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Dental product manufacturers seek to block gray market sales

January 04, 2016

By Kelly Soderlund

Editor's note: This is the fourth story in a series focusing on the gray market and how it affects dentists, patients and manufacturers.

It's the ideal position to have in an unideal situation.

Dental product manufacturers are in the unique position of being able to see how gray market products flow through unsecured supply chains around the globe. It's a frustrating position to be in because they oftentimes see their intricately made, safety-tested products with knockoff labels, phony expiration dates and sometimes not meeting the safety and regulatory specifications required by the U.S. government. They'll also sometimes discover counterfeit products.

The term "gray market" is a generic term that primarily refers to products that are traded or sold outside of the manufacturer's authorized distribution channels. It's different than the black market, where products are illegally manufactured by others or illegally sold.

Gray market products can appear to be attractive because they can be less expensive than products purchased directly from a manufacturer's authorized distributor. Selling or purchasing products on the gray market isn't necessarily illegal, but purchasers may not be getting what they think they paid for.

It's a topic gaining steam in the dental community and one discussed at the Chicago Midwinter Meeting in 2014. Then-ADA Chief Science Officer Daniel Meyer presented what the Association is doing to educate members on how to avoid the pitfalls of purchasing an item through gray market channels and Simon Hearne, vice president of international business for 3M Oral Care, provided examples from the manufacturer's point of view on what can be done to combat gray market sales.

"The ADA is actively involved in trying to address gray market safety issues with dental manufacturers, distributors and regulators. Those stakeholders need to share in the responsibility to work in harmony with the dental profession to address this complex problem," Dr. Meyer said. "The ADA has maintained a key role in developing national and international standards to help ensure dental product consistency, compatibility, fair competition and technological advances. Though important in identifying potential product effectiveness and safety issues, international and national standards are not designed to get at the heart of the gray market manufacture, import and distribution/chain problems. The Medical Device Reporting regulation contains mandatory requirements directed at manufacturers, importers and device user facilities to report certain device-related adverse events and product problems to the FDA."

Mr. Hearne said the company is dedicated to combatting the sale and distribution of gray market products with the ultimate goal of protecting patient safety.  

"Like many other industries, this issue has silently plagued the dental industry globally for a long time," Mr. Hearne said. "Our company's global presence has given us an opportunity to see how gray goods flow through gray market channels around the world and the factors driving the players involved."

Manufacturers across the United States and the globe have dealt with issues related to the gray market. There have been products that have changed hands numerous times and have not been handled and stored in the required conditions. After this happens, oftentimes, the products no longer meet the manufacturer's original specifications or the U.S. regulatory requirements, Mr. Hearne said.  

There have also been products that were repackaged or relabeled with phony expiration dates, Mr. Hearne said. Some of these products were sold years past their real expiration dates, which can lead to improper curing or bonding, he said.

The least common scenario, but the one that poses the greatest risk to patient safety, is when counterfeit products, also called black market goods, look like genuine products. Mr. Hearne said he has seen all of these types of goods flow through the same unsecured supply chain.

To combat these types of sales, 3M is following a long-term strategy.

"It's not a one-off short-term strategy," Mr. Hearne said. "Our approach is robust and multi-faceted and it's already making a difference."

Mr. Hearne said that 3M has implemented measures within its marketing and business processes to prevent diversion and counterfeiting, essentially minimizing the incentives for gray market sales. He couldn't offer specifics to avoid tipping off gray market sellers or distributors.

"We proactively monitor gray market sales, catch unauthorized products and then stop them at the source. We seek legal and regulatory actions to deter illegitimate dealers," said Mr. Hearne, who has presented 3M's approach to gray market sales at a number of conferences and contributed articles to trade publications.

Mr. Hearne said the manufacturer can't combat the gray market alone. As one example, 3M is working with Patterson Dental to promote Patterson's new initiative, Supply Chain Integrity, which educates dentists on the risk of purchasing products from the gray market. Dentists can visit dentalsupplyintegrity.com to watch a video on the threat gray market products pose to the dental industry, learn the six questions to ask before purchasing a product and read the white paper "Gray Market and the Dental Industry."

"This represents a new trend of distributors and manufacturers collaborating to ensure supply chain integrity. We hope Patterson's initiative becomes an industry standard," Mr. Hearne said. "We are launching more education programs to create more awareness among dental professionals and teach them how to prevent gray market and counterfeit goods from entering their offices. Our message to them is very simple: Long-term success in dentistry comes when you place patient safety above gray market deals."

DENTSPLY has also taken action against gray good resellers. The York, Pennsylvania-based company has used federal patent and trademark laws and state consumer protection laws to sue gray market resellers.

Since 2014, DENTSPLY has filed suit against three dealers to reduce the availability of DENTSPLY products through gray channels, said Meghan Smith, DENTSPLY corporate communications manager. One case resulted in a successful settlement where the dealer agreed to stop selling DENTSPLY products in its own name or through any of its affiliates, Ms. Smith said. The other two cases are still active.

Some gray market products purchased in the U.S. come from Europe and are approved under European law but may not have been approved by the FDA because DENTSPLY never intended to sell them in the U.S., Ms. Smith said.

"The integrity of the supply chain for these products is unknown. Because the products have been diverted, they are outside our quality control program and may be beyond our ability to trace for recall and other notice purposes," Ms. Smith said. "Products sold through these channels may be damaged, adulterated or in some cases counterfeit. The alteration of the packaging voids the manufacturer warranty; therefore consumers lose that protection as well as the assistance of our customer service for questions."

Ultimately, DENSTPLY urges dentists to purchase their dental products directly from the manufacturer or their contracted dealers and suppliers.

Manufacturers and distributors are doing their part to maintain the safety and integrity of their products but, in the end, the onus is on the dentist to provide the best and safest care for their patients.

"Dentists should not rely solely on the manufacturer's or distributor's representations about a product's claims, performance, safety or efficacy," Dr. Meyer said. "Dentists have a responsibility to inquire about the truth, accuracy and performance of products to help ensure they are providing safe and effective care for their patients."