The Power of Centralized Distribution in the Face of DSCSA Compliance

Valerie Bandy, PharmD

In the ever-evolving landscape of healthcare supply chain management, the Drug Supply Chain Security Act (DSCSA) looms large. With the November 2023 DSCSA compliance requirements officially taking effect the 27th of this month and a one-year stabilization period following that, there is an added urgency to ensure traceability and transparency in the pharmaceutical supply chain. The need for efficient and streamlined pharmacy operations has never been more critical given shifting regulations and compliance requirements.

While traditional pharmacy logistics have been effective, they now face new challenges in the modern pharmaceutical landscape. The DSCSA mandates fully interoperable, enhanced electronic unit-level drug traceability requiring a serialized identifier, as well as verification of saleable returns for manufacturers and trading partners. With the complexities of medication management, drug shortages and global supply chain disruptions, there is a pressing need to adapt and innovate in pharmacy logistics.

Against the backdrop of these DSCSA compliance requirements, the future of pharmacy logistics lies in centralization, modernization, and strategic use of technology. By adopting a patient-first approach that harnesses supply chain innovation, healthcare systems can ensure timely, affordable, and efficient access to essential medications while ensuring full compliance with regulatory standards. As the healthcare landscape continues to evolve, centralized pharmacy distribution, combined with modern systems and automation, will play an essential role in shaping the future of medication management and patient care.

After becoming authorized and licensed, all trading partners have an obligation to familiarize themselves with the law and communicate their plan for compliance to their customers. They must provide, capture, and maintain information about transactions involving products distributed within the United States and the trading partners who engaged in such transactions of products. Manufacturers and repackagers are required to include a product identifier with standardized graphics, an encompassing NDC (national drug code), a serial and lot number, and an expiration date. These details must be available in both human and machine-readable formats using 2D data matrix barcodes for packages, and either linear or 2D data matrix barcodes for homogenous cases.

They are also required to establish systems and processes to:

• Respond to verification requests of the product identifier on certain packages or homogenous cases of product (for manufacturers, repackagers, wholesalers), and the product identifier on saleable return product to determine whether the product is suspect (applicable to manufacturers, repackagers, wholesalers, and distributors).
• Conduct investigations to determine if a product is illegitimate after identifying a product as suspect, or upon receiving a verification request from the FDA. They must also quarantine suspect product as a potential counterfeit, unfit for distribution, and potentially dangerous (applicable to manufacturers, repackagers, wholesalers, and distributors).
• Promptly notify the FDA when suspect product is confirmed as legitimate, quarantine, and disposition illegitimate product, and notify the FDA and other stakeholders if an illegitimate drug is found or if product with an elevated risk of illegitimacy is identified (applicable to manufacturers, repackagers, wholesalers and distributors).

Much of this is achieved via modern software applications that offer more than just operational efficiency. These applications are pivotal in ensuring compliance with regulatory frameworks like the DSCSA. They enable real-time tracking to ensure traceability, a core requirement of the Act. With predictive analytics to anticipate medication needs, they ensure that patient care is not compromised even with the added layers of regulatory compliance. And with the potential integration of automation in centralized pharmacy operations, they can significantly reduce human errors, ensuring more accurate and efficient drug distribution, which is paramount in the face of strict regulatory requirements.

Compliance from a health system’s perspective

Pharmacy supply chain management at the health system level is going through a period of innovation and maturation. As healthcare providers adopt emerging best practices like consolidated pharmacy service centers (CPSC), they are paying greater attention to logistics optimization, traceability, system modernization, and regulatory compliance. As this awareness grows, they are increasingly expecting the same level of sophistication from their pharmacy distribution counterparts.

With DSCSA requirements in full effect, health systems must now ensure they become familiar with the law and ensure their trading partners do the same. Their teams must be trained on handling suspect or illegitimate products, on verifying that trading partners are authorized, and on the timely reporting concerning licensing or quarantined product. If they are delivering to non-owned facilities or customers, they must also provide product tracing information.

While the specific impacts and compliance requirements may vary between the pharma industry and the health systems that rely on those pharmaceuticals, one undeniable truth remains: the importance of accurate DSCSA compliance is a shared imperative. Central to this is harnessing the transformative potential of centralized pharmacy distribution, the role of modern systems, automation integration, and the importance of all partners adhering to the stringent regulatory frameworks.

As we enter an era where DSCSA compliance is non-negotiable, there are many reasons why health systems care that pharma companies and their distributors are DSCSA ready now, including:

1. Patient safety: At its core, the DSCSA aims to protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. If pharmaceutical companies and their distributors are not DSCSA compliant, it could compromise the safety and efficacy of the drugs that pharmacies dispense to patients, causing illegitimate products to enter the market.
2. Supply chain integrity: The DSCSA mandates enhanced drug traceability throughout the supply chain. Pharmacies rely on this traceability to ensure they are receiving legitimate products. If pharmaceutical companies or distributors are not compliant, it could disrupt the integrity of the entire supply chain.
3. Operational efficiency: Health system pharmacies operate more efficiently when they can trust the provenance of their products. Delays or uncertainties in verifying the authenticity of drugs can disrupt pharmacy operations, leading to potential delays in patient care.
4. Regulatory compliance: Pharmacies also have their own set of DSCSA requirements to adhere to. Working with DSCSA-compliant pharmaceutical companies and distributors makes it easier for pharmacies to meet compliance obligations.
5. Financial implications: Non-compliance with DSCSA can result in significant penalties and fines for pharmaceutical companies and distributors, which could indirectly impact their business relationships and pricing structures with pharmacies, and in turn affect their downstream customers, the health system pharmacies and others.
6. Reputation and trust: Pharmacies want to work with reputable suppliers. If a pharmaceutical company or distributor is not DSCSA compliant, it could raise questions about their overall commitment to quality, safety, and regulatory adherence. This could erode trust with the health system’s downstream patients and customers, as well as with its trading partners.
7. Risk mitigation: Non-compliance by any pharmaceutical trading partner could expose pharmacies to potential legal and reputational risks, especially if counterfeit or compromised drugs enter the supply chain.
8. Future preparedness: The DSCSA requirements have been phased in, with more stringent requirements set to roll out. Pharmacies want to align themselves with forward-thinking pharmaceutical companies and distributors that are both compliant now and prepared for future regulations.

The interconnected roles of pharmacy-related trading partners highlight the critical need for alignment in the supply chain. As we move forward, it is imperative that all stakeholders recognize that DSCSA readiness is not just a regulatory necessity, but a fundamental commitment to patient safety, supply chain integrity, and the future of healthcare. By forging strong partnerships, staying proactive in compliance efforts, and embracing innovation, we can ensure a safer, more efficient and resilient supply chain.

About the Author

Valerie Bandy, PharmD, is Senior Director of Pharmacy Solutions at Tecsys.