Exemptions and Inspections: New Developments in DSCSA Compliance

Since the Drug Supply Chain Security Act (DSCSA) was enacted in 2013, the U.S. Food and Drug Administration (FDA) has taken a number of steps to implement the law, including by issuing guidance and policy documents. Certain milestones are approaching, including the requirement that trading partners comply with enhanced drug distribution security requirements. While FDA has delayed enforcement of certain requirements, it has stepped up oversight in other areas. This Advisory provides an update on recent DSCSA developments.

Temporary Interoperable and Enhanced Systems Exemptions

On October 9, 2024, FDA issued exemptions for eligible authorized trading partners from certain DSCSA requirements relating to the implementation of interoperable and enhanced systems.¹ Section 582 of the DSCSA requires trading partners to adopt such systems by November 27, 2023. However, in August 2023, FDA announced that it would exercise enforcement discretion and implement a “stabilization period” until November 27, 2024 to accommodate additional time trading partners in the supply chain need to adopt interoperable and enhanced systems.²

FDA has announced that it is allowing exemptions for manufacturers for any products introduced in a transaction into commerce from November 27, 2024 (when the stabilization period was set to end) until May 27, 2025.³ The exemption only applies to trading partners who have made documented efforts to complete data connections with trading partners, but are still finalizing their interoperable systems.

FDA is exempting eligible manufacturers from the following requirements until May 27, 2025:

• The requirement that transaction information and statements be exchanged in a secure, interoperable, electronic manner in accordance with the guidance issued by FDA on unit level tracing and interoperable data exchange. Eligible manufacturers and their trading partners may continue to rely on current methods for providing, capturing, and maintaining transaction information and transaction statements for products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025.
• The requirement that the transaction information required to be exchanged include the product identifier (e.g., the National Drug Code, serial number, lot number, and expiration date) at the package level for each package included in the transaction. For products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025, eligible manufacturers and their trading partners may continue to exchange transaction information for product that does not incorporate — at the package level for each package in the transaction — the product identifier. For products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025, eligible manufacturers and their trading partners may continue to exchange transaction information for product that does not incorporate — at the package level for each package in the transaction — the product identifier.
• The requirement that systems and processes for verification of product at the package level, including the standardized numerical identifier, be in accordance with the standards established under FDA’s guidance on unit level tracing, interoperable data exchange, and suspect and illegitimate product. Eligible manufacturers and their trading partners may continue to rely on current methods for verification of product at the package level for products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025.
• The requirement for systems and processes necessary to promptly respond with the transaction information statement for a product upon a request by FDA, or an appropriate government official, in the event of a recall or for the purposes of investigating a suspect product or an illegitimate product. Eligible manufacturers and their trading partners may continue to rely on current methods to respond to such requests for such information for products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025.
• The requirement for systems and processes necessary to promptly facilitate gathering the information necessary to produce the transaction information for each transaction going back to the manufacturer, as applicable (i) in the event of a request by FDA, or an appropriate government official, on account of a recall or for the purposes of investigating a suspect product or an illegitimate product or (ii) in the event of a request by an authorized trading partner, in a secure manner that ensures the protection of confidential commercial information and trade secrets, for purposes of investigating a suspect product or assisting FDA, or an appropriate government official, with a request described in clause (i). Eligible manufacturers and their trading partners may use current methods to respond to such requests for products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025, with the relevant transaction information if they directly transacted the product(s) subject to the request.
• The requirement that each person accepting a saleable return have systems and processes in place to allow acceptance of such product and may accept saleable returns only if such person can associate the saleable return product with the transaction information and transaction statement for the product. Eligible manufacturers and their trading partners may use current methods to accept saleable returns for products introduced in a transaction into commerce by eligible manufacturers from November 27, 2024 until May 27, 2025.

The above exemptions are also applicable to repackagers until May 27, 2025.

FDA expects manufacturers to communicate to their trading partners that they are relying on these exemptions when applicable. FDA also urges trading partners to continue efforts to implement the necessary measures to satisfy the enhanced drug distribution security requirements during this period.

FDA also has issued certain exemptions applicable to eligible dispensers through November 27, 2025; and for wholesale distributors through August 27, 2025.

FDA Inspections Related to DSCSA Compliance

We have observed that FDA is more frequently examining manufacturer DSCSA compliance in general, often through Current Good Manufacturing Practice (CGMP) inspections. FDA has now built a module into its typical CGMP inspections calling on FDA investigators to examine items such as Standard Operating Procedures for dealing with suspect and illegitimate product. We are aware that FDA has issued Form 483s to manufacturers, citing them for what FDA believes to be deficient procedures.

Recommendations

Note that states continue to have parallel requirements for manufacturer and distributor licensing, and manufacturers should continue to monitor compliance with state requirements. The exemptions summarized above do not affect state reporting requirements. In addition, they do not impact requirements relating to sample pharmaceutical products under the Prescription Drug Marketing Act.

We recommend that industry stakeholders review FDA’s guidance to ensure that they are on track to comply with DSCSA requirements by the applicable deadline. We also recommend that manufacturers develop and implement formal Standard Operating Procedures addressing compliance with the DSCSA, including procedures for identifying and dealing with suspect and illegitimate product. Our team will continue to follow and report developments in this area.

Related Content

Arnold & Porter, FDA Releases Proposed Rules on National Licensure Standards for Wholesale Drug Distributors and Third-Party Logistics Providers (3PLs) (Feb. 14, 2022).

Arnold & Porter, FDA Releases Guidance on the Drug Supply Chain Security Act (June 9, 2021).

Arnold & Porter, Drug Supply Chain Security Act: Legal Overview and Cross-Enterprise Compliance Strategies (Aug. 11, 2020).

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.