Pharmaceutical Supply Chains Might Not Be Able to Comply to the Traceability Law

Pharma companies have had a decade to comply with the Drug Supply Chain Security Act, but there are signs the industry might not be ready for the final deadline on Nov. 27th.

The new regulation has been ten years in the making

The Drug Quality and Security Act (DQSA) was enacted by Congress on November 27, 2013. 

The ten years long regulatory process is coming to an end for the pharmaceutical supply chain, and companies will have to electronically share drug data from end to end, or risk healthcare ecosystem instability.

Title II of DQSA, the Drug Supply Chain Security Act (DSCSA), outlines steps to achieve interoperable, electronic tracing of products at the package level to identify and trace certain prescription drugs as they are distributed in the United States. This will enhance FDA’s ability to help protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. These requirements will also improve detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S. consumers.

Additionally, the DSCSA directs FDA to establish national licensure standards for wholesale distributors and third-party logistics providers, and requires these entities report licensure and other information to FDA annually.

Come Nov. 27, if a pharmaceutical manufacturer can’t provide unit-level serialized products to its distributors, no one along the supply chain can legally move it to the next step. If the distributor is unable to provide the pharmacy with electronic tracing data, the pharmacy can’t legally receive the product, or dispense it to the patient.

The new rules come as a result of the final implementation stage of the Drug Supply Chain Security Act, or DSCSA, which aims to boost drug traceability and improve patient safety. 

There are concerns about how ready companies really are to meet this final deadline

No matter the industry, a supply chain is only as strong as its weakest link. If you have most of the parts to put together an automobile, but you are missing even the smallest of those needed, you won’t be able to complete the vehicle. But if nobody ends up dead without a new car, when it comes to drugs, however, a hitch in the supply chain might mean the medicine doesn’t reach the patients in time, which could prove fatal. Pharmaceutical drugs depend on many companies along the way to ensure patients have easy and prompt access to treatments. Companies have been preparing to comply with the law’s various milestones for some time, and they had to go through various steps since the regulations were issued, almost a decade ago.

But recently, as the compliance effort is near the final step, association surveys and public meetings have shown stakeholders fear companies are not ready, neither technical nor practical, and this could really affect the drug supply chain.

Manufacturers, repackagers, wholesale distributors, third-party logistics providers and drug dispensers like hospital and retail pharmacies must all comply with new requirements under the DSCSA. Although many companies consider themselves fully prepared, Elizabeth Gallenagh, general counsel and head of supply chain integrity at the Healthcare Distribution Alliance, said there are still gaps along the chain.

According to Gallenagh, part of the problem concerning the industry’s readiness comes from the fact that many companies are treating Nov. 27 as a prompt for action, but without testing the supply chain prior to this deadline, data problems could be encountered. 

“In their mind the compliance date is their trigger,” Gallenagh said. “This is the flaw in the law. The last push has been written as flipping the switch, but you can’t flip the switch and have it work seamlessly.”

Most distributors feel collaborating with trading partners will be hard, a lead issue amongst the DSCSA challenges

Manufacturers and distributors were asked to reply to the following question: From your perspective, what are the key challenges for meeting the DSCSA’s 2023 requirements?

HDA emailed members a link to the survey in June 2022. In all, 47 manufacturers and 29 distributors responded to the questionnaire.

90% of distributors and over 50% of manufacturers said collaboration with trading partners is the main issue, and with 72% of distributors saying they envision encountering technical challenges, it is quite visible people do not think they are ready to fully comply. 

According to Gallenagh some reports say less than half of manufacturers are ready to share data with distributors. Dispensers are concerned they won’t be able to provide products to patients if they don’t have the right data once the DSCSA is enacted.

Gurdeep Sidhu, manager of QA global policy at Canadian generics manufacturer Apotex, said downstream connectivity also presents its own challenges.

“Not all the partners are on board with the requirements,” Sidhu said in a December public meeting FDA hosted, concerning implementation challenges. “We want to make sure that there are some exceptions outlined, and how do we handle them.”

Stakeholders are able to request a waiver, exception or exemption, FDA announced

Concerns companies are not ready have prompted some action from the federal government.

On May 11, the FDA agency announced the process for stakeholders to request a waiver, exception or exemption from the act’s requirements. It has already exempted some COVID-19 products. 

On May 22nd, FDA announced the conclusion of its Drug Supply Chain Security Act (DSCSA) Pilot Project Program, established to assist drug supply chain stakeholders, including FDA, with developing electronic, interoperable capabilities that will identify and trace certain prescription drugs as they are distributed within the United States.

Under this program, FDA worked with the selected participants listed in the following table to explore and evaluate methods to enhance the safety and security of the drug supply chain. Participants reflect the diversity of the supply chain, including large and small entities from all industry sectors.

Selection into this program should not be interpreted as FDA’s position on an entity’s compliance with regulatory requirements or an endorsement of a particular technology, system, or other approach used in the pilots.

FDA is bound by federal law and regulations to keep commercial confidential and trade secret information from public disclosure across all programs. Any such information that was submitted to us in the program has not been disclosed publicly, including confidential sales information, customer and supplier names, contractor and consultant names, and business plans. All information in the individual pilot project links has been freely provided by the program participants.

The program has concluded, and the final program report is available to the public so that all supply chain stakeholders can benefit from the information gathered and lessons learned from FDA’s DSCSA Pilot Project Program.

What happens if companies won’t be able to comply by the end of November?

The Healthcare Distribution Alliance is worried about a product stoppage and is asking for a “stabilization” period from the FDA, so medicines could flow and continue moving toward the unit level traceability goal. This transition period could imply narrow exemptions and some delays for specific requirements.

The repercussions of something going wrong are serious. As of Nov. 27th, in case any link along the supply chain is not receiving and transmitting the tracing information electronically, the drug won’t be able to move to its next step.

“Technically distributors can’t receive or sell products downstream if they haven’t received the appropriate data from the manufacturer,” Gallenagh said.

At the FDA’s public meeting in December, the agency also received feedback from other stakeholders on their level of readiness and implementation challenges. In an email to Supply Chain Dive, the regulator announced plans to have some draft guidelines ready by November, including the standards for data exchange. The FDA also mentioned hearing concerns from stakeholders about compliance from small dispensers with 25 or fewer staff members, and will keep on analyzing whether alternative methods for compliance are needed.

“FDA will be conducting a small dispenser assessment that will examine necessary software and hardware’s accessibility, cost to obtain, install, and maintain, and integration into business practices,” the spokesperson said. “Continued outreach is needed because stakeholders felt there is still a lack of understanding of the complexities and needs to meet DSCSA requirements, particularly small entities.”

To ensure compliance, Gallenagh said different institutions could ensure things are done by the DSCSA regulations, FDA for manufacturers and state authorities for pharmacies. No matter who checks compliance though, if, by the end of November, strict interpretation and enforcement of every aspect of the law will be put in place, product shortages are bound to happen, according to Gallenagh.