FDA Clarifies Trading Partners Under the Drug Supply Chain Security Act

The Federal Food and Drug Administration (FDA) recently published several draft guidelines to aid industry and State and Local governments in understanding how to define entities in the drug-supply chain in accordance with the Drug Supply Chain Security Act (DSCSA).

DSCSA — enacted as part of the Drug Quality and Security Act of 2013 — delineates the steps manufacturers, re-packagers, wholesale distributors, dispensers (i.e. pharmacies), and third-party logistics providers need to take to develop an electronic, interoperable system that tracks a drug at a unit level through its trajectory in the drug-supply chain. DSCSA includes provisions that speak to product verification and identification, data sharing, record keeping, and unified licensure standards for wholesale distributors and third-party logistics providers.

Since it became law in 2013, industry members and practitioners have raised questions about DSCSA‘s applicability and the extent to which it applies to certain groups of the pharmaceutical supply chain industry. They have also raised concerns about how to meet the DSCSA requirements for being considered an “authorized” trading partner, and whether some groups should be considered trading partners at all.

The FDA’s draft guidance is timely and addresses many of these concerns. It takes steps to clarify the applicability of DSCSA requirements to groups that take part in the distribution of prescription drugs in the United States and may not have historically been considered partners. The draft guidelines also explain whether and when such entities are engaged in activities that require licensure and annual reporting as well as other requirements related to being classified as an “authorized” trading partner.

While the guidelines are intended to enhance FDA’s ability to help protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful, the guidelines may also expand the breadth of defendants in pharmaceutical/products liability cases. Entities and groups not historically considered partners in the drug-supply chain now need to consider the legal ramifications of their new identity as “partner” and what that means in the context of products liability claims. We continue to keep a close eye on these developments.

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