DSCSA Implementation Is Progressing, But More Complexity May Be Coming

By Eric Marshall, Partnership for DSCSA Governance

On July 12, the FDA announced it would exempt small dispensers from the enhanced security and unit-level electronic traceability requirements of the Drug Supply Chain Security Act (DSCSA) until Nov. 27, 2026. This two-year compliance extension for small dispensers (those having 25 or fewer full-time employees licensed as pharmacists or qualified as pharmacy technicians) is likely a recognition of both the status of implementation progress among small dispensers and the FDA’s delay in conducting a statutorily mandated study of technology accommodations that may be needed for small dispensers. In parallel, FDA also announced that it does not intend to issue further enforcement discretion for other parts of the supply chain and has urged trading partners who are not prepared to meet the DSCSA’s enhanced traceability requirements by Nov. 27, 2024 to seek individual waivers, exceptions, and exemptions (WEEs). It would not be surprising to see the supply chain flooded with WEEs over the coming months.

These complementary announcements from FDA reflect an effort to maintain a delicate balance by simultaneously limiting potential supply chain disruption and keeping pressure on the industry to continue its progress toward interoperable traceability. Though the small dispenser exemption and encouragement of WEEs is likely necessary to maintain that balance, just the prospect of broad-scale WEEs is creating significant uncertainty. If broad-scale WEEs are approved, it will add significant complexity to DSCSA implementation and stabilization and, unfortunately, management of that complexity will fall most heavily on those organizations that have done the long, hard work to ensure their internal systems and processes are best prepared for interoperable traceability.

Are You Caught Up On DSCSA? A Brief Background

The DSCSA was enacted by Congress in 2013 and established critical steps that companies must take over 10 years to enhance the security of the pharmaceutical supply in the U.S., including the implementation of electronic interoperable systems for tracing drug transactions in the United States by Nov. 27, 2023. In August of 2023, FDA established a one-year stabilization period to allow supply chain trading partners to fine-tune their systems and processes without the fear of aggressive regulatory enforcement.¹

Over the last decade, supply chain companies have implemented systems and processes to ensure the legitimacy of their suppliers and customers; established drug traceability at the lot level; added unique serialized identifiers to each prescription drug package sold in the U.S.; and implemented systems and processes to identify, investigate, and respond to suspicious and illegitimate drug products. The DSCSA’s requirements culminate with the requirement to move from lot-level traceability to individual unit- or package-level traceability. These new requirements include:

1. use of secure, interoperable electronic approaches to exchange transaction information for each individual package in the supply chain
2. establishment of systems and processes to verify products at the package level, including saleable returns
3. implementation of systems and processes to promptly respond with the transaction information and transaction statement for a product, upon request, in the event of a recall or investigation of suspect or illegitimate product
4. implementation of systems and processes to facilitate the gathering of information needed to compile the transaction information for a product going back to the manufacturer, as applicable, in the event of a recall or suspect or illegitimate product investigation.

Supply chain trading partners (including manufacturers, repackagers, wholesale distributors, pharmacies, and other dispensers) have been working for years to develop and deploy the systems and processes needed to meet those requirements. With those efforts, however, came an appreciation for just how technically complex those systems and processes are. At steady state, trading partners will be interoperably exchanging and managing data for tens of billions of individual drug package sales and purchases, and that interoperability must extend from highly sophisticated multinational corporations to mom-and-pop pharmacies with limited resources and a plateful of competing demands. The scope and granularity of this process is unrivaled across any industry.

Implementation Progress; Work To Be Done

A recent public meeting co-hosted by the Partnership for DSCSA Governance (PDG) and the FDA provided a checkpoint midway through the DSCSA stabilization period. This hybrid in-person/virtual meeting brought together approximately 800 stakeholders from across the drug distribution ecosystem to share information that will support all stakeholders in efficiently executing the remaining steps needed to achieve enhanced product tracing. Through the public meeting, stakeholders shared the tremendous progress that has been made during the stabilization period and shined a light on the critical gaps and challenges that remain.

Manufacturers participating in the public meeting noted significant improvements and success in establishing the necessary data connections to support interoperable traceability, and their focus is shifting more heavily to improving the quality of the data being exchanged. Wholesalers have experienced more varied progress across all manufacturers but acknowledged that progress in data exchange between manufacturers and wholesalers has been significant. Progress between wholesalers and dispensers has been less momentous, in large part because many of those systems and processes are dependent on wholesalers receiving reliable data from a critical mass of manufacturers. Throughout the supply chain, trading partners continued to highlight the ongoing challenge of reaching and engaging broad swaths of the small dispensers in the implementation. A full report of the public meeting is available here.

WEEs: Necessary Flexibility, Challenging Complexity

The FDA-PDG joint public meeting highlighted the important difference between preparedness and interoperability. Each individual trading partner controls the preparedness of its respective systems and process. No individual trading partner, however, can achieve interoperability alone. By its very definition, interoperability is dependent on the consistent preparedness, and adherence to standards, among many trading partners. The public meeting surfaced trading partner after trading partner struggling with this dichotomy between preparedness and interoperability, having made the requisite investment and preparations to be fully prepared but left unable to achieve fully interoperable data exchange due to the lack of preparedness among a portion of their suppliers and/or customers.

Among the well-prepared, efforts are intense and focused on stabilizing systems and processes for unit-level traceability, particularly improving the quality and reliability of data exchanged. Among the unprepared, it should be expected that a significant volume of WEEs will be sought. Those WEEs are expected to take myriad forms: some will be sought by entities for all of their products and transactions, others may seek WEEs for specific products, lots, or dates. Each WEE will have its own potentially unique parameters, and the well-prepared trading partners on the other end of those transactions will be left to manage this complex patchwork of whether a given product is required to be in compliance or not. While this complexity may be unavoidable, it will be immense.

Collaboration and communication — between commercial trading partners and through broader industry forums — have been critical in achieving the level of progress that has been made to date and will be even more important as the industry moves through this mixed period of initial compliance, small dispenser exemption, and uptick in WEEs. Reaching the remaining corners of industry will require creative strategies that communicate DSCSA implementation expectations in ways that are actionable and simplified. It is more important now than ever that the supply chain come together and continue to press down the path to interoperability across all trading partners.

About The Author:

Eric Marshall is a principal in the Washington, D.C. office of Leavitt Partners and the executive director of the Partnership for DSCSA Governance (PDG), a public-private partnership between industry and FDA that is committed to implementing supply chain security protections in the U.S. At Leavitt Partners, he advises healthcare coalitions on health policy and provides consulting services to drug and device companies. A regulatory lawyer by training, he is an industry specialist in the areas of drug, device, and diagnostics regulation. A portion of Eric’s practice is focused on domestic and international supply chain security. Marshall leads Leavitt Partners’ alliance practice, helping the firm and clients with industry collaboratives committed to advancing sound health policy initiatives. Prior to joining Leavitt Partners, he practiced law, counseling healthcare and life science clients on regulatory, compliance, and transactional matters.