‘Whose Brand Is it Anyway?’

Edition: September 2003 - Vol 11 Number 09
Article#: 1654
Author: Repertoire

Product labeling rules could affect private-label and contract-manufacturing programs.

Manufacturers and distributors at press time were mulling over their responses to a rule that could affect private labeling and contract manufacturing practices.

The rule calls for manufacturers to prominently display their names on each device they produce. If enforced as written, it could force private labelers and manufacturers who contract out their manufacturing to display more information than they’d like.

The rule stems from the Prescription Drug Marketing Act of 1987 and the Prescription Drug Amendments of 1992, as well as the Food and Drug Administra-tion Modernization Act of 1997. It was to become effective in April 2003, but the federal government granted a reprieve until Apr. 1, 2004.

“The [Center for Devices and Radiological Health of the FDA] are willing to work with us,” says Jennifer Alfisi, HIDA’s director of government relations. “They want to make sure that the regulation doesn’t harm the industry. But they’re not sure what we need them to do.”

That’s why HIDA and other industry groups were preparing to meet in August to discuss the implications of the regulation and to determine how the industry should respond.

‘Don’t Do This’

“We have written the FDA three letters since February 2003 saying, ‘You really shouldn’t do this,’” says Napoleon Monroe, vice president of corporate brand development for Henry Schein in Melville, N.Y. “We believe the cost of implementing the rule would easily exceed $100 million and impact 12,000 firms.” Monroe adds that the cost of labeling individual items – such as gloves – would be more than the cost of the devices themselves.

The rule may have less to do with private labeling and contract manufacturing than with the reprocessing of single-use medical devices, says Monroe. In its desire to ensure a chain of responsibility, Congress wanted to ensure that the names of reprocessors were prominently displayed on reprocessed single-use devices. “But in the legislative history, it appears that at the last moment, a sentence was added and a discussion held that this law should apply to all medical devices,” says Monroe.

Had the rule been enacted earlier this year without further discussion, “It would have dramatically increased the cost of medical devices, increased the regulatory burden on medical device manufacturers, limited the ability of manufacturers to private label their products, and limited the ability of many branded firms to subcontract the manufacturing of their devices,” says Monroe.

The rule could hurt manufacturers who reduce their prices by contracting with offshore manufacturers – and even at times with competitors – to make their products, says Monroe.

It would also harm distributors, such as Schein, who sell private-label products, he says.

“If the manufacturer’s name were displayed on each medical device and the distributor’s name on the outside package, there would be a major dislocation,” says Monroe. “People would wonder whose brand they’re buying.”

Monroe calls private labeling a “strategic asset” of distributors. “It allows them to be effective in competing in the marketplace,” he says. “We value the brands we carry. However, private labeling allows us to compete in the marketplace when our customers demand a very cost-effective price point and when the branded manufacturers are unable to reduce their costs to that level.

“Our point of view is this: There’s a chain of responsibility by showing the name of the distributor on the package in accordance with the regulations as they’re now written. To put a name on each medical device, especially low-cost disposables, would be difficult, costly and ineffective,” says Monroe.

Monroe urges trade associations and others to voice their concerns about the rule to the FDA.

One GPO with its own private label program – Novation – said the rule would have little effect on them. Irving, Texas-based Novation has always placed the name of the original manufacturer on the packaging of NOVAPLUS pharmacy products, says a spokesman. (NOVAPLUS is Novation’s private label brand.) What’s more, as of 15 months ago, Novation began placing suppliers’ names on the packaging of all NOVAPLUS products.

Injectables and Vaccines

Meanwhile, another provision of the Prescription Drug Marketing Act has been put on hold as well. That provision would require companies that resell prescription drugs to have a detailed and complete history of all prior sales of the products. In other words, distributors that buy pharmaceutical products from other wholesalers (instead of directly from drug manufacturers) would have to produce a paper trail extending all the way back to the manufacturer. (See “FDA Reg Could Hurt Drug Resellers,” April 2000 Repertoire.)

The potential problem with the provision is that authorized distributors (that is, those authorized by the drug manufacturers to sell their products) are themselves under no obligation to share with other resellers data about where they purchased the pharmaceuticals.

Smaller distributors have also ex-pressed concern that once an end user was to get a complete paper trail of the injectable or vaccine, he or she might elect to buy directly from the authorized distributor instead of the local reseller.