The Penalties of DSCSA Non-Compliance

July 19, 2018

The FDA starts serialization enforcement for manufacturers and repackagers on November 2018— just 4 months away. The rate of serialization adoption by November 2018 is anyone’s guess.

Serialization Readiness

According to the 2017 HDA Serialization Readiness Survey, “64% of manufacturers responding indicated that wholesale distributors will start to receive serialized products before November 27, 2017”. Today, nearly a full year later, wholesale distributors report approximately only 25% of products received by their distribution centers are serialized. Clearly, the numbers don’t line up. Perhaps the manufacturers are holding off serialization due to the enforcement delay announced in 2017 by the FDA. Or perhaps they were simply too optimistic a year ago, and they needed the extra time caused by the delay to finish and go live with serialization.

Many wholesale distributors anticipate that the number of serialized products will climb quickly between now and November. The industry then shifts its attention from serialized packaging and labeling to serialized supply chain. However, if the number does not climb fast enough, the industry faces a bigger issue – the disruption of the healthcare system.

The Health of Healthcare

The U.S. Healthcare system relies on all members of the pharmaceutical supply chain to do their part. Manufacturers and repackagers need to ship products; wholesale distributors need to maintain service levels, and the healthcare providers need to fill patients’ orders. Failure from any members to fulfill these vital needs is disruptive to the health of our nation’s healthcare.

The upcoming November deadline presents the big reveal of serialization adoption. The healthcare system will run smoothly into the serialization era if the adoption rate is high. Furthermore, from there, many benefits can be achieved by utilizing the robust data that serialization creates.

Life without Serialization

On the other hand, our healthcare system will suffer if the serialization adoption rate is small. It means many manufacturers and repackagers simply lack the capability to serialize their product past November. Life without serialization is dire for manufacturers and repackagers, and their options are limited.

1. Grandfathering Wholesalers will stop accepting non-serialized products after November, except the grandfathered products. Many companies underestimate the efforts and time requirement needed to succeed in serialization. As the project unfolds, many unforeseen challenges and delays derail the serialization process. With only four months left, reality sets in. There is simply not enough time to complete the project to go live with serialization. A viable temporary but resource intensive option is to pull production ahead for grandfathering. Drug products manufactured and packaged before November 27, 2018 can enter the supply chain without a serialized product identifier free of penalty. Any product manufactured thereafter, however, will still be denied from entering the supply chain without proper serialization, eventually leading to the next option.

2. Stop Ship – Regardless of how a product is serialized, getting there demands capital and time. High margin products can bear the expenses, but low margin products can’t. The DSCSA Serialization requirement forces the manufacturers and repackagers to reevaluate entire product portfolios. Products without an ROI won’t make the serialization list. They will be reshuffled for new owners or stop ship altogether.

Consequence of Non-Compliance

Non-compliance is unthinkable for pharmaceutical companies. Failure to comply to DSCSA is a “Prohibited Act”, stated in the DSCSA section 206. And failure to “bear the product identifier as required” is a “Misbranding”. Simply put, it is a criminal act if a company sells non-serialized and non-grandfathered prescription drug products after November 2018, intentionally or unintentionally.  Aside from business suicide, persons committing such act face criminal justice.  The cases filed by the FDA Office of Criminal Investigation (OCI) show that criminals have been penalized with heavy fines, license suspensions, and imprisonment, confirming the FDA’s responsibility of enforcing the law.

The Happy Path

Despite the gloom and doom, I have a happy path to share: LSPediA can fast-track your serialization in a matter of weeks and help you meet compliance, easily and expediently. Our state of art software offers the best package on the market:

  • Turnkey compliance for 3T and Serialization
  • Serialized label printing
  • Warehouse serialization with integrated scanners
  • Single Scan Verification Router System (VRS) ready
  • Supply chain metrics for extended data visibility

In addition, we now offer RxChain® in three Editions, all mapped to affordably optimize your operations:

  1. RxChain® Basic Edition – for small manufacturers and distributors
  2. RxChain® Standard Edition – a full suite of features including serial warehouse and mobile application
  3. RxChain® Enterprise Edition – for large companies with multiple business units with enterprise data layer

If you are challenged by serialization or supply chain planning, LSPediA is here to help. A 30-day Free Trial and One Hour of Free DSCSA Consultation are available to get you started.

Protect Your Business

To learn about how LSPediA is helping companies meet compliance requirements, improve customer loyalty, and gain competitive advantage. To find out how we can help your business, contact us today.