An upcoming workshop May 8 and 9, 2014 is the next step in a 10-year implementation plan by FDA to create an electronic, interoperable system to identify and trace prescription drugs as they are distributed in the United States.

Implementation of the Drug Quality and Security Act (DQSA), signed into law on November 27, 2013, is underway as FDA begins its work under Title II of DQSA, known as the Drug Supply Chain Security Act (DSCSA), which outlines critical steps to build an electronic, interoperable system to identify and trace prescription drugs as they are distributed in the United States. DSCSA, which has staged implementation over a 10-year period, is designed to create a system that will facilitate the exchange of information (i.e., transaction information, transaction history, and transaction statement) at the individual package level about where a drug has been in the supply chain. In February 2014, FDA issued its Implementation Plan for the new law, which specifies the deliverables required of the agency under DQSA. In the first two years of implementation, FDA has to work on or publish two regulations and six guidances. FDA has already started the process by seeking stakeholder comments on standards for interoperable exchange of transaction information, transaction history, and transition statement in paper or electronic format and will hold the public workshop in May with a goal to issue draft guidance for these standards in November 2014. Vincent J. Ventimiglia, Jr., principal, Faegre BD Consulting , who spoke at the educational program, “Regulatory Trends: A Global View from the U.S. Food & Drug Administration,” at DCAT Week ’14, outlined the serialization and traceability provisions of the DSCSA, upcoming implementation, and the implications for pharmaceutical companies and their suppliers. 

Vincent J. Ventimiglia, Jr. Principal Faegre BD Consulting

Rationale for the law
Ventimiglia explained that the impetus behind the passage of DQSA was to address some threats to security and patient safety and the potential of serialization to improve the effectiveness of standard recalls. “While the frequency of observed events has traditionally been low, the risk to patients was too high for policymakers to ignore,” he said. He pointed to some documented history of counterfeit product at the distributor and pharmacy level, history of product stolen from manufacturers’ warehouses or trucks as well as the potential benefit of serialization to improve the effectiveness of standard recalls. Moreover, a lack of a centralized and federal structure for ensuring the integrity of the drug supply chain created weakness in regulatory oversight. “There had been a mixed, inefficient response from the states,” he said. “Some states had only limited protections in place. There were also conflicts among state requirements, which created confusion, complexity and burden.” Moreover, a model for a secure system, the California pedigree system “was not proving implementable,” he said. “Policy makers concluded there was a need for a single, uniform, national, robust response.”

Tracing and serialization requirements
Under the DSCSA, tracing and serialization requirements first took effect with the passage of the law on November 27, 2013, and then are staged for implementation with some requirements taking effect January 1, 2015, others taking effect four years after enactment, and a new “Phase II” occurring 10 years after enactment. The requirements will require use of a product identifier:  a GS-1-compliant standardized graphic that includes, in both human-readable form and on a machine-readable data carrier: the standardized numerical identifier, lot number, and expiration date of the product.

The requirements of DSCSA apply to the following: manufacturers (i.e, holder of a new drug application (NDA) or abbreviated new drug application (ANDA), a co-licensed partner, or an affiliate of the NDA/ANDA holder or co-licensed partner); repackagers; wholesale distributors; third-party logistics providers (which are subject to licensure provisions); and dispensers (e.g., pharmacies and healthcare providers). The traceability requirements generally apply to the transaction (the transfer of product between persons in which a change of ownership occurs) and the product (prescription drugs in finished dosage form intended for human use).  With respect to that transaction between parties, the law outlines requirements for the transaction information, transaction history, and transaction statement.

Transaction information includes the proprietary or established name(s) of the product, the strength and dosage form of the product, the National Drug Code number, container size, number of containers, dates of transaction and shipment, and the business name and address of those from/to whom ownership is being transferred. The transaction history includes the transaction information dating back to the manufacture of the product. The transaction statement is a statement that the entity transferring ownership in a transaction meets certain requirements, such as being an authorized entity under DQSA to be involved in a transaction, received the transaction information or transaction statement from the prior owner of the product, and did not knowingly ship a suspect or illegitimate product.

Ventimiglia outlined that Phase I of implementation of the DSCSA began with the passage of the law on November 27, 2013, which locked in federal pedigree requirements. The DSCSA also immediately created “floor and ceiling” preemption with respect to state and local laws related to the tracing of products through the distribution system that are inconsistent, more stringent, or in addition to the DSCSA requirements, he said.

The next phase of implementation, scheduled to begin January 1, 2015, imposes important requirements. First, entities must trade with only with authorized trading partners (i.e, manufacturers; wholesale distributors; third-party logistics providers; and dispensers). Entities also must pass, capture, and maintain the transaction history, transaction information, and transaction statement; the exception is that dispensers are given until July 1, 2015 to comply. Entities must also respond to requests for information and have systems and processes to investigate, verify, and respond to suspect and illegitimate products.

Four years after enactment (November 27, 2017), manufacturers must pass the transaction history, transaction statement, and transaction information in electronic form, serialize product, and meet enhanced verification requirements. In each succeeding year, repackagers, wholesale distributors, and dispensers respectively must comply with similar requirements.

Phase II begins 10 years after enactment. “Phase II is self-effectuating, but FDA is required to publish regulations and guidance clarifying the requirements,” said Ventimiglia. Key requirements under Phase II implementation are that product identifiers will be used to electronically pass the required information, and the information passed will allow product to be traced at the package level, not just the lot level. Also, the transaction history will be replaced with a “one up, one back” data packet. Systems and process will be required to enable package-level verification. And entities must associate the transaction information and transaction statement for saleable returns.

Ventimiglia further outlined that in the Phase II implementation, FDA must establish two processes by guidance by November 27, 2015. First, is a process through which an entity may request a waiver and exemption from the serialization requirements on the basis of undue economic hardship, emergency medical reasons, or declaration of a public health emergency. Second, FDA must establish a process for establishing additional products or transaction exemptions.

Ventimiglia further outlined that the DSCSA established uniform national licensing standards for wholesale distributors and third-party logistic providers. “States will continue to have the authority to license wholesales and third-party logistic providers, but they must use federal standards,” he said. Also the DSCSA sets out seven broad categories of licensing standards for wholesale distributor and for third-party logistic providers, to be established by November 27, 2015. The DSCSA immediately preempts all state standards, requirements, and regulation with respect to licensure of wholesale distributors and third-party logistic providers that are inconsistent or less stringent than those requirements under the DSCSA.  State standards that are more stringent are also preempted if they are already covered by or related to the federal standards.

FDA implementation of DSCSA
In February 2014, FDA issued its implementation plan for the new law, which specified the deliverables required of the agency and other stakeholders (see Tables I and II). In the first two years, FDA has to work on or publish two regulations and six guidances. FDA has already started the process by seeking stakeholder information and comments on standards for interoperable exchange of transaction information, transaction history, and transition statement in paper or electronic format and will hold the public workshop in May on this topic with a goal to issue draft guidance for these standards in November 2014. “FDA is considering broader regulatory revisions in this space as well, such as revisions to labeling rules,” noted Ventimiglia, who also noted that Congress will “remain active in overseeing and influencing agency implementation.”

Challenges of implementation
As DSCSA is implemented, there are several key challenges, explained Ventimiglia. One challenge is to ensure state and stakeholder recognition that DSCSA provides full express federal preemption of all state traceability and pedigree requirements. “At least one state has sent ambiguous signals about whether they will continue in effect their state requirements,” he said. “If states maintain any of these requirements, they undermine the DSCSA objective of a single, uniform, national traceability system.” Ways to address that challenge, said Ventimiglia, are to educate state regulators on the full effect of DSCSA traceability provisions and to collect information on non-compliant states. He also said gaining a “clear FDA statement on the full, preemptive effect of the DSCSA” would be useful.

Another challenge is the transition from state-based licensing standards to federal licensing standards. The new law requires that entities work with authorized trading partners beginning January 1, 2015, but there is confusion as to how wholesale distributors will be licensed between January 1, 2015 and November 27, 2017 since federal licensing standards are unlikely to be effective until November 27, 2017. “Also, there is some ambiguity regarding scope of the preemption provision related to licensure,” explained Ventimiglia. He said to address those changes it would be important to develop common distributor understanding of the DSCSA objectives and operation and work with FDA to develop an optimal system.

Another key challenge, explained Ventimiglia, will be to ensure interoperability in the exchange of information. “Establishing appropriate interoperability standards will be particularly challenging for FDA due to the variety and complexity of supply-chain stakeholders, the costs, benefits, and risks of requiring standardization, and the very short timelines for implementation,” he said. Specific challenges include:

• Standards for communication of information or data between authorized trading partners
• Interaction with partners in conjunction with investigation of suspect or illegitimate product and the retention or disposition of product
• Processes and standards for notification of partners regarding suspect or illegitimate product
• Establishing effective and efficient methods of communication between industry and FDA
• Development of one or more pilots under Phase I implementation that seeks to integrate partners in the supply chain.

Ventimiglia said that to address this challenge it is important to evaluate current and future practices, such as through industry surveys, and develop and standardize the most promising approaches, recognizing that the market will drive certain solutions. “It is important to consider that FDA may seek a degree of standardization, but may wish to depend on some existing market solutions,” he said. “Additionally, it is important to develop public-private communication and information exchange to maximize effectiveness for patients and minimize disruption to the agency and the supply chain.”

An additional challenge will be to harmonize the measures in DSCSA with international standards, said  Ventimiglia.  Ensuring a consistent global data carrier standard, maximizing consistency of global serialization and traceability requirements, and optimizing access to global databases are ways this issue can be addressed, he said.

Table I: Planned Implementation Time Frames for the Drug Supply Chain Security Act over a 10-year period,  beginning in 2014. *
Planned FDA Implementation Period (Stakeholder Implementation Specified Where Relevant)	Action by FDA
Beginning of 2014 through early 2014	Issue notice of public docket to collect stakeholder comments on  standards for interoperable exchange of transaction information,  history and statement in paper or electronic format.**
Beginning of 2014 through mid-2014	Publish guidance on identification of suspect product and  termination of notifications of illegitimate product for finished human  prescription drugs.
Beginning of 2014 through late 2014	Publish draft guidance establishing standards for interoperable  exchange of transaction information, history, statement in paper or  electronic format.
Beginning of 2014 through late 2014	Establish a system for third-party logistic providers reporting to FDA.
Beginning of 2014 through the end of 2014	Establish a system for wholesale drug distributor reporting to FDA  and public database with licensing information.
Beginning of 2014 through late 2015.  Planned stakeholder implementation period: Late  2015 through late 2017	Develop regulations establishing standards for licensing of wholesale  drug distributors.
Beginning of 2014 through late 2015.  Planned stakeholder implementation period: Late  2015 through late 2016.	Develop regulations establishing standards for licensing of third-party  logistics providers.
Beginning of 2014 through late 2015.  Planned stakeholder implementation period: Late  2015 through mid-2017	Publish guidance on processes for waivers, exceptions, exemptions.
Beginning of 2014 through late 2015.	Publish final guidance on grandfathering product.
Beginning of 2015 through mid-2021.	Conduct at least five public meetings.
Beginning of 2015 through end of 2020.	Establish one or more pilot projects in coordination with  stakeholders to explore and evaluate methods to enhance the safety  and security of supply chain.
Beginning of 2017 through end of 2020.	Conduct and complete a technology and software assessment on  feasibility of small dispensers to conduct drug tracing at the  package level.
Beginning of 2018 through late-2022.  Planned stakeholder implementation period: Late  2022 through late 2023	Publish final guidance on system attributes necessary to enable  secure tracing at the package level.
Beginning of 2018 through late-2022.  Planned stakeholder implementation period: Late  2022 through late 2023.	Publish final guidance on the standards for interoperable data  exchange to enhance secure tracing of product at package level.
Beginning of 2017 through late-2021.  Planned stakeholder implementation period: Late  2021 through late 2023.	Develop regulations establishing enhanced drug distribution security  system for interoperable electronic tracing of product at the package  level.
*Time frames are estimates and are based on the requirements set forth in law. The Drug Quality and Security Act (DQSA) was signed into law on  November 27, 2013. Title II of DQSA is known as the Drug Supply Chain Security Act (DSCSA).  ** Note: FDA published a request for public comment and established a docket per a notice in the Federal Register Vol. 79, No. 34, February 20,  2014, page 9745.  FDA is scheduled to hold a public workshop for May 8 and 9 in Silver Spring, MD, entitled “Standards for the Interoperable Exchange of Information for  Tracing of Human, Finished, Prescription Drugs, in Paper or Electronic Format. The public workshop will allow input from interested stakeholders on  the development of initial standards for the interoperable exchange of information between trading partners.  Source: FDA