Pharma Due Diligence Checklist

Within the prescription drug industry, wholesalers must take active steps to ensure that the products they buy are not counterfeit. Since prescription drug wholesalers are nongovernment agencies and do not have the resources or investigative powers to verify the legitimacy of sold prescription drugs, the companies must practice due diligence by following a checklist to establish legitimate distributor sources.

Identify Legitimate Companies

• A wholesaler's due diligence involves steps to identify certain shared characteristics with legitimate prescription drug distributors. These steps assure the integrity of the distribution system without alienating law-abiding companies. Identifying characteristics will show that the distributor has demonstrated financial responsibility, strict internal operations procedures and adherence to corporate compliance rules that has been well documented.

New Distributor Information

• When a wholesaler decides to buy prescription drugs through a new distributor, the wholesaler should make a complete information request before any purchases are made. A legitimate distributor will have a listing of states where the distributor has affiliated companies along with shipping info as well as current state and federal regulatory licenses or certifications. The distributor will also show a maintained minimum of both general and product liability insurance, a complete list of corporate officers and all disciplinary actions against the company by state and federal agencies.

Certification and Background Checks

• Any distributor who claims an Authorized Distributor of Record (ADR) status will have a written statement available for the wholesaler detailing that it is an ADR and on what grounds. The wholesaler should verify the ADR status before any initial purchase and on an annual basis.

  Along with checking the ADR status, the wholesaler should also proceed with background checks of the distributor by following the requirements of the Fair Credit Reporting Act of 1970. A legitimate distributor will allow for physical site inspections, investigation of internal operations, verification of administrative procedures and evaluation of seller qualifications.