New FDA Chief's Surprising Link to Drug Wholesaling

President Obama has nominated Dr. Margaret Hamburg to be Commissioner of the Food and Drug Administration (FDA). However, you may not know that Dr. Hamburg’s first-hand knowledge of the drug distribution business because she’s on the board of directors of a major healthcare wholesale distributor. If she is confirmed, I expect that the FDA will move forward more quickly on a national strategy for the drug distribution system.

As I point out in Federal Pedigree Sand Trap, the FDA has struggled to implement a coherent national strategy for pedigree, leading some states to introduce new pedigree legislation. The topic will heat up even further given proposed importation legislation (Surprise! New Importation Bill Introduced) and the FDA’s obligation to establish technology standards for the pharmaceutical supply chain by 2010 (Dear FDA: Eight is (Not) Enough).

However, we could soon have someone running the FDA who actually understands distribution and supply chain issues. Imagine that!

Since 2003, Dr. Hamburg has been on the Board of Directors of Henry Schein, one of the largest wholesale distributors of dental, veterinary, and medical products to office-based physicians, dentists, and veterinarians. The company was recently named the “world’s most admired” health care wholesaler by Fortune magazine. See Henry Schein at a Glance for the official overview of their business.

Although pharmaceuticals are a minority of its overall business, Henry Schein is an Authorized Distributor of Record (ADR) for most leading drug makers. Thus, the company has had to sweat the details of state-level pedigree requirements, including varying pedigree standards for human versus animal health products. Notably, Schein was the first wholesale drug distributor in the nation to have its entire distribution system accredited through the NABP’s Verified-Accredited Wholesale Distributors® (VAWD®) designation in 2006. The company generates about one-third of its revenues from international markets, so drug importation could be another hot topic for the company.

Dr. Hamburg’s affiliation with Henry Schein has also been personally profitable for her. Her shares are worth more than $2.3 million and she received director’s fees of about $250,000 (in 2007). Naturally, she will resign from the Board and sell her shares once confirmed.

Roy Poses, who blogs at Health Care Renewal, is skeptical about Dr. Hamburg’s objectivity, writing:

“Given that Dr Hamburg has spent over five years living with the obligation for unyielding loyalty to the interests of Henry Schein, and has become what many people would consider rich in the process, how easy will it be for her to turn to becoming a strict regulator of the products her former company used to sell?”

I’m not as cynical as Dr. Poses and believe that Dr. Hamburg can still be effective. Nevertheless, I am curious to see how her personal experience at a distribution company (versus a manufacturer, pharmacy, or health care provider) will influence the FDA’s approach to pedigree, serialization, counterfeiting, diversion, secondary wholesalers, importation, etc.