Our readers with association to the pharmaceutical and drug industry may recall that in mid-February  both major drug distributor Cardinal Health and drug chain CVS pharmacy had certain southern Florida facilities temporarily shut down. Four pharmacies located in the Sanford Florida area suspected of selling “staggering” volumes of the controlled drug oxycodone lead to strong suspicions of a huge black market in this specific area.  The U.S. Drug Enforcement Administration (DEA) took the unusual step of targeting the supplier to these pharmacies, Cardinal Health Inc., the second largest U.S. wholesale pharmaceutical distributor, by seeking to block distribution of controlled substances from Cardinal’s distribution facility located in Lakeland Florida. The DEA alleges that Cardinal had failed to follow agreed-to monitor misuse of controlled substances such as oxycodone. Cardinal has attempted to appeal and overturn the injunction on controlled substance shipments from its Lakeland distribution facility but has thus far been unsuccessful in doing so. An administrative hearing is scheduled to occur next month.

Business and traditional media are reporting yet another major development in the ongoing crackdown of prescription drug abuse among U.S. regulatory agencies.  On Wednesday of this week, the DEA searched six Walgreen retail locations as well as the company’s distribution center in Jupiter Florida. The agency is investigating whether Walgreen allowed suspiciously high levels of prescription pain pill retail sales.  Walgreen represents one of the largest U.S. pharmacy and drug chain with over 8000 locations across the U.S.

In this latest crackdown, federal officials are probing for larger amounts of cash sales, as opposed to insurance reimbursement sales. The Associated Press reported that DEA records indicate sharp increases in oxycodone purchases at each of the targeted Walgreen retail outlets. One example, the pharmacy located in Ft. Myers went from a volume of 95,800 units of oxycodone in 2009, to more than 2.1 million units in 2011, accounting for 67 percent of that drug’s purchases within the same zip code. Walgreen manages its own distribution, and as was the case with Cardinal, a potential shut down on controlled substance and prescription drug supplies from its Florida DC could have an economic and store service impact.

In its reporting, The Wall Street Journal notes that Florida has had a long history for pill mills that offered one-stop shopping for controlled substance abuse.  A recent state-wide crackdown on these private facilities may be forcing the abusers to turn their attention to retail pharmacies.

This should be concerning news for the broader pharmaceutical industry, along with its supply chain distribution partners. Regulators are clamping down on the requirement for policing unusual purchase volumes, and are holding drug distribution trading partner’s feet to the fire to perform such actions. For their part, distributors believe that the DEA has not been clear on what policies need to be adhered to, or the granularity of sales information that needs to be tracked.

Supply Chain Matters is of the view that drug retailers and distributors will not be successful in their current defense strategies, so stop making the lawyers wealthier. Instead, stakeholders need to quickly come together in an effort to track higher levels of granularity of prescription drug demand and supporting disease data and be prepared to take appropriate action to target and mitigate abuse. The good news is that current technology is more than able to enable these needs.

Overcoming cross-industry organizational and business performance obstacles should be the focus.

Bob Ferrari