Ready Or Not, Here It Comes! The Drug Supply Chain Security Act Requirements Are Almost Fully Upon Us. Are You Prepared?

Introduction

Drugs entering the U.S. drug supply chain can pose a threat to public health and safety, especially if they are counterfeit, stolen, or contaminated. For example, in 2008, contaminated heparin containing an active pharmaceutical ingredient sourced from a firm in China resulted in the deaths of as many as eighty-one people. Several years later, in 2012, nineteen U.S. medical practices purchased counterfeit versions of the injectable cancer drug, Avastin, which lacked the genuine drug's active ingredient, from a foreign supplier. Although no deaths were reported as a result of this incident, it spurred Congress to take action to improve the security of the U.S. drug supply.

In November 2013, Congress enacted the Drug Supply Chain Security Act (DSCSA) as part of the Drug Quality and Security Act (DQSA) to address vulnerabilities in the drug supply chain and to facilitate the tracing of certain prescription drugs in finished dosage form throughout the pharmaceutical distribution supply chain.1 The DSCSA amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) by adding sections 581 and 582, which established, among other things, product identifier, product tracing, authorized trading partner, and verification requirements for manufacturers, wholesale distributors, repackagers, and dispensers. Implementation of these requirements is intended to enable the U.S. Food and Drug Administration (FDA or Agency) to better protect consumers from counterfeit, contaminated, or stolen drugs, and better detect and remove such drugs from the U.S. pharmaceutical supply chain.

The DSCSA is being progressively phased-in. Since the legislation's enactment on November 27, 2013, many of the requirements have taken effect, while others will become effective in the next few years. This article provides an overview of DSCSA requirements currently in effect, forthcoming requirements that should be on the radar for stakeholders in the drug supply chain, lessons from recent enforcement, implications for recordkeeping, and a discussion of how technological advances may be used to enhance drug supply chain security.

Part I: DSCSA Requirements

The DSCSA created a national uniform approach to tracking, tracing, and verifying the identity and validity of prescription drugs in the U.S. supply chain. Pharmaceutical supply chain stakeholders, including drug manufacturers, wholesale distributors, repackagers, third-party logistics providers, and dispensers, are now expected to comply with many of the major provisions of the DSCSA. Since 2015, many key elements of the statute have become effective, including product track and trace requirements, use of product identifiers on packages and cases of drugs intended for use in transactions (and verifying products at the package level) by manufacturers and repackagers, implementation of verification systems that facilitate identification and quarantining of suspect/illegitimate products, and notification of trading partners and FDA of suspect/illegitimate products. Other key requirements, such as the use of product identifiers and performing verification at the product level by wholesale distributors and dispensers, as well as the implementation of an interoperable electronic unit-leveltraceability system, are forthcoming.

The charts below provide an overview of the major DSCSA requirements currently in effect and on the horizon, the supply chain stakeholders to whom they apply, and the provisions' effective dates.

DSCSA Requirements Currently in Effect

Requirement

Trading Partner

Effective

Description

Product Tracing2

(lot level)

Manufacturers

Repackagers

Wholesale Distributors

Dispensers

1/1/15

1/1/15

1/1/15

7/1/15

Each trading partner must provide the subsequent owner with transaction history, transaction information, and a transaction statement of the drug product. Before taking ownership of the drug product, the subsequent owner must have received these from the previous owner. By November 27, 2017, manufacturers must provide this information in an electronic format.

Authorized Trading Partners3

Manufacturers

Repackagers

Wholesale Distributors

Dispensers

1/1/15

1/1/15

1/1/15

1/1/15

Beginning January 1, 2015, the trading partners of a manufacturer, repackager, wholesale distributor, and dispenser have to be "authorized."4

Product Identifiers5

Manufacturers

Repackagers

11/27/176

11/27/18

Manufacturers and repackagers must affix or imprint a product identifier to each package and homogenous case of product intended to be introduced in a transaction.7

Repackagers may not engage in transactions involving certain Rx drugs unless the drugs are encoded with product identifiers.

Verification Systems8

Manufacturers

Repackagers

Wholesale Distributors

Dispensers

1/1/15

1/1/15

1/1/15

1/1/15

Beginning January 1, 2015, a manufacturer, repackager, wholesale distributor, and dispenser must have systems in place that allow for the identification and quarantine of suspect and/or illegitimate products, the investigation of suspect products for an illegitimacy determination, and the notification to the FDA and immediate trading partners of a product's illegitimacy.

Verification at Package Level9

Manufacturers

Repackagers

11/27/17

11/27/18

Manufacturers and repackagers must verify products at the package level, including the standardized numerical identifier.

Licensure Status Reporting10

Wholesale Distributors

3PLs

1/1/15

11/27/14

Wholesale distributors and 3PLs must report licensure information to FDA annually.

DSCSA Requirements Forthcoming

Requirement

Trading Partner

Effective

Description

Product Identifiers11

Wholesale Distributors

Dispensers

11/27/19

11/27/20

Wholesale distributors and dispensers may not engage in transactions involving certain Rx drugs unless the drugs are encoded with product identifiers.

Verification at Package Level12

Wholesale Distributors

Dispensers

11/27/1913

11/27/20

Wholesale distributors and dispensers must verify products at the package level, including the standardized numerical identifier.

Enhanced Electronic, Interoperable System - Product Tracing (package level)14

Manufacturers

Repackagers

Wholesale Distributors

Dispensers

11/27/23

11/27/23

11/27/23

11/27/23

Product tracing information (at the package level) must be exchanged in a secure, interoperable, electronic manner; product identifiers must be verified at the package level; and suspect and illegitimate products, when found, must be responded to promptly.

Part II: DSCSA Enforcement

On February 7, 2019, FDA issued a Warning Letter to McKesson Corporation, a wholesale drug distributor, following a Form FDA 483 issued in connection with a 2018 inspection of the firm's corporate headquarters and a distribution facility. This marks the first Warning Letter issued by the Agency citing violations of DSCSA provisions currently in effect. Not only is this Warning Letter significant because it is indicative of FDA's commitment to improving the safety of the nation's drug supply, but also because it is instructive in that it included three (non-exhaustive) examples of McKesson's non-compliance with the verification requirements of the DSCSA that are applicable to wholesale distributors. Below is an overview of the FDA's Warning Letter to McKesson, examples of the firm's non-compliance set forth in the Warning Letter, and McKesson's responses to the Form FDA 483 as conveyed in the Warning Letter.

FDA Warning Letter to McKesson Corporation

Although the DSCSA's provisions are not yet fully implemented, the FDA issued its first Warning Letter citing violations of DSCSA provisions currently in effect to McKesson Corporation on February 7, 2019.15 According to the Warning Letter, FDA observed significant violations of the DSCSA's verification requirements during its inspection of McKesson's corporate headquarters from June 25 to July 3, 2018 and a McKesson distribution center facility from June 26 to June 29, 2018. FDA subsequently issued a Form FDA 483 to McKesson Corporation on July 3, 2018.16 The verification requirements said to be at issue, and identified in the warning letter, included those that apply to wholesale distributors when they determine or are notified that a product is "suspect" or "illegitimate."17 Among the violations observed/cited during...

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