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FDA BEGINS ENFORCEMENT OF WHOLESALE DISTRIBUTOR VERIFICATION REQUIREMENT FOR SALEABLE RETURNED DRUG PRODUCT – NOVEMBER 27, 2020

TurningPoint Systems’ ERP Solutions Can Reduce the Cost of Complying with The Drug Supply Chain Security Act (DSCSA)

The Drug Supply Chain Security Act (DSCSA) was adopted by Congress in 2013 to identify and trace certain prescription drugs as they are distributed in the United States. The intention is to protect consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. However, trading partners who manufacture, distribute, and dispense pharmaceutical products have been required to change their business practices to comply with the DSCSA, which added multiple logistical complications and recordkeeping costs.

We have been attending and following HDA and FDA presentations and advisories and updating our software products in anticipation of the upcoming regulatory environment. Though full implementation of “Enhanced Drug Distribution Security” will not go into effect until 2023, requiring an interoperable, electronic tracing of product at the package level from manufacturer to dispenser, some of our customers are already in full compliance. The compliance strategy should be a component of each distributor’s overall business strategy.

What Changes on November 27, 2020?

The FDA announced last year that they would be delaying the enforcement of the Wholesale Distributor Verification Requirement for Saleable Returned Drug Product until November 27, 2020. This requires wholesale distributors to comply with the “enhanced requirements” section 582(c)(4)(D) of the Federal Food, Drug, and Cosmetic Act (FD&C Act).

That text reads as follows:

“SEC. 582. REQUIREMENTS.

`(c) Wholesale Distributor Requirements.—
“(4) Verification.–Beginning not later than January 1, 2015,
a wholesale distributor shall have systems in place to enable the
wholesale distributor to comply with the following requirements:
“(D) Verification of saleable returned product.–Beginning
6 years after the date of enactment of the Drug Supply Chain
Security Act, upon receipt of a returned product that the
wholesale distributor intends to further distribute, before
further distributing such product, the wholesale distributor
shall verify the product identifier, including the standardized
numerical identifier, for each sealed homogeneous case of such
product or, if such product is not in a sealed homogeneous
case, verify the product identifier, including the standardized
numerical identifier, on each package.

Also, on the subject of returns:

“…a wholesale distributor may accept returned product from a dispenser or repackager only if the wholesale distributor can associate returned product with the transaction information and transaction statement associated with that product. For all transactions after such date, the transaction history, as applicable, of such product shall begin with the wholesale distributor that accepted and verified the returned product. For purposes of this subparagraph, the transaction information and transaction history, as applicable, need not include transaction dates if it is not reasonably practicable to obtain such dates.”

The DSCSA stipulates what shall be done, but it does not say how to do it. Furthermore, these new regulations are ambiguous enough that they are open to different interpretations of what compliance requires. Our customers, after consultation with their legal advisors, have adapted the ProfitPoint and QWIKPoint ERP Suite’s lot control, fulfillment, inventory control, and recordkeeping features in vastly different ways to comply with their understanding of the regulations and according to their business circumstances.

What is the Same?

Most of the burden still falls on the manufacturer to provide human and machine-readable labeling, and for your suppliers are responsible to assure that only legitimate products enter the supply chain and provide you with a transaction history (TH), transaction information (TI), and transaction statement (TS), (known as a T3 document), to confirm it.

Your general requirements remain the same, and are summarized as follows:

• Distributors may not accept products that do not have the required product identifier, are not accompanied by a T3 document, and are obtained from any source other than an authorized trading partner. The distributor may not transfer the products to anyone other than authorized trading partners and must declare that the previous owner, the distributor, and the subsequent owner are authorized trading partners.
• The confidential records must be kept for 6-years and accessible to authorities within 48-hours of a request in the case of an audit or investigation.
• The distributors must have systems in place to identify suspect and illegitimate products, quarantine, and report them to the proper authorities in a timely manner.

The key question is, “How would you like TurningPoint Systems to configure your ERP system to match your unique business circumstances and to meet your DSCSA compliance strategy?

TurningPoint Systems provides these sections of the DSCSA text for your convenience. We recommend that you refer to the entire text and seek legal counsel if you are unsure about the correct interpretation.

This blog post is not a legal opinion. TurningPoint Systems highly recommends that each distributor seeks legal counsel during the formation of their DSCSA compliance strategy.