The Supply Chain Provisions Of The FDA Safety & Innovation Act

Secretary of Health and Human Services Kathleen Sebelius, President Barack Obama, Representative Nancy Pelosi
Secretary of Health and Human Services Kathleen Sebelius, President Barack Obama, Representative Nancy Pelosi

Last fall the U.S. Congress passed the Food and Drug Administration Safety and Innovation Act, or FDASIA, and the bill was signed into law by President Obama.  The purpose of the legislation was primarily to re-authorize user fees that are paid by manufacturers of drugs, medical devices and biologics, but the law also contains quite a few other things.  Readers of RxTrace will recall that the well-organized attempt to add a nationwide track & trace requirement to the bill failed (see “PDUFA Will Not Include RxTEC”), but a number of very significant supply chain security elements did make it into the law under the title “Title VII—Drug Supply Chain” (see the full text of the law here).  A closer look at these provisions is long overdue.


Probably the most interesting standards-related requirement in the supply chain provisions is the direction to the FDA to come up with a new “unique facility identifier system” that can be used by registrants of domestic and foreign drug and device manufacturing facilities.  A similar—or perhaps the same—kind of identifier must be developed for use in registering commercial importers of drugs.  The new identifier would be used to reference all of these types of facilities within FDA databases and assist the agency with regulating the drug supply.

The law is vague on what this unique identifier might be so the full definition is left up to the FDA.  This reminds me of the way Congress directed the FDA to develop the unique identifier for drugs back in the FDA Amendments Act (FDAAA of 2007).  In that case, the direction resulted in the FDA publishing their Standardized Numeric Identifier (SNI) guidance in 2010 (see “FDA Aligns with GS1 SGTIN For SNDC”).  That guidance was written to enable the use of existing international standards like those from GS1 and/or ICCBBA for uniquely identifying drugs.

However, in the case of the SNI, Congress specifically directed that the SNI “…be harmonized…with internationally recognized standards for such an identifier.”  No such wording was included in the FDASIA for the unique facility identifier.  In theory, the FDA could make use of GS1’s Global Location Number (GLN) or HIBCC’s Health Industry Numbering (HIN) System rather than coming up with their own new identifier, but in the past the FDA has shown no willingness to embrace a single standards organization at the expense of another.  Look for draft guidance sometime next year.


The law requires drug and device manufacturers and importers to make use of the new unique facility identifiers to register all of their domestic and foreign sites.  The FDA must come up with a new electronic system for registration and listing these facilities within two years of passage.  Registration must include a list of drug excipients used and the unique facility identifier for the establishments where they are produced.


The new law says that “Every establishment that is required to be registered with the Secretary under this section shall be subject to inspection”.  The frequency for drug facility inspections will be determined using a risk-based approach.  See the text of the law for all the parameters that will be used to determine risk.  It is explicitly illegal to delay, deny, or limit an inspection, or refuse to permit entry or inspection of an establishment where a drug has been manufactured, processed, packed, or held including any factory, warehouse, or other establishment.


OCI emblemOne of the most important and impactful provisions of the supply chain section of FDASIA is the new ability for the FDA to destroy drugs with a value of $2,500 or less that they find entering the U.S. that are determined to be illegitimate.  Incredibly, previously these drugs had to be returned to the sender where they were probably immediately resent to the U.S. recipient.  Since the percentage of illegitimate drugs entering the country that are detected is small, odds are, simply resending these same drugs meant that the original detection was nothing more than a minor delay in their shipment.  In other words, it was a joke to the criminals.  Now these drugs can be detained and the sender will be given due process to contest their destruction.

The FDA has two years to adopt final regulations for this process.


FDASIA adds the following text to the definition of the term ‘current good manufacturing practice’ (cGMP):

“the implementation of oversight and controls over the manufacture of drugs to ensure quality, including managing the risk of and establishing the safety of raw materials, materials used in the manufacturing of drugs, and finished drug products.’’

I don’t know the full significance of this but it’s a little surprising to me that these things weren’t already covered by cGMP.  Perhaps without these words the FDA could not prosecute companies who would now be considered negligent if the Heparin adulteration case were to happen today.


In addition to the registration of commercial importers of drugs using a new unique facility identifier, the FDA may require importers to electronically submit information demonstrating that the drugs comply with the Food, Drug and Cosmetics Act.  The agency has 18 months after FDASIA was enacted to publish final regulations for this section.


The FDA will now be able to make arrangements and agreements with appropriate foreign governments to recognize their inspections of facilities on foreign soil.  This is an important provision to ensure that the FDA can accomplish a significant increase in protection of the U.S. supply chain even without hiring additional inspectors.  By being able to accept the inspection reports of like-minded peer agencies within foreign governments, the FDA can eliminate the duplication of efforts that had been spreading our inspectors too thin.

A related provision allows the FDA to accept and protect confidential information related to drugs received from foreign governments.  This will allow the FDA to engage in information exchange about potential criminal activity with peer agencies in other countries without that information becoming caught up in a “freedom of information act” search.

These provisions should be a big boost in the global fight against counterfeit, adulterated, stolen and diverted drugs.


The law now allows the FDA to require notification by any regulated person who knows that:

  • the use of a drug in the United States may result in serious injury or death;
  • a significant loss or theft of a drug has occurred;
  • a drug has been or is being counterfeited either in the U.S. or to be imported into the U.S.

This section applies to anyone who is required to be registered under FDASIA and to drug wholesale distributors.


DoJ Logo 2The penalty for intentionally adulterating a drug in a way that has a reasonable probability of causing serious adverse health consequences or death to humans or animals is now elevated to up to 20 years in prison or a fine of not more than $1,000,000, or both.  FDASIA defines the term ‘counterfeit drug’ to mean “…a drug […] that uses a counterfeit mark on or in connection with the drug.’’  It gives direction to the U.S. Sentencing Commission to review and amend its guidelines and policy statements that apply to persons convicted of counterfeit drug offenses…

  • to reflect the intent of Congress that such penalties be increased in comparison to those currently provided by the guidelines and policy statements
  • “…consider the extent to which the guidelines may or may not appropriately account for the potential and actual harm to the public resulting from the offense;
  • …reflect the serious nature of [counterfeit drug offences] and the need for an effective deterrent and appropriate punishment to prevent such offenses
  •  “…assure reasonable consistency with other relevant directives and with other sentencing guidelines;
  • “…account for any additional aggravating or mitigating circumstances that might justify exceptions to the generally applicable sentencing ranges;

These provision are the conclusion of the steps initiated by a group of Congresspeople as I reported in my essay “STEP #1: Raise Penalties For Drug Crimes To Reflect The Widespread Harm They Can Inflict“.

Finally, the law includes…

extraterritorial jurisdiction over any violation of this Act relating to any article [drug, device or biologic] if such article was intended for import into the United States or if any act in furtherance of the violation was committed in the United States.

Take that, criminals who think they can hide outside our borders.


These crime-fighting provisions make up only a small part of the entire FDASIA law but they may have a profound effect on the ability of the U.S. FDA and the Justice Department to pursue and prosecute drug, device and biologic criminals from now on.  Many people were disappointed in the seemingly anemic ability of these agencies to bring anyone to justice over the Heparin adulteration debacle back in 2008.  These new provisions in FDASIA could turn the tables.  Given the announcement of a new discovery of counterfeit Altuzan in New York last week we may not have long to see these new tools in action.


PhL banner ADVERTFDASIA is going to impact just about every company in the healthcare industry whether drug, device or biologic.  If you are a part of that industry, there is a golden opportunity approaching for you to learn all about the law and its upcoming implementation.  I highly recommend that you attend the PharmaLINK conference to learn more about FDASIA and chat with the folks who will oversee its implementation and enforcement.

The FDA is co-sponsoring this conference with Xavier University on March 11-14.  My essay has only covered the supply chain section of the law but PharmaLINK will cover the full scope.  Speakers include those from regulatory agencies (FDA, MHRA, Fimea and Swissmedic) and industry.  Check out the full agenda here.  I will be there for for first part of the agenda before I have to depart for the California Board of Pharmacy Enforcement Committee meeting.  If you attend, make sure you find me and introduce yourself.


One thought on “The Supply Chain Provisions Of The FDA Safety & Innovation Act”

  1. Managing medications after dispensing can be a major contributor to improving compliance and outcomes, and reducing healthcare costs.
    Systems are being developed to help patients and caregivers manage medications.
    Some are based on smart phone and various sensor capabilities. AIDC labeling on drugs and devices provides another capability to enable such medication (and patient and caregiver device) management.

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