Any Drug Manufacturer (or Repackager, Dispenser, and Distributor) Affected by the Looming Serialization Deadline in the Drug Supply Chain Security Act Really Should Read This One…..July 2, 2017
The FDA just released Draft Guidance affecting the implementation of the Drug Quality and Security Act’s (DQSA) November 27, 2017 “serialization” requirements for finished dosage form pharmaceutical prescription drug products (as defined by the DQSA). Among addressing other issues, the newly released Draft Guidance states that FDA will extend the manufacturer serialization and product verification deadlines for a year – to now take effect November 27, 2018.
Recall that the Title II of the DQSA, the Drug Supply Chain Security Act (DSCSA) requires in FDCA Section 582(b)(2) that manufacturers “affix or imprint a product identifier” to each package and homogenous case of a product “intended to be introduced into commerce” beginning not later than November 27, 2017, and to verify that identifier in accordance with statutory requirements set forth in Section 582(b)(4). Drugs not including the product identifier after that date would have been deemed “misbranded” pursuant to the terms of the statute, and manufacturers who did not verify products would have been subject to enforcement action. See Draft Guidance at 5.
Recall that the DSCSA also requires FDA to issue guidance defining “grandfathering” and how to obtain a “waiver, exception and exemption” of the so-called “serialization” requirement – by 2015. See FDCA Section 582 (a)(3), (a)(5). Notwithstanding the statutory deadline, FDA did not issue the guidance, leaving manufacturers to wonder in the years and months leading to the looming November 27, 2017 deadline what “grandfathering” was supposed to mean, whether it would apply to their drug products in the distribution chain or not yet in the distribution chain, and exactly what FDA would deem that distribution chain to be. FDA addresses the “grandfathering” conundrum on the last page of the Draft Guidance (page 8), stating it intends to issue additional guidance “that will outline FDA’s current thinking on the “grandfathering product” provision. (We will eagerly blog on that guidance when FDA releases it.)
In addition, manufacturers questioned whether they would otherwise be able to apply for a “waiver” of, “exemption,” or ”exception” to the serialization requirement (because, for example, of a manufacturer has a small production or orphan drug, limited distribution channel, an inability to meet the requirement because of economic constraints, or an inability to meet the requirement because of a pending drug product approval near the November 2017 deadline). However, FDA remains silent in the Draft Guidance concerning whether or when it will issue much needed (and statutorily required) guidance on when and how to obtain waivers, exceptions, or exemptions of DSCSA serialization requirements for certain products.
FDA notes that it received comments from manufacturers and other trading partners expressing concerns with industry-wide readiness for implementation of the serialization requirement. It issued the Draft Guidance to minimize potential market disruptions in the United States.
Importantly, FDA’s Draft Guidance does further define what “introduced in a transaction into commerce” means. This language has caused consternation among manufacturers given the lurking serialization deadline because manufacturers have struggled to understand exactly “when” a product “enters commerce” and thus when a product must serialized (i.e., when manufactured? when delivered to a warehouse? what if the manufacturer owns the warehouse?) Industry also was confused by the statute’s use of the word “intended to be introduced in a transaction into commerce” in the statute’s “Product Identifier” provision in FDCA Section 582(b)(2)(A). Seemingly ignoring the preface “intended,” FDA now clarifies that it considers “a product to be ‘introduced in a transaction in commerce’ when the manufacturer first engages in a transaction involving the product.” The DSCSA defines “transaction” as the “transfer of product between persons in which a change of ownership occurs.” (Section 581 (24) (note exceptions)). Thus, in simpler terms, it now seems clear that a product must be serialized if a change of ownership from the manufacturer of the “product” occurs after November 27, 2018.
Most importantly, for those manufacturers that have engaged in the serialization process and have product identifiers on their products that are introduced in a transaction in commerce after November 27, 2017, your efforts are not lost on FDA. FDA expects both “manufacturers and downstream trading partners to use it in verification” as required under the DSCSA. See Draft Guidance at 5. (Lines 165-67)
Effect on Downstream Trading Partners (i.e., Wholesalers, Repackagers, Dispensers)
FDA’s Draft Guidance also addresses the trickle down effect of the additional year until enforcement on other participants in the drug distribution chain. Prior to the release of the Draft Guidance, repackagers would be required to engage in transactions with only those products bearing a product identifier by November 27, 2018. Wholesalers and dispensers had parallel requirements, effective November 27, 2019 and November 27, 2020, respectively. In addition, repackagers, wholesalers and dispensers would be required to verify product, including product identifiers at the package level (in certain circumstances) along this same timeline. FDA states at page 6 of the Draft that it will not take enforcement action for these downstream partners for accepting ownership of unserialized product between November 27, 2017 and November 26, 2018. Draft Guidance at 6.
Repackagers and Product Identifiers: No Extension of Serialization Requirement
FDA’s requirement beginning on November 27, 2018, that repackagers “affix or imprint a product identifier on each packager or homogeneous case of product intended to be introduced into commence” still remains on target. Thus, beginning on November 27, 2018, wholesalers and dispensers that purchase from repackagers should ensure that the products they purchase have product identifiers. Id.
Verification requirements for Repackagers, Wholesalers, and Dispensers
The Draft Guidance states that FDA recognizes that products introduced in a transaction in interstate commerce between November 27, 2017 and November 26, 2018, without an identifier will not be capable of verification at the package level via a product identifier. Therefore, FDA will not take action against repackagers, wholesalers, and dispensers that do not use a product identifier to verify product at the package level until November 27, 2018, November 27, 2019, and November 27, 2020, respectively. Draft Guidance at 7. Notwithstanding, they still must validate applicable transaction history and transaction information for product in their possession to determine whether it is suspect product, and the Guidance “does not extend the deadline for this requirement.” And, if the product does in fact contain an identifier, it must be used to verify the product.
Saleable Returns Intended for Further Distribution
With respect to saleable returns of product by a repackager or distributor intended for further distribution, the Draft Guidance states that they may receive a return of a product that does not include an identifier if the returned product was introduced in a transaction into commerce by a manufacturer before November 27, 2018. Draft Guidance at 7.
Documentation of the “Date of Introduction in a Transaction into Commerce”
FDA also offers guidance for trading partners to determine whether the product at issue introduced by a manufacturer into commerce without a product identifier between November 27, 2017 and November 26, 2018 is covered by the compliance policy outlined in the Draft Guidance. In other words, how do trading partners ensure that a product was in fact introduced in a transaction in commerce before November 27, 2018 (and thus does not require serialization and verification)?
FDA states that trading partners should make a determination (presumably after November 27, 2018) based on whether: (1) At least one of the transaction information documents (the transaction history) for the product describes an initial transaction date from the manufacturer as one that occurs between November 27, 2017 and November 26, 2018; or (2) there is other documentary evidence created by a trading partner “in the ordinary course of business” that contains a product description matching the product at issue that does not contain a product identifier. This type of documentation should contain a date from which it can be determined that the product was introduced in a transaction into commerce by the manufacturer between November 27, 2017 and November 26, 2018. Examples include “bills of lading, commercial invoices, and shipping invoices.”