In one year (plus a few days, as of this writing), regulation of the U.S. drug supply chain will be historically changed. On November 27, 2023, the final phase of the Drug Supply Chain Security Act (DSCSA) goes into effect. Haven’t heard of the DSCSA? Aren’t ready for the new rules? According to a recent survey, you’re not alone. Read on for details on the DSCSA, recent developments and how to prepare for full implementation.

The Healthcare Distribution Alliance (HDA) Research Foundation recently released its seventh annual Serialization Readiness Survey that explores manufacturer and distributor readiness and distributor perceptions on dispenser preparedness for full DSCSA implementation. The survey found that despite an overall improvement in implementing necessary steps to comply with the DSCSA, some supply chain partners must increase their efforts to achieve compliance by the deadline.

DSCSA Snapshot

To help protect consumers from exposure to prescription drugs that may be counterfeit, stolen, contaminated or otherwise harmful, Congress enacted the DSCSA in 2013 and set forth a 10-year plan for phased implementation. The DSCSA’s requirements aim to improve detection and removal of potentially dangerous drugs from the drug supply chain to protect U.S. consumers.

The DSCSA creates step-by-step tracing requirements for the distribution of certain prescription drugs. The law requires manufacturers, wholesale distributors, dispensers and repackagers (collectively, Trading Partners) to establish verification systems that confirm the legitimacy of the drugs’ packaging. Trading Partners must identify adulterated products by investigating and quarantining suspect products. The law also requires Trading Partners to notify the U.S. Food and Drug Administration (FDA) and supply chain partners of illegitimate products. FDA has issued various Guidances on these Trading Partner obligations.

By November 27, 2023, Trading Partners must have in place an interoperable, electronic data exchange system of transaction information and statements on serialized products. In preparation for this final phase, FDA recently announced a Public Meeting on December 7 and December 8. Registration is open until December 2 online.

Is Industry Ready for Full DSCSA Implementation?

HDA’s June 2022 survey results reflect responses to a confidential questionnaire from 29 distributors and 48 manufacturers, including 16 manufacturers that are in the top 20 manufacturers for 2020. The main takeaways from the survey are summarized below.

Manufacturer Responses

Survey results indicate that some manufacturers have taken steps to implement the forthcoming 2023 requirements, including the development of pilot programs. 

• 76% percent of manufacturers responded that they anticipate sending 100% of serialized data, along with product shipments, in compliance with the new DSCSA requirements by the deadline.
• 32% of surveyed manufacturers noted that they send serialized data to wholesale distributor customers upon product shipment. In fact, some manufacturers have already established an electronic serialized data exchange using EPCIS per FDA’s recommendation.
• 87% of manufacturers currently use EPCIS standards for product tracing.
• Many manufacturers also responded that they intend to send EPCIS files with product identifiers to support verification requests; however, most manufacturers anticipate using the Verification Router Service (VRS) system, developed by HDA, to send information on verification requests to distributors.

Despite promising steps toward compliance with the 2023 regulations, manufacturers identified challenges to achieving interoperability. The top three challenges identified were: 

• Collaboration with trading partners (i.e., wholesale distributors)
• Governance of the interoperable system (i.e., a lack of oversight of the electronic data exchange)
• Differences in interpretation of the law (i.e., divergent perspectives on Trading Partner legal obligations).

Manufacturers also acknowledged technical challenges, resource concerns and dispenser readiness, among other potential barriers to implementation.

Distributor Responses

Similar to manufacturers, surveyed distributors also have prepared for the new 2023 requirements, but complete readiness is not yet present. While most manufacturers reported no concerns with meeting the requirement to process serialized returns, almost half of distributors expressed concerns about complying with the requirement to implement verification processes for saleable returns. This concern is primarily due to lack of access to master data and accuracy of such data. Roughly 50% of distributors have received master data for approximately 25% of products, with a quarter of distributors indicating that they have not received master data from any manufacturer.

There also exists some shortcomings in distributors’ receipt of serialized data. According to the survey, many distributors reported that they have the capabilities to receive serialized products as well as data for these drugs. Yet, only 7% of distributors indicated that more than 76% of their manufacturer suppliers have shared serialized data on at least one product. Meanwhile, 18% of distributors reported that they have not received serialized data from any manufacturer suppliers.

Despite a lack of consistent data exchange from manufacturers to distributors, both stakeholders generally align on approaches to verification processes for returned products. Like manufacturers, the majority of surveyed distributors (69%) intend to use the VRS system for verification processes of returns, with EPCIS as a close second option for many distributors (65%). Distributors indicated that system preferences were based on efficiency, automated approaches, and error rates.

Distributors’ top challenge for achieving 2023 interoperability was the same as that of manufacturers’ first concern: collaboration with trading partners — in this case, manufacturers. According to Perry Fri of HDA, “healthcare distributors have indicated that onboarding manufacturers well before the deadline as the best way to avoid possible disruptions in product flow — so aligning on plans in short order will be crucial.”

Distributors’ three other major concerns included: 

• Technical challenges (72%)
• Establishing standards (48%)
• Connectivity and related security (48%).

Dispenser Readiness

The survey also assessed distributors’ perceptions of dispensers’ readiness for implementation and knowledge of the DSCSA. As part of the serialization requirements, dispensers must engage in product identifier verification processes for suspect products they receive as well as products for which dispensers have received notification from FDA or a Trading Partner of the product’s illegitimacy. Notably, FDA will not grant enforcement discretion past the deadline in 2023, so dispenser knowledge of its requirements is critical to ensuring compliance.

However, distributors reported that dispenser education on their legal and regulatory obligations was among the largest challenges facing their dispenser customers. Specifically, distributors expressed concern over dispensers’ lack of understanding of the systematic and operational changes that are needed to comply with the forthcoming regulations, and consequently, not having the appropriate technology in place. Nearly half of surveyed distributors noted that their dispenser customers’ knowledge of the 2023 requirements “varies considerably.” Importantly, no distributors answered affirmatively that dispensers understand the existing requirements to accept only a serialized product and investigate suspect products. Of the dispensers that lack knowledge of their current and forthcoming obligations, distributors identified independent pharmacies as the least educated, while distributors expressed less concern for health systems’, chain drugs stores’ and hospitals’ knowledge. To equip dispenser customers with knowledge of the DSCSA and address concerns of dispenser preparedness, HDA and other pharmacy stakeholders created a website with resources for dispensers.

Supporting Trading Partners and Regulators

The National Association of Boards of Pharmacy (NABP®) recently announced the DSCSA Interoperability Network (Network). This Network addresses the requirement to electronically track and make available prescription drugs’ ownership transaction records. The Network will provide a means for state regulators and trading partners to investigate and remove suspect or illegitimate medications from the legitimate supply chain.  NABP began working on the Network after stakeholders and state regulators requested assistance identifying and addressing gaps in interoperability among all sectors of the supply chain.

While participation is voluntary, NABP announced that the Network “will serve as a critical information sharing tool to help state regulators and trading partners ensure the legitimacy of prescription medications via electronic interoperability.”

“The state boards of pharmacy play a critical role in protecting our nation’s drug supply. When the requirements of DSCSA are fully implemented in November 2023, it will be necessary for regulators to have an efficient means of communicating with manufacturers, wholesale distributors, pharmacies, and other dispensers. NABP’s DSCSA network will provide the secure, efficient, and uniform means for state regulators and trading partners to efficiently investigate and remove suspect or illegitimate medications from the legitimate supply chain,” said NABP President Reginald B. “Reggie” Dilliard, DPh.

In furtherance of NABP’s public health mission, the nonprofit is offering free home-study Continuing Pharmacy Education on DSCSA related issues through April 2023, which is available here.

Conclusion

As Trading Partners and other stakeholders prepare for the November 2023 deadline, the slow but steady pace at which supply chain partners have moved must accelerate to a sprint toward compliance. HDA acknowledged that “there are those [Trading Partners] that plan to implement and onboard ahead of schedule,” but it expressed concern over the “uneven readiness” due to Trading Partners that are still lagging in preparation.

Increased alignment on and knowledge of obligations under the law, collaboration on implementation plans, and adequate resources to sustain continuous interoperability across the electronic data exchange are critical hurdles Trading Partners must overcome to ensure compliance with the DSCSA come 2023. To assist supply chain partners in achieving compliance, surveyed entities have urged FDA to release “proactive guidance” to address compliance risks and establish clearer governance standards. Ongoing industry preparedness and collaboration, NABP’s DSCSA Network, and further guidance from FDA, will be critical as pharmaceutical supply chain partners hustle toward November 27, 2023.