Industry Needs to Better Prepare for Drug Supply Chain Compliance

Year 10 of Drug Supply Chain Security Act implementation has finally arrived. By Nov. 27, 2023, authorized trading partners are expected to comply with all requirements—a culmination of a decade-long phased implementation plan to build a fully interoperable, electronic system for tracking and tracing drug products.

However, the state of readiness of individual manufacturers, repackagers, wholesale distributors, third-party logistics providers, and dispensers remains a mixed bag.

The Food and Drug Administration has continued to fulfill the agency’s own obligations by phasing in key requirements.

In 2022, the agency issued proposed national licensure standards and published guidance on identifying trading partners, standards for interoperable exchange of information, and establishing verification systems.

During a December FDA public workshop on DSCSA implementation and readiness, industry stakeholders presented their implementation challenges.

Senior agency leaders shared FDA’s view that operationalizing full implementation requires a collaborative and responsive partnership between the FDA, industry, and stakeholders. Industry remarks painted a more uncertain and disjointed picture.

Manufacturers

Several manufacturers described mature initiatives related to serialization, and expected to achieve full compliance. Manufacturers have historically been held to regulations requiring traceability, robust investigation programs, and documentation systems that ensure reliable, accurate, and complete record-keeping.

However, they highlighted downstream connectivity challenges caused by data misalignment between trading partners. They also considered the ripple effect of things as minor as clerical errors or as major as incompatible web portals or electronic product code information services systems used to maintain data.

Distributors

A representative from a large wholesale distributor noted their firm has “onboarded about 34-35 percent of suppliers,” and urged others to establish communication with trading partners and provide early access to electronic portals to mitigate product risk.

With plans to begin onboarding dispensers around April 2023, another speaker predicted that 65% of dispensers will rely on the agency portal and 35% will use the Electronic Product Code Information Services system.

Another speaker noted their firm identified “about 100 manufacturers” that have not been able to provide a project plan for transaction information exchange testing.

Third-Party Logistics

Meanwhile, third-party logistics companies face their own challenges. The FDA’s 2022 Proposed Rule adds a wrinkle for 3PLs, which must monitor potential changes to state licensing requirements in light of the June 2022 proposed rule issued by the FDA.

The current patchwork of state licensing laws will impact 3PL licenses as states amend their laws, or when those laws are preempted—changes that will monumentally affect third-party logistics companies.

Dispensers

Finally, dispensers are just realizing the challenges that upstream trading partners have been managing for years. Comments from the public meeting reflected that small dispensers may lack resources, personnel, and understanding to achieve interoperability.

A TraceLink representative noted the learning curve smaller dispensers face and why they must use serialized data. The National Association of Boards of Pharmacy highlighted a need to explore alternative options for interoperability.

Looking Ahead

Not all trading partners are trending towards full compliance, and significant work remains to achieve a fully interoperable, electronic system for tracking and tracing if not all trading partners are in lockstep.

Looking ahead to the deadline, there remain obvious barriers for each type of trading partner that may frustrate the primary purpose of the DSCSA.

All trading partners should begin testing and piloting data exchanges to ensure that any transactional, technical, or clerical errors do not thwart compliance efforts.

As with any significant technology-based overhaul, trading partners should begin mapping out a project plan for when these systems go live to mitigate technical challenges.

Industries will also be eager to see what the FDA does in 2023. Points of clarification, including whether smaller companies with limited resources will be permitted to use web portals for data exchanges, are needed.

Although there is no directive under the DSCSA for the proposed rule to be finalized in 2023, 3PLs will be eager for FDA to move quickly to finalize its proposed rule on licensing standards —an often challenging task given the slow and burdensome nature of the administrative notice and comment rulemaking process.

What remains to be seen is whether the FDA will deviate from the initial DSCSA time frame, including any exercise of its enforcement discretion after November 2023.

The essence of a “fully interoperable” system relies upon 100% of stakeholders at every level having the appropriate electronic systems in place to ensure seamless transfer of products, information, and data.

Eyes will stay focused on the FDA to determine agency expectations when the clock strikes midnight on Nov. 27, 2023.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Brendan Carroll is a partner on Alston & Bird’s Food, Drug & Device/FDA Team, counseling industry stakeholders engaged in manufacture, sale and distribution of pharmaceutical products on novel legal, regulatory, and legislative issues.

Anthony Fanucci is an associate in Alston & Bird’s Health Care Group and member of the Food, Drug & Device/FDA Team. He advises pharmaceutical and medical device companies on complex FDA rules and regulations.