Dear Investor,
Several recent events have transpired in Kentucky that raise the profile of the need for a real-time drug diversion monitoring system.
On June 23 and again on July 1 the Kentucky Prescription Drug Diversion Task Force held inaugural hearings to define the scope of the problem of prescription drug diversion and possible solutions. The Task Force is taking a "top-down" investigative view of the drug diversion problem. Although Company representatives have been present at the hearings — and have presented materials to the Task Force staff — because the pilot project is now months behind schedule, we are not yet in a position to actively engage the Task Force with a demonstration of our provisionally patented Verified Prescription SafeguardsTM System as a real-time reporting solution to the diversion problem.
On a positive note, at the July 1 hearings, all parties testifying (Medicaid, law enforcement, licensure boards, physicians, and pharmacists) without exception called for a real-time reporting system with positive patient identifiers using a relational database with query capabilities — in short, our VPSTM system.
The next hearing on August 25 will feature what other states are doing (ironic, since Kentucky is the recognized leader in this field — a point we made directly with the Task Force staff), as well as appearances by Rep. Hal Rogers and Purdue Pharma. Two subsequent hearings will be held to present staff recommendations and formulate committee findings. We intend to have sufficient data from the pilot project to be part of the final recommendations.
The day before the Fourth of July was spent in Hazard, Kentucky — site of the two-county pilot project using our VeriscripTM System — meeting with regional leaders in the drug rehabilitation efforts from Kentucky and Virginia. These are the “front line” civilians at the local level who daily see the ravages of prescription drug diversion on rural communities. This is just the latest in a series of meetings we have had with community leaders in the pending project pilot area, as well as with law enforcement professionals and regulatory authorities.
We also met with some of our institutional partners in the pilot, of which there is still no word from the Commonwealth of Kentucky regarding the contract. Sources within state government, however, assure us the process is still progressing, and the outcome is said to be favorable.
The Company has met all the stipulations of the Request for Proposal (RFP), including responding to 17 additional questions regarding details of our Prescription Drug Monitoring Pilot Proposal. The questions centered on clarifying technical aspects of the VPS System and our business relationships with our strategic partners.
Kentucky, of course, is not our only focus. The Company has also submitted a response to the Virginia Department of Health Professions (DHP) RFP to develop a drug-monitoring program for a 29-county area in Southwestern Virginia. Originally, the Company had determined the RFP was not specific to its Veriscrip System. Upon discussions with the DHP — who also recommended a Virginia-based minority-owned company to subcontract database design — the Company was encouraged to make a proposal. This in no way assures the proposal will be successful, since the RFP is written specifically to develop a system identical to that in operation in Kentucky since 1999.
As for the filings: the continued delay from our auditors is vexing, to say the least. We have complied with all requests for information, and have had repeated assurances the filings would be made. And we continue to wait. We offer no excuses.
We do, however, continue in our quest to test our technology for a real-time monitoring program under a U.S. Department of Justice grant from the Harold Rogers Prescription Drug Diversion Monitoring Fund. Both Kentucky and Virginia are recipients of grants from the Rogers Fund; Kentucky to improve an existing system, Virginia to develop a new system. Both criteria are met with the Veriscrip System. Other states with regulatory authority in place for drug diversion monitoring hold out prospects as well, but none to the extent as Kentucky and, secondarily, Virginia.
The Company continues to believe its response to the Kentucky RFP will be favorably reviewed by the Finance Cabinet, the Cabinet for Health Services, and the Governor’s Office for Technology. We are further confident that the Company was the only organization to submit a response to the RFP. Although we do not yet know when the announcement of bid acceptance will be made, we are confident the process will continue to a successful conclusion.
Under the terms of the contract specifications, we will have two months to develop the fully functional VPS system, followed by a three-month test period, and an additional four-month evaluation of the project by an independent consultant. That schedule would be met by year’s end.
Although the two-county pilot project is our key concern, be assured that Kentucky is not our sole focus. We are in contact with several other states, any of which could supercede Kentucky's current leadership role in drug diversion monitoring. In all, 21 states now have drug diversion monitoring regulations in place — and that list is growing. We have formally contacted the highest level controlling authority (governor, attorney general, or licensure board) in each of those states regarding our provisional patent and willingness to work within increasingly tightened state budgets to implement a system that will save literally millions of dollars in Medicaid overruns — as well as save millions of lives through the reduction of prescription drug diversion. All 21 states have formally acknowledged our provisional patent. We know of several states that are waiting for results from Kentucky before making a decision regarding drug diversion monitoring.
As for the equally critical business issue of completing the 2002 10K and 2003 1st Quarter 10Q filings, we have completed the document request phase, and will complete the filings in the next several days. We are confident the stock will return to the OTCBB forthwith, as there is nothing extraordinary in the filings.
As always, we thank you for your continued interest in and support of the Verified Prescription Safeguards System.
Best wishes,
James Kemper Millard
President & Chief Executive Officer
Equity Technologies & Resources, Inc.
325 West Main Street, Suite 240
Post Office Box 12012
Lexington, Kentucky 40579
VOX: 859.268.4446
eFAX: 419.821.3646
This communication may contain forward-looking statements. The Company expressly disclaims any intent or obligation to update any forward-looking statements.
Verified Prescription Safeguards and VPS are trademarks of Verified Prescription Safeguards, Inc., a wholly owned subsidiary of Equity Technologies & Resources, Inc. Envoii is a trademark of Envoii, Inc.
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