Drug Supply Chain Security Act, DSCSA

Pharmaceutical manufacturers and their supply, contract packaging and distribution partners are under constant pressure to comply with government requirements while maintaining high standards for patient safety, product quality and innovation.

A lack of traceability in the drug supply chain is a barrier to progress in all of these areas, but the US Food and Drug Administration (FDA) is working to change that through the Drug Supply Chain Security Act (DSCSA). The DSCSA, which takes full effect in November 2023, should usher in a new era of supply chain resilience for the US pharmaceutical industry, but compliance is not without its challenges.

A 2017 survey from KPMG found 45% of companies had already invested upwards of $50 million in IT and technological infrastructure to support compliance. Many of those efforts, however, took a backseat during the pandemic. Existing vulnerabilities in the global supply chain were brought to the surface and companies had to act fast to minimize disruption.

Many of the supply chain risks that companies are grappling with today mirror the challenges the FDA is hoping to solve with the DSCSA. The same infrastructure required for compliance could also help companies address other major supply chain and operational concerns, but November 2023 is coming up fast and companies need to start preparing now. 

What is the Drug Supply Chain Security Act (DSCSA)?

A lack of traceability in the drug supply chain is a problem for companies as much as it is for consumers and the FDA. Congress in November 2013 moved to strengthen this supply chain through the enactment of the Drug Supply Chain Security Act, which is part of the Drug Quality and Security Act (DQSA).

The DSCSA, as defined by the FDA, “outlines steps to achieve interoperable, electronic tracing of products at the lot, unit, and now package level to identify and trace certain prescription drugs as they are distributed in the United States.”

“This will enhance the 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.”

Regulatory jargon aside, the DSCSA was created to accomplish three goals over its 10-year implementation. Those goals are as follows:

  • Establish an end-to-end verification system to validate the legitimacy of a drug, all the way down to the package level.
  • This, in turn, achieves the second proposed objective — easy detection of illegitimate and counterfeit products in the pharmaceutical supply chain.
  • Finally, towards the end of the implementation phase, it pledges to accomplish an interoperable, self-sufficient system with supply chain-wide traceability, allowing for easy identification and recall.

Why is the DSCSA Important?

The ultimate goal of the DSCSA is to create a resilient pharmaceutical supply chain where prescription drugs intended for human consumption can be traced through every stage of the manufacturing and distribution process.

This is important because serialization, traceability and compliance directly translate to a high level of patient safety. Upon full implementation, the DSCSA will help keep potentially harmful drugs from entering the drug supply chain and threatening public health. Drug companies, of course, share this goal and never intentionally produce products that could harm consumers, but the complexities of the global supply chain and inconsistencies in distribution, shipping, and labeling processes certainly make this difficult.

In 2012, for example, the FDA reported the distribution of counterfeit cancer medicine in the US when several medical offices procured counterfeit batches of the injectable cancer drug bevacizumab from a foreign entity. FDA lab tests found at least one version of the drug had no active ingredients. In another case it was marketed under a different name when the only FDA-approved version of bevacizumab was Altuzan. Shortly after, the DSCSA was born.

According to Contract Pharma, the act has expedited the shift toward drug supply chain digitization, but it’s not enough. Cases of drug counterfeiting doubled in size from 2014 to 2019, reaching an all-time high of 4,405 cases in 2019. The same year, North America saw a record-high number of drug-related seizures stemming from illegitimate pharmaceuticals.

What are the Two Parts of the Drug Quality and Security Act?

The US House of Representatives and Senate in 2013 aligned respective compounding and supply chain security bills to form and finalize the Drug Quality and Security Act. The legislation has two distinct components, the Compounding Quality Act and the Drug Supply Chain Security Act. These are also known as Title I and Title II of the DQSA.

The measures are separate but complementary efforts to strengthen patient health and safety.

Part 1: The Compounding Quality Act

As its name implies, the Compounding Quality Act focuses on the safety of compounded medicines. Since the FDA does not approve compounded medicine or validate their safety, Congress felt it needed another mechanism to ensure compounded medicines were safe for consumers.

The legislation reinstated Section 503A of the Food, Drug and Cosmetic Act, which contains compounding guidelines for state-licensed pharmacies that are not official outsourcing facilities and health systems that distribute such products.

It also established a national registration system for pharmaceutical companies and other entities that produce sterile drugs for human use. Companies may register to become an official outsourcing facility if they agree to:

  • Comply with product labeling requirements
  • Pay the FDA a registration fee
  • Allow FDA inspections
  • Report adverse effects twice annually
  • Submit compounded medicine reports to the FDA twice per year

Registered outsourcing facilities are also subject to strict quality requirements and failure to comply may result in penalties.

Part 2: The Drug Supply Chain Security Act

The DSCSA, or Tier II of the Drug Quality and Security Act, is the part of the legislation that’s on pharmaceutical stakeholders’ minds right now because full implementation goes into force in November 2023. The DSCSA has taken effect in two phases over a 10-year period.

The legislation ultimately aims to create a fully serialized pharmaceutical supply chain where every drug and ingredient can be traced from beginning to end. Given its broad scope, the DSCSA will affect every aspect of the supply chain, including manufacturers, dispensers, distributors, third-party logistic providers, wholesalers and repackagers. 

The legislation will touch any and all entities that come into contact with drugs intended for human consumption. There are four requirements stakeholders must be aware of:

  1. Product serialization
  2. Product tracing
  3. Verification (of product identifiers)
  4. Authorized trading partners
Drug Supply Chain Security Act, DSCSA

What DSCSA Requirements are Coming into Effect in 2022-2023?

The pharmaceutical supply chain has had nearly 10 years to prepare for the full implementation of the DSCSA, but many stakeholders are still taking steps to comply with the final phase. The final phase is currently underway with penalties and fines beginning November 27, 2023. At this point, the whole pharmaceutical supply chain will be required to ensure the interoperable, electronic tracing of products at the unit level.

Manufacturers, wholesales, dispensers and other stakeholders won’t be permitted to continue operating within the supply chain unless they meet the following FDA requirements.

  1. Interoperable exchange: Trading partners must exchange transaction information (TI) and statements in a secure, electronic format with the use of a product identifier (PI) at the unit level.
  2. Interoperable verification: Partners are required to verify the unit level PI interoperably and electronically and validate shipments.
  3. Interoperable tracing: Serialization, or unit-level traceability, is mandatory. Every item must be able to be tracked throughout the supply chain. Every PI must include an expiration date, lot number and standardized numerical identifier.

Together, these three requirements will make it easier to verify the legitimacy of a drug and ensure counterfeit medicines don’t enter the market. 

How Does the November 2023 Deadline Affect Manufacturing and Supply Chain Businesses?

Most pharmaceutical manufacturers and stakeholders have been preparing for the final phase of the DSCSA for years, but bringing their operations into compliance is a time-consuming, resource-intensive process because it often requires a significant investment in infrastructure that supports serialization.

Many companies were unprepared for the initial deadline in 2018 due to a lack of guidance from the FDA and confusion about the requirements. In recent months, the FDA has issued several pieces of draft guidance to help companies prepare for implementation in 2023.

The guidance has yet to be finalized, but will contain processes and recommendations to enable secure tracing at the unit level. In 2022, the FDA proposed the follow draft guidance:

The FDA is still accepting public comments on DSCSA draft guidance and has proposed a couple of rules, including the National Standards for the Licensure of Wholesale Drug Distributors Third–Party Logistics Providers. It is expected to finalize related guidance and rule-makings in late 2022 to early 2023.

Full DSCSA compliance has many implications for companies, which is why it’s important to start preparing now. Companies that fail to comply may be liable for significant fines and other penalties from the FDA.

It’s also important to note that since the DSCSA aims to create a national “track and trace” system for drugs, manufacturers are somewhat reliant on third-party logistics providers, distributors and other partners to ensure interoperable exchange, verification and tracing at the lot level. The old adage, “a chain is only as strong as its weakest link,” couldn’t be more accurate when it comes to operating in a post-DSCSA world.

Interested in learning more about the DSCSA? Check out these additional resources:

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