FDA’s Already Enforcing DSCSA Rules – And It’s Going To Be Costly

February 13, 2019

If you think complying with the Drug Supply Chain Security Act is expensive, consider the cost of running afoul of those new regulations — $150 million.

In the first enforcement action to directly cite DSCSA requirements, the FDA issued a Form 483 Warning Letter in July to one of the country’s largest wholesale distributors for mishandling suspicious products.

Clearly, the FDA has fired a warning shot at the entire industry to emphasize that its DSCSA enforcement will be real and stringent.

Meet the FDA

Part of the Code of Federal Regulations, the DSCSA significantly expands the FDA’s authority from overseeing only manufacturing to supervising the entire pharma supply chain, regulating both distributors and dispensers.

The FDA has a 50-year history with drug manufacturers and, just like a long marriage, maintaining that relationship takes work. Manufacturers and the FDA both understand that each other’s efforts are needed to protect patient safety. Manufacturers have engrained FDA compliance requirements into their daily operations. In the case of the DSCSA, each phase of requirements under what formally was titled Bill H.R. 3204 was evaluated and accessed by manufacturers to see how it would affect their operations. Drug manufacturers did their part by creating Policies, Standard Operating Procedures (SOP), and Work Instructions to bring their companies into compliance.

Now the question is: Can wholesale distributors conform to the same culture?

In the FDA’s 483 Warning Letter, the agency cited major gaps in the wholesaler’s policy and procedures, writing specifically that, “There is no documentation demonstrating that your firm quarantined said products after receiving notification and during your investigation.”

If one of the country’s leading wholesale distributors can fail an FDA audit, then what’s the state of compliance when it comes to smaller distributors?

Looming Verification Deadline

The FDA’s Warning Letter also noted that the distributor’s procedures, “Do not instruct notifications to all immediate trading partners, and sufficient tracing information is not retained to identify trading partners that received such product.”

The letter nearly repeated word-for-word the DSCSA’s product verification requirement mandates:

  1. Quarantine and investigation
  2. Notification and record keeping

If wholesalers already are running into issues with verification, things will get only more difficult in November. That deadline requires wholesalers to do all the above, plus they’ll need to start verifying products at the individual package level, including using standardized numerical identification (NDC and serial number).

Unless they can meet those new standards, wholesalers could be in for some very expensive pain.

The Very Expensive Salable Returns Problem

If the threat of a 483 Warning Letter sound harsh, consider this: Beyond the price of any FDA actions, nearly 59 million units of returned drug products worth as much as $13 billion annually also are at risk. Those drugs simply can’t be resold if they can’t be properly verified.

Without a reliable serialized verification platform, returns will become a costly problem for wholesalers and manufacturers who wouldn’t even recoup the cost and time spent handling returns, let alone the loss in sales. Wasted saleable drugs also increase the risk of creating dangerous product shortages, increasing overall waste and contributing to pollution.

LSPediA’s VRS Solves the Problem

Many of the DSCSA illegitimate product requirements took effect at the end of 2015, so the industry as a whole has had time to put appropriate processes and technology into place. Still, many manufacturers and distributors continue to struggle (I’ll post more on that issue in the coming weeks). Making sure your company is fully compliant will be your single best defense when a federal agency comes calling. We all should note that Morris & Dickson successfully fought back against a May 2018 DEA license suspension right away because the company had solid transaction records that backed up its defense. That kind of protection needs to be an essential component in any effective DSCSA solution.

Remember that real protection goes beyond simple labeling and scanning to extend into all your business processes. For example, LSPediA’s RxChain® software is a turnkey solution with built-in prompts and notifications that can drive your supply chain process to track, quarantine, sample and notify as required under the law. This workflow ensures your employees are alerted to take all legally required actions to protect the drug supply chain and – ultimately – our patients.

In addition, LSPediA’s Saleable® Verification Router Service (VRS) functions as a platform, a network and an application so that companies can verify serialized products with a single scan of the 2D barcode. Saleable® has just been released, in time to help wholesale distributors and manufacturers meet the DSCSA November deadline for verification of saleable returns.

If you’re not sure your operations are fully compliant with DSCSA rules, LSPediA can help. Give me a call at 248-973-2008 or email me for a demonstration of LSPediA’s VRS and EPCIS system. You’ll be much happier if it’s me and my team that come knocking on your door – and not the FDA.