IBM (NYSE: IBM) and contract manufacturer and third party logistics provider Golden State Medical Supply (GSMS) announced the two companies have worked together to help drug companies comply with stringent prescription drug pedigree regulations in advance of state and federal mandates.

Global counterfeit drug sales will grow at almost twice the rate of legitimate pharmaceutical commerce by 2010 according to estimates from the Center for Medicine in the Public Interest. The organization predicts that the counterfeiting business will generate $75 billion in revenues in 2010 - a 92 percent increase from 2005. California has lead the nation with landmark prescription drug regulations which aim to protect California consumers from these potentially lethal drugs.

Using IBM technology, GSMS is now able to act in accordance with California's law which take effect in 2015, as well as new electronic pedigree regulations that are emerging in other states and countries. Having used IBM's system in its own operations, GSMS is now offering pedigree compliance services to pharmaceutical manufacturers seeking a quick and proven way of addressing regulations taking effect in California and around the world.

The pioneering work with GSMS overcomes many of the previous obstacles to creating an effective electronic pedigree program faced by small to mid-size pharmaceutical companies. New improvements in technology, lower costs, as well as new industry standards for sharing and analyzing information are making it possible for drug companies of any size to ensure their drugs are authentic -- while enabling the use of smart technology to track movement of drugs from the manufacturing floor to the pharmacy.

An electronic pedigree is an electronic record containing information on all the steps a pharmaceutical takes as it moves from the manufacturer, to wholesalers, and finally, to pharmacies or hospitals. California has mandated that these pedigrees be maintained in an interoperable electronic system so that all participants in the drug supply chain can access the electronic records.

"The pharmaceutical industry giants won't have a problem complying with the California regulations, but many smaller players in the industry don't have the resources to do it on their own," said Jim Stroud, president and CEO, Golden State Medical Supply, Inc. "However, our company has been serializing at the saleable unit and RFID tagging at the case level since February of this year. The system IBM built for us will not only benefit GSMS, but also small and mid-sized drug manufacturers around the world."

Serialized drug pedigree information is gathered by IBM's WebSphere Premises Server software, and transmitted to IBM's InfoSphere Traceability Server, which allows GSMS to manage and share information with trading partners to authenticate pharmaceuticals. The software is compliant with both GS1/EPCglobal's Electronic Product Code Information Services (EPCIS) standard, and its Drug Pedigree Standard. In addition to using the IBM system for electronic pedigree, it can also address business needs such as chargeback resolution, targeted recall and expiration management.

"Now is the time for the pharmaceutical industry to inject technology into their operations to make the drugs we take safer," said Katherine Holland, general manager, global life sciences, IBM. "The key to a smarter, safer drug supply is the use of a unique serial number on every bottle of medicine. Using IBM technology, GSMS can help drug manufacturers around the world address the growing threat of counterfeit drugs."

About Golden State Medical Supply, Inc.

In business since 1986, Golden State Medical Supply, Inc. is a contract manufacturer and third party logistics provider licensed by the California State Board of Pharmacy to sell pharmaceuticals and registered with the FDA and licensed to manufacturer pharmaceuticals by the California Department of Public Health, Food and Drug Branch to our valued partners in the medical industry.

About IBM

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Source: IBM