secretary to develop methods to obtain access to disparate data sources and to establish a postmarket risk identification and analysis system to link and analyze health care data from multiple sources. On May 22, 2008, FDA launched the Sentinel Initiative with the ultimate goal of creating and implementing the Sentinel System-a national, integrated, electronic system for monitoring medical product safety. The Sentinel System, once up and running, will enable FDA to actively gather information about the postmarket safety and performance of its regulated products-a significant step forward from our current, primarily passive safety surveillance systems. The law sets a goal of access to data from 25 million patients by July 1, 2010, and 100 million patients by July 1, 2012. FDA has gathered public input on issues related to the creation and development of Sentinel, held numerous meetings and a public workshop, and established a working group consisting of representatives of numerous federal agencies to share information and discuss issues related to ongoing efforts that are complementary to Sentinel. FDA has awarded key contracts for a pilot project to gather information that will be essential to fully implementing the Sentinel System.

Track and Trace

FDAAA also required the development of standards for the identification, validation, authentication, and tracking and tracing of prescription drugs as a step towards further securing our nation’s drug supply. Very shortly, FDA will issue a guidance establishing a standard for unique identification for prescription drug packages, which ultimately will help in identifying the whereabouts and authenticity of drug packages and distinguish them from counterfeits.

SAFE USE INITIATIVE

Before I close, I would like to briefly mention a new drug safety initiative at FDA called the Safe Use Initiative. Every approved drug has both benefits and risks. Underlying FDAAA is the principle that Congress wants to see the benefits maximized for patients and the risks minimized. We all want patients to get better on medication and avoid unnecessary injuries, even death, as a result of preventable medication errors or misuse. In November 2009, we announced the launch of FDA’s Safe Use Initiative. Through this initiative, FDA will identify, using a transparent and collaborative process, specific candidate cases (e.g., drugs, drug classes, and/or therapeutic situations) that are associated with significant amounts of preventable harm. FDA will then work with hospitals, doctors, nurses, patient groups and others to recognize and mitigate these risks. In a voluntary complement to the REMS program, we will use our understanding of drug risk as a tool to gather partners together and develop and implement strategies for progress.

CONCLUSION

Over the last seven decades, so much has changed in pharmaceutical science and drug regulation. Yet in 2007, when scores of patients died of contamination in Bangladesh, and in 2006 when children died in Panama, the culprit was familiar. It was diethylene glycol, or DEG-the very same poison that had led to the passage of the FD&C Act in 1938.

FDA’s work is far from done. The scientists, doctors, nurses, inspectors, and other public health professionals who make up FDA thank you for your support and confidence in our mission.

Thank you very much for the opportunity to testify today. I welcome your ideas and your questions.

Joshua M. Sharfstein, M.D.