U.S. may lose chance to pass national drug trace plan WASHINGTON (Reuters) - A proposed law calling for healthcare companies to build a U.S. system for tracking medications to minimize the threat of fake drugs is in jeopardy, thanks to arguments over cost and a looming deadline. The U.S. Food and Drug Administration said earlier this year that counterfeit vials of cancer drug Avastin were sold to dozens of medical practices across the country, sparking new fears about the safety of the drug supply. The agency has been working on a "track and trace" system for nearly a decade, and has until September to introduce it as part of its funding laws, or wait another five years for the opportunity under Congressional rules. Europe beginning in 2016 will require a unique identifier on all medicine packages. "To learn that the cancer drug you were taking to save or prolong your life might be nothing but a counterfeit is unthinkable," FDA Commissioner Margaret Hamburg wrote on the agency's blog earlier this month. We ... need authority to require a robust system to track and trace all drugs throughout the supply chain. But resistance to the proposed plan comes from a range of players, from huge drugmakers like Pfizer Inc and Merck & Co Inc to distributors and corner pharmacies. The main complaint is money and who pays for individual vials of medicine to carry their own serial numbers and a unified technology infrastructure to keep track of them. Pharmacy officials estimate that it would take more than $6 billion just for pharmacies to make that happen, on top of whatever drugmakers and distributors might have to pay. A coalition of drugmakers, distributors and pharmacies is pushing an alternative plan it says is cheaper and easier, but would focus on tracking much larger "lots" of drugs rather than the individual packages. They say their plan would pave the way for more stringent rules later. "Often in crafting policy, there's the search for the perfect and we just walk by the good," said Peter O'Toole, a spokesman for Pfizer, a member of the coalition. We could be saying in 10 years, 'we have to work on something perfect.' And in the intervening years, we would have done nothing, and that would be a shame for patients. Both sides of Congress are editing their draft versions of the FDA "user fee" funding bill this week, after which it will be more difficult to include new provisions. The industry's plan may make it into the Senate version of FDA "user fee" funding bill, after Richard Burr, a Republican from North Carolina, and Michael Bennet, a Democrat from Colorado, on Tuesday proposed an amendment along those lines. But the House of Representatives, which is planning to submit its user fee bill for President Barack Obama's signature by the end of June, has not agreed on a version yet. The fight over how to track medications sold in the United States has already been staged in at least one state. California legislators passed their own law for a track and trace system in 2004; healthcare companies were able to delay its implementation three times, and it is now scheduled to begin in 2015. Now that the law is finally coming into effect, it has at least brought the industry to the table. Their concern is that other states will follow suit, leading to a complicated patchwork of laws rather than a coordinated federal plan. A national law to prevent Americans from getting counterfeit, expired, or adulterated drugs has been on the books since 1987. All medicine sold in the country already must be marked with an ID number that shows its dose and name. But this number is the same across thousands of drugs, and says nothing about who sold the drug to whom, where it went, and how long it took to get there. A unit-level tracking system would not stop doctors or patients who wanted to buy outside the legal supply chain, from unlicensed distributors or online pharmacies. But it would send a red flag if a licensed distributor tried to scan a drug from an unknown source, said Ilisa Bernstein, acting director of the FDA's Office of Compliance. "Each package would have its own identity, and you'd be able to verify each package to see if it's fake," she said. California's regulators ran into the limits of the current system in 2008, during a national scare over tainted versions of the blood thinner heparin. In a few cases, medicine that was recalled from state hospitals still reached patients. Virginia Herold, executive officer of the California Board of Pharmacy, said in three cases a hospital received heparin from its wholesaler, sent it back, and then received the recalled heparin again several months later because the wholesaler did not recognize that the product was recalled. The U.S. still has the safest drug supply in the world. But it's under assault," she said. Industry officials back a plan to put unique serial numbers on individual drug packages, but require scanning drugs in "lots" only when they reach distributors, lumping together a hundred or thousand drug packages each, depending on the manufacturer. Lot numbers already appear on drug packages, so the entire system could be in place by 2020, said Liz Gallenagh, in charge of government affairs at the Healthcare Distribution Management Association (HDMA), a trade group representing distributors like AmerisourceBergen Corp and Cardinal Health Inc. "It's going to start with lot-level traceability, basically thinking you can't run before you can walk," she said. Pharmacy groups also say implementing a national system to trace drugs could hurt small businesses. They cite estimates that individual pharmacies would each have to pay $84,000 to $110,000 to implement the system in its first year. "That's pocket change for the big guys, but for our guys it's a completely different story," said Susan Pilch, senior director for policy and regulatory affairs at the National Community Pharmacists Association. Critics fear the industry plan is meant to pre-empt the more stringent California law, and companies would never agree to anything more comprehensive down the line. "Distributors and pharmacists telling us they don't need item-level serialization is like drunk drivers telling us they don't need breathalyzers," said Walter Berghahn, who has worked on track and trace issues since 2004 and is the president of SmartRmeds For Life, which focuses on medication adherence. Either way, lawmakers who have backed a national system appear unwilling to propose their own bills, separate from the FDA's user fee legislation, to get the job done. It is still unclear which version, if any, will make it into the final user fee draft, as congressional aides have said they want broad-based agreement between the FDA and industry. "We're reviewing the proposal and look forward to working with Congress on a track and trace system that will protect patients from counterfeits," FDA spokeswoman Karen Riley said. Editing by Michele Gershberg and Matthew Lewis