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DSCSA: Transaction Statement

TS.iStock_000008261949SmallerThis is the third in a series of essays about data exchange components required by the Drug Supply Chain Security Act (DSCSA) beginning next January.  The previous essays in this series include DSCSA Transaction Information (TI) and DSCSA Transaction History (TH).   The DSCSA, which is Title II of the Drug Quality and Security Act (DQSA), defines Transaction Statement (TS) this way:

“(27) TRANSACTION STATEMENT.—

The ‘transaction statement’ is a statement, in paper or electronic form, that the entity transferring ownership in a transaction—

(A) is authorized as required under the Drug Supply Chain Security Act;

(B) received the product from a person that is authorized as required under the Drug Supply Chain Security Act;

(C) received transaction information and a transaction statement from the prior owner of the product, as required under section 582;

(D) did not knowingly ship a suspect or illegitimate product;

(E) had systems and processes in place to comply with verification requirements under section 582;

(F) did not knowingly provide false transaction information; and

(G) did not knowingly alter the transaction history.”

All companies in the U.S. pharmaceutical supply chain must begin passing TI, TH and TS to the buyer whenever a change in ownership occurs, starting on January 1, 2015.  This date is fast approaching.  The FDA is supposed to publish guidance to help you know how to format and exchange this information, but their deadline isn’t until November 27 of this year so you will not have much time to implement if you wait for that (see ““The Flaw That Must Be Addressed in H.R. 3204, The Drug Quality and Security Act” and “DQSA: Getting To Electronic Transaction Data Exchange”).  Companies had better have a plan for meeting the basic TI, TH and TS requirements in the law and then be prepared to make adjustments based on the FDA’s guidance later this year.

The FDA is currently asking for comments on data exchange of this type to help them formulate their guidance.  To read what others have already submitted, and to submit your own thoughts and preferences (before the April 21 deadline), go to the FDA’s submission docket.  The FDA held a webinar recently on the DSCSA to provide background on the law and their action plan for the next year or so.   Listen to the recording and download the slide deck here.

In addition, the Healthcare Distribution Management Association (HDMA) will hold a webinar featuring Connie T. Jung, RPh, PhD of the FDA called “FDA Perspectives on Implementation of the Drug Supply Chain Security Act” on April 7 at 1pm EDT.  This may be just a repeat of the recent FDA webinar but I still recommend that you register and listen in on it.  HDMA events are generally very high quality.  If you miss it, they usually include a recording so you can catch up later.

TRANSACTION STATEMENT, WHAT’S THE POINT?

One of the purposes of a pedigree is to provide prosecutors with evidence that they can use to bring charges and make them stick against criminals.  One of the requirements for getting the most severe judgment against someone in a case like this is to establish that they intended to deceive the buyer.  It’s one thing to show that the transaction history for a shipment of drugs does not match the actual history, but if you can’t establish that the difference was an intentional act, you might not be successful in bringing charges against the seller.  Mistakes happen all the time and very few of them are intentional, criminal acts.

The Transaction Statement forces sellers of drugs to explicitly state seven different assertions regarding the transaction (the change in ownership).  These are:

(A)  The seller “is authorized as required under the Drug Supply Chain Security Act”
According to the DSCSA, an “authorized” trading partner is one that is licensed appropriately for the type of business they are, what role they are filling, and where the transaction is taking place.  By making this assertion, you are stating that you are appropriately licensed at the time of the transaction;

(B)  The seller “received the product from a person that is authorized as required under the Drug Supply Chain Security Act”
To make this assertion, you must know that the companies you originally bought this product from are also appropriately licensed as the type of role they fulfilled when you bought the product from them in the locations that the transactions took place.  Keep in mind that, in some cases, your current shipment (current transaction) may include drugs received from multiple sources, including multiple sources for a given product code and lot number.  In those cases, this assertion must refer to all of those suppliers.  Because you must receive (and retain for 6 years) a TS from each of those suppliers in which they assert that they are “authorized” to offer the product for sale (see below), you may not need to keep track of the licensing status of each supplier in each locality you do business with them (although there may be other reasons you will want to do that).  That is, your assertion that you received the product from a person that is authorized might be based on the fact that your supplier provided you with their assertion that they were authorized.  The combination of these assertions results in the documentation of the chain of trust that has always existed in the U.S. pharma supply chain (see “Reliance on Trust in the U.S. Pharma Supply Chain”) and turns it into evidence that can be used against criminals;

(C)  The seller “received transaction information and a transaction statement from the prior owner of the product, as required under section 582”
to make this assertion, you must ensure that you receive proper TI and TS from all of your suppliers, starting in January, and you must keep those paper or electronic documents so you can retrieve them quickly in case of an investigation (see “DSCSA:  Transaction Information”);

(D)  The seller “did not knowingly ship a suspect or illegitimate product”
To make this assertion you need to have a way of identifying at shipment time (and earlier) any product for which you have receive a “suspect product” or “illegitimate product” notice from the FDA or a trading partner.  Don’t make this assertion without having confidence that your systems would automatically detect and stop the shipment of any product that is covered by one of these types of investigations or you will be breaking the law.  It will be easy for the Justice Department to prove that you received a notification and as a result your company “knew” that the product you shipped was suspect or illegitimate at the time of the transaction.  The DSCSA provides clear definitions for “illegitimate product” and “suspect product”.  Make sure you become familiar with those definitions.  The FDA is due to publish guidance on the determination of those types of products and how to conduct investigations into them by May 27;

(E)  The seller “had systems and processes in place to comply with verification requirements under section 582”
The DSCSA includes sections that describe the verification requirements for each type of trading partner in the supply chain, including manufacturer, wholesale distributors, repackagers and dispensers.  These sections explain how each type of trading partner must detect and handle suspect and illegitimate product.  These “systems and processes” must be in place by January so that you can make this assertion truthfully at that time.  Make sure you update all of your supply chain standard operating procedures (SOPs) and retrain your workers to follow them before the end of the year.  Don’t underestimate the effort this requirement will take.  To be ready in time, start this process now, or no later than the FDA publishes their guidelines in late May;

(F)  The seller “did not knowingly provide false transaction information”
To make this assertion, you must ensure that the TI you send to your customers always match the product contained in their shipments and, if you are not the manufacturer, that they reflect the information provided to you by your source(s) (see “DSCSA:  Transaction Information”);

(G)  The seller “did not knowingly alter the transaction history”
To make this assertion, you must ensure that the TH you send to your customers always match the product contained in the shipments and that they reflect the true histories of the products contained in the shipment.  And, of course, don’t modify any of the information that was provided by previous owners of the product.

As the seller, if it turns out that any one of these assertions are false, then you are committing perjury and you leave yourself open to prosecution.  However, the DSCSA does not require anyone to check the validity of this information on a routine basis.  The law is what I call an “after-the-fact” investigation law, which means that this transaction data will be collected from supply chain members and analyzed by the FDA, U.S. Justice Department or State regulators only in the event that something raises suspicion that there may be something illegitimate about the drugs.  That is, the drugs become “suspect product”, or “illegitimate product”.

This should be good news for legitimate members of the supply chain, and bad news for criminals.  I don’t think the FDA is going to go around prosecuting people who pass a TS that has an inadvertent false statement as long as the drugs being sold are legitimate and there is nothing illegal about the current or previous transactions.  But if true illegal activity is uncovered—like the sale of drugs that were illegally imported, stolen, mis-labeled, counterfeit, adulterated or any other illegitimate activity—the TI, TH and TS will be just as good as a forged pedigree to point the finger at the criminal(s) and these tools will also make the job of the prosecution easier than it was before the DSCSA.

UNANSWERED QUESTIONS ABOUT ‘TS’

But there are a number of important questions about transaction statements.  I anticipated one of them when I constructed the 2014 RxTrace U.S. Pharma Traceability Survey, sponsored by Frequentz, last December.  I asked the following question regarding what people thought would constitute a valid way or representing these seven TS assertions and got the following responses (click on the image to enlarge it).  In the question, “the full text above” refers to the full TS definition text:

Click image to enlarge

Click image to enlarge

In fact, some of these survey choices can be eliminated.  It now seem clear to me that the seven specific assertions must remain individually answerable because some parts of the DSCSA exempt certain trading partners from answering certain individual assertions under certain specific situations.

For example, when a wholesale distributor sells product after January 1, 2015 which it acquired prior to that date, that company is exempt from asserting in their TS that they received TI and TH from the prior owner of the product, since that prior owner was under no obligation to provide it at that time.  This is a form of “grandfathering” in product that was in supply chain inventories on the day the law goes into effect.  However, the wholesale distributor in this example must provide a TS that includes the remaining assertions.  The only way to respond to the other six assertions without responding to one of them is if all seven are individually answerable.  So I don’t think a single checkbox on an electronic or paper form will comply.

In addition, there is at least one additional assertion must be included in the TS under certain conditions.  This occurs when a wholesale distributor is selling drugs that they acquired directly from a manufacturer, the exclusive distributor of the manufacturer, or a repackager that purchased the drugs directly from the manufacturer.  In this case, the wholesale distributor must provide the subsequent owner of the product an additional assertion in their TS to indicate that they bought the drugs from one of those entities.  This alerts the buyer that the wholesale distributor’s TI and TH in this instance will not need to include certain data elements, including the lot numbers of the product (for more about this, see “DSCSA: Transaction History“).

This is a strong indication that the assertions within the TS must be individually answerable, but can they be abbreviated in some way, or must the entire text appear in every TS?  Hopefully the FDA will tell us.

When a manufacturer generates a TS, should they include the assertions that they received TI and TH from the prior owner, and that they received the product from an authorized person?  Clearly these do not apply to the company that makes the product, but oddly, nothing in the DSCSA appears to exempt manufacturers from these individual assertions.  The FDA should make this clear in their future guidance.

Can you think of more questions about TS?  Leave a comment below.

Product Image.single user.thumbnailIf your job requires you to understand the DSCSA, make sure you check out my new PDF document “The Drug Supply Chain Security Act Explained”.  It is a section-by-section explanation of the DSCSA and discusses many of the implications to companies in the supply chain who must implement it.  It includes thousands of cross-reference hyperlinks that allow you to navigate from one point in the document to another and back with little effort.  You will find it an indispensable tool for learning the DSCSA quickly.  Get a copy today.  The introductory price discount ends today so don’t wait.  To learn more, click here.

A NOTE TO THE CRIMINALS OUT THERE

Finally, I want to directly address the criminals who are reading RxTrace in an attempt to figure out how to get around the new law.  I don’t know who you are but I know you are out there.  You know who you are.  Make particular note of the TS because it is the piece of evidence that the U.S. Justice Department will use to nail you so tightly that the only thing left for you to do will be to plead guilty in hopes of getting a reduced sentence.  You are going to get caught, and you are going to prison.  So why bother?  Find another line of work.

Dirk.

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2 Responses to “DSCSA: Transaction Statement”

  • Ricardo Acosta says:

    Hi Dirk -
    Which TS would be applicable to a manufacturer that makes most of the products that it sells but that does carry a few products it buys from other manufactuers (e.g. licensed, JV, etc.)?

    What about the scenario where all products (made and bought) are sold on the same customer order and shipped together in the same delivery? Which TS would apply? The Manufacturer’s? Wholesaler’s? Both?

    Thanks,
    Ricardo

    • Dirk A. Rodgers says:

      Ricardo,
      This is a an excellent question. It makes sense that the TS provided by a seller must make clear exactly which products in the shipment it covers. In the shipment you describe where there is a mix of products that a manufacturer makes themselves and some that they license or distribute from others, both the TH and the TS for each product would probably be different. This same situation applies to all trading partners in the supply chain because shipments are often made with a mixture of products (especially wholesale distributors).

      Remember that for most shipments of a given product, the TI, TH, and TS must be contained in a single document, whether that is paper or electronic. In this way it will be clear which products your TS applies to. However, this also means that for overall “shipments” that include multiple products that have different histories or required a different set of TS assertions, you will need to include more than one document containing the transaction data. Don’t expect to use a single document for an entire “shipment” unless the entire load is composed of a single product from a single lot and they all have a single supply chain history.

      I’m sure the FDA’s guidance will explain all that with more clarity.

      Thanks,
      Dirk.

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About The Author
Dirk Rodgers

Dirk is an independent consultant and founder of RxTrace. He has contributed to many of the industry groups that have been formed over the last 10 years to investigate solutions to the problem of counterfeit and other illegitimate drugs in the legitimate supply chain. He served as co-chair of a number of key technical work groups in GS1 and GS1 US. These include the original GS1 EPCglobal Drug Pedigree Messaging work group that created the DPMS pedigree standard, the Network Centric ePedigree (NCeP) work group and the RFID Barcode Interoperability Guideline work group. Dirk holds a BS in Electrical and Computer Engineering from the University of Wisconsin-Madison.

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