Despite a lot of negative press these last 12 months, sales were strong for most pharmaceuticals and nutraceuticals--thanks, in part, to the aging population and an emphasis on health and wellness.

Some manufacturers posted profits by successfully introducing new products. Others boosted their bottom line with acquisitions, divestitures, spinoffs or marketing agreements.

Our State of the Industry report analyzes the specific market issues and packaging trends in three subcategories:

In May 2005, the House Appropriations Committee approved the Food and Drug Administration's 2006 budget of $1.48 billion. This represents a $30 million increase from last year. An amendment also provides for an additional $5 million in funding for the "highest priority drug safety needs," which shows FDA's commitment to America's health concerns.

Patient safety is the industry's No. 1 priority, but cost containment is next on the list. And satisfying both at the same time has been most challenging.

The high price of prescription drugs in America has caused consumers to seek other, lower-priced sources, including Internet or Canadian pharmacies.

FDA consistently warns that these avenues of supply are not safe. The agency estimates that about 45% of drugs bought from outside the U.S. are counterfeit. (Drug industry sources estimate that as much as 15% of the drugs circulated in the U.S. are fakes, too.)

Whether the risk of imported drugs is real or not, American consumers don't react well to scare tactics. As constituents continue to pressure their representatives, state governments are introducing legislation that allows their citizens to import drugs, usually citing Canadian pharmacies as the best option.

But Canada, while not completely turning away U.S. customers, has started to dose up shop. Last month, the country's health minister announced that Canada is banning bulk exports of prescription drugs to the U.S. to ensure that its own citizens have an adequate supply.

Canada will, however, continue to allow Americans to buy pharmaceuticals through Internet sales and foot traffic across the border. While the Canadian drug industry openly supports the bulk ban, many pharmacies are relieved that they're not losing a major customer base. Nearly two million Americans spend between $800 million and $1 billion at Canadian pharmacies.

Some say this ban came about because of big pharma's pressure on the Bush administration to intervene against Canadian competition. But FDA's response--that it is approving more generic drugs to help lower prices in our country--stays on message: contain costs, curb counterfeiting, secure supply, stress safety.

Track and trace

To curb counterfeiting and improve patient safety by securing the U.S. drug supply chain, the pharmaceutical industry has been exploring a number of track-and-trace options. Electronic pedigree and mass serialization are ways to distinguish and record pharmaceutical packages throughout distribution by assigning a unique number to each package, case and pallet of drugs.

Two major projects--Project Jumpstart and the Drug Security Network--have successfully tested radio frequency identification (RFID) as an alternative to paper-based pedigrees.

* Project Jumpstart: With guidance from consulting firm Accenture (www.accenture.com), a group of manufacturers, distributors and retailers participated in an active test called Project Jumpstart. This involved tagging bulk bottles of popular drugs and tracing them from factory to pharmacy. Participants were able to identify and solve logistical problems, such as how to read tags inside cases and cross firewalls between databases. Lessons learned have been helpful in developing what many see as a workable RFID system for pharmaceutical tracking and tracing.

* Drug Security Network: Technology consulting firm Capgemini (www.capgemini.com) worked with several major pharmaceutical companies and software specialist SupplyScape (www.supplyscape.com) to develop the architecture of an RFID-supported drug pedigree system called the Drug Security Network. The idea was to create a solution that would help drug companies comply with most pending state e-pedigree laws. About 20 state governments will soon require RFID-enabled drug security, with Florida leading the way.

The good news is that FDA endorses RFID technology in these track-and-trace efforts.

But with so many cooks in the kitchen, the final epedigree product may be hard for the pharmaceutical industry to swallow. D. Bruce Cohen, director of U.S. Packaging Services at GlaxoSmithKline, says, "The industry worries that we'll have 52 different rules. We would like to have some agreement to modify laws to make them similar." A national regulation might be best, but drafting one that will satisfy everyone would probably take longer than the states will allow.

Although using RFID in a large scale will take years, the drug industry continues to move forward quite aggressively. For example, Tom McPhillips, vice president for U.S. trade group at Pfizer, earlier this year told Food & Drug Packaging that the company plans to apply RFID tags to all Viagra packages and cases sold in the U.S. by the end of 2005.

Safety is #1

Getting back to the No. 1 priority of patient safety, did you hear the one about... ... Drugs used to treat erectile dysfunction may cause vision problems, including blindness? (See p.60) ... Or how about the class of prescription painkillers--called non-steroidal anti-inflammatory drugs (NSAIDs)--that has been linked to an increased risk of heart attacks or strokes?

The point is: Safety is no joke.

When reports showed an increased risk of cardiovascular events for COX-2 selective NSAIDs, makers Merck and Pfizer had to pull their drugs Vioxx and Bextra, respectively, from the market. Vioxx and Celebrex, another NSAID from Pfizer, have since been re-cleared for sale by the FDA, but each now requires a "black box" warning on the label.

Drug companies struggle with other labeling issues, too, especially when it comes to prescribing information for doctors and pharmacists.

Back in Dec. 2000, FDA proposed a new format for prescription drug labeling to "reduce practitioners' time spent looking for information, decrease the number of preventable medical errors, and improve treatment effectiveness."

FDA wouldn't comment on whether a final rule for package insert (PI) format changes was imminent, but other sources report that it may be published this month. Additionally, FDA is asking for medication guides and patient information, which would increase the leaflet's size by up to 60%.

While agreeing that this added information would be useful, GlaxoSmithKline's Cohen points out economic and operational concerns: "The size of [leaflets] gets so large that it makes it difficult to get it down to a size that is smaller than a bottle. The last thing I want to do is return every bottle into a carton now because it's the only way I can stuff all this paper. We got rid of cartons years ago, and just used a glued leaflet to the bottle. I'd hate to take a step back and put cartoners on every one of my solid-dose lines."

Also regarding prescribing information, the "paperless labeling" initiative progresses. Several successful trials have already taken place over the last two years.

Drug industry lobbyist and association Pharmaceutical Research and Manufacturers of America (PhRMA) is currently writing a petition to the FDA, asking the agency to change the regulation so that drug companies could distribute prescribing information electronically. This would either supplement or replace printed leaflets attached to every package.

Many ideas to improve patient safety seem to add another piece of information to the package. Since most pharmaceutical packages are small to begin with, finding the extra room is often problematic.

Drug companies, however, seem to have found a groove for adding FDA-required linear bar codes to their hospital unit-dose (HUD) packs. The idea is that, using bar code technology, health care professionals in the hospital can better ensure that the right patient gets the right drug in the right dose at the right time.

The Reduced Space Symbology (RSS) code has become popular because it, guess what?, uses less space. Several manufacturers are printing their bar codes online, which lets them add lot and expiration date as well as the required National Drug Code (NDC).

Turning design on its head