Implementing the Drug Supply Chain Security Act

11/10/2014

State Pre-emptions

Title II of the Drug Quality and Security Act (DQSA) [Public Law 113-54], otherwise referred to as the Drug Supply Chain Security Act (DSCSA), became law on Nov. 27, 2013.

The law established a federal system for tracing prescription drug products through the pharmaceutical distribution supply chain from raw source materials to finished products for consumers. The measure added two new sections to the Federal Food, and Drug, and Cosmetic Act (FD&C Act) establishing revised definitions, new requirements for supply chain participants, new standards for the licensing of wholesale drug distributors and third-party logistics providers, and a Uniform National Policy.

Title II also calls for a uniform national policy for tracing pharmaceutical products which pre-empts states from establishing or continuing with standards and requirements that are inconsistent with the federal requirements. The new system will:

  • Enable verification of the legitimacy of the drug product identifies down to the package level.
  • Enhance detection and notification of illegitimate products in the drug supply chain.
  • Facilitate more efficient recalls of drug products.

As part of a 10-year year implementation effort, the Food and Drug Administration (FDA) released a draft guidance document Oct. 7, 2014 to help industry and states understand the immediate effects. The guidance is meant to help clarify section 585’s effect on state product tracing and standards and requirements for wholesale distributors, and third party logistics provider (3PL) licensing. It provides three sets of questions and answers focusing on product tracing, wholesale drug distributor standards and licensing, and 3PLs provider standards and licensing.

Product Tracing

  1. How does Section 585(a) affect state tracing requirements?

The section enumerates the type of requirements that are preempted from including in state law including:

  • Statements of distribution history, transaction history, transaction information, or transaction statement of a product as the product changes ownership in the supply chain.
  • Verification, investigation, disposition, notification, or recordkeeping relating to the distribution systems, including  paper or electronic pedigree systems or for tracking and tracing drugs throughout the distribution system.
  1. What product tracing requirements apply before Jan. 1, 2015?
    • Before Jan. 1, 2015, the federal pedigree requirements remain in effect, meaning that states may not regulate tracing in any way that is inconsistent with, more stringent than, or in addition to the requirements of the FD&C Act.
  2. What product tracing requirements apply on or after Jan. 1, 2015?
    • Beginning Jan. 1, 2015, the federal tracing requirements go into effect. After that date, states may not regulate tracing in any way that is inconsistent with, more stringent than or in addition those requirements.
  3. Which state requirements are pre-empted?
    •  Any requirements for tracing drugs through the pharmaceutical distribution supply chain that are inconsistent with, more stringent than, or in addition those requirements, or in addition to any requirements applicable the new law or its related regulations are preempted.

Wholesale Drug Distributor Standards and Licensing

  1. How does section 585(b) affect states wholesale drug distributor standards and licensing?
    • Since Nov. 27, 2013, states have been pre-empted from establishing or continuing any standards, requirements, or regulations with respect to wholesale distributors licensure that are inconsistent with, less stringent than, directly related to, or covered by the standards or requirements under the FD&C Act. As amended by the DSCSA, states may not fall below the minimum standards.
  2. Will states need to change their wholesale drug distributor licensing laws before the new federal wholesale drug distributor regulation take effect?
    • States will have to analyze their laws to determine the impact of section 585. However since most state laws are based on the federal standards, requirements and regulations it is unlikely that those laws would fall below the minimum standards in federal statute and would need to be changed.
    • The new wholesale drug distributor regulations issued under section 583 will take effect two years after they are finalized by the FDA providing states sufficient time to analyze their laws.
  3. Can states continue to license wholesale drug distributors before the new federal regulations for wholesale drug distributor standards and licensing go into effect?
    • States may continue to license wholesale drug distributors before the regulations are issued, as long as the state regulations are consistent with the federal law. Provisions in the DSCSA require that a wholesale drug distributor either be licensed by the state from which the drug is distributed or be licensed by the Secretary of Health and Human Services (HHS) if the state chooses not to have a licensing program. The distributor will also have to be licensed by the state into which the drug is distributed.
  4. What wholesale drug distributor standards and licensing requirements apply after the new federal regulations go into effect?
    • When federal licensure regulations become effective states will be pre-empted from continuing or establishing licensure in any way that conflicts with or falls below minimum federal standards.
    • The licensing regulations for wholesale drug distributors are to be issued not later than two years after the date of enactment of the DSCSA which was Nov. 27, 2013, and with the final regulations taking effect two years after the date they are published. Once final regulations are published, states will know whether they need to change any standards, requirements, or regulations that they may have established that are inconsistent with the federal requirements.

Third-Party Logistics (3PL) Provider Standards and Licensing

  1. How do the DSCSA requirements affect 3PL standards?
    • Since Nov. 27, 2013, states have been preempted from establishing or continuing any standards, requirements, or regulations with respect to 3PLs which are inconsistent with the new federal requirements.
  2. Can states license 3PLs before the new federal regulations for 3PL standards and licensing go into effect?
    • States may license 3PLs before the new federal regulations are issued and effective.
    • Beginning one year after the date of enactment of the DSCSA all 3PLs will be required to report to the FDA the state by which the facility was licensed.
  3. What 3PL standards and licensing requirements apply after federal regulations go into effect?
    • Once the federal licensing requirements for 3PLs are effective, states will be pre-empted if their requirements fail to conform to the federal rules.
  4. Can states license 3PLs using their licensing program for wholesale drug distributors?
    • The statute does not permit states to license 3PLs as wholesale drug distributors and 3PLs.
 

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