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The Drug Supply Chain Security Act creates uncertainty about which trading partners have responsibility for product verification
The US Food and Drug Administration (FDA) faces a challenging schedule for implementing the Drug Supply Chain Security Act (DSCSA), enacted on Nov 27, 2013. The DSCSA revamps the requirements for securing prescription drugs throughout the supply chain, and mandates that an interoperable electronic system for tracing prescription drugs to the package level be put into effect in phases over 10 years. Among the DSCSA’s requirements are new verification obligations imposed on manufacturers, distributors and pharmacies regarding “suspect” and “illegitimate products,” designed to identify and eliminate counterfeit and diverted prescription drugs from the supply chain. By Jan 1, 2015, all parties in the supply chain must have systems in place to comply with these verification requirements. How FDA interprets the interlocking and sometimes ambiguous obligations that the DSCSA imposes may have a significant impact on the contractual obligations among trading partners and on the relationship among parties in the supply chain.
On June 11, 2014, FDA announced the availability of a draft guidance entitled “Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification.” This guidance is the first of many FDA is required to issue under the statutory mandates included in the DSCSA.
The draft guidance provides practical suggestions for how trading partners may identify suspect products, such as to be skeptical of prices that are “too good to be true,” and to closely examine the package and transport container for signs that the product has been compromised. The document also recommends that trading partners “discuss with each other any observations, questions, or concerns they have related to the status of a drug as a suspect product to aid them in determining whether the drug should be considered a suspect product,” and that trading partners “contact regulatory authorities, law enforcement, or other available resources to aid in that determination . . . .” (see draft guidance p. 6) The draft guidance does not clarify which party has the final word, however, nor resolves certain other ambiguities about the interlocking responsibilities of the parties involved. These ambiguities include:
Will FDA resolve the ambiguities in time?
The agency requests comments by Aug 11, 2014. Whether the final guidance will address these ambiguities and will be issued before the Jan 1, 2015 implementation date—let alone in time for affected companies to put systems in place necessary to comply with these and other DSCSA obligations—remains to be seen.
As of July 30, FDA had received only two comments on the draft guidance and had not posted either. Absent timely FDA interpretation, parties subject to the DSCSA’s verification requirements will need to resolve these issues and other ambiguities regarding their mutual obligations themselves. Prudence suggests that the parties review their internal policies and the contractual obligations governing their relationships, and engage in explicit conversations among themselves to try to resolve these ambiguities to the extent possible. Otherwise, the gaps left open may create situations in which counterfeited or diverted products are not adequately investigated and disposed of because parties may assume another party is taking responsibility for investigating and handling the product.
ABOUT THE AUTHOR
Mike Druckman (firstname.lastname@example.org) is a partner at Hogan Lovells who counsels life sciences companies and organizations on FDA law and regulation. He formerly worked for seven years in FDA’s Office of Chief Counsel, first as Associate Chief Counsel for Enforcement and then as Associate Chief Counsel for Biologics.