Drug Industry To Shift To Digital Orders

Every time a pharmacy orders a controlled substance such as morphine, oxycodone, or Ritalin from a distributor, or when a distributor orders such a drug from the manufacturer, a cumbersome paper trail of government-mandated forms is created.

After about five years of analysis, preparation, and discussion by the U.S. Drug Enforcement Administration and the pharmaceutical industry, the federal government is expected to formally approve modifi- cations to DEA regulations, possibly as soon as this week, so that paper-based forms can be replaced by electronic transactions featuring digital certificates.

The Controlled Substance Ordering System, developed by PEC Solutions Inc., will put an end to a time-consuming and expensive process using the DEA's Form 222, which is meant to help prevent certain pharmaceutical drugs from being used illegally and to ensure a sufficient supply for legitimate uses. Currently, for each order of these so-called "schedule II" substances, triplicate copies of Form 222 are filled out, signed by an authorized person, and sent to and stored by each of the parties. The third copy is sent to the DEA, which manually audits the transactions.

The DEA estimates that 15% to 20% of prescriptions pharmacies fill each year are for schedule II drugs, with each of those paper-based orders costing the parties involved $40 per transaction. By comparison, an electronic transaction for controlled substances will cost around $9, says Michael Mapes, E-commerce director of the DEA's office of diversion and control.

The Office of Management and Budget could publish the DEA's final regulations for the system by the end of this week, and they would become effective 30 to 60 days afterward, Mapes says. Once in effect, the DEA will accept electronic transactions using the Controlled Substance Ordering System, which will let the agency issue digital certificates to individuals at pharmacies or distributors who are certified to order schedule II drugs. When a certified individual "signs" a digital order for a drug and sends it to a distributor, the distributor's software system will automatically check the certificate with electronically updated certification lists the DEA provides, likely on a daily basis, Mapes says. The agency is electronically notified of shipments within two days.

The system will require technology investments throughout the industry. Anda, the distribution arm of generic drug manufacturer Andrx Corp., has completed testing of a new ordering system from Cyclone Commerce Inc., says Jerry Cazzell, Anda's VP of Internet strategy. "This will eliminate all the double work we need to do with the manual paper forms. It'll give us better control and balance and make it easier for us to work with the DEA," he says. The final cost of Anda's project will total between $1.5 million and $2 million, of which about $300,000 is related to new software, Cazzell says.

The DEA will continue to accept Form 222 transactions but expects most in the industry will eventually migrate to digital orders for controlled substances. "Just like using ATMs versus going into a bank branch, over time, everyone will switch to the digital forms," Mapes says.

Meanwhile, the DEA is working on a draft project to allow doctors to replace mandated handwritten prescriptions for schedule II drugs with electronic prescription transactions using digital certificates.