Vendor Managed Inventory Under the DSCSA

I wrote this essay on Vendor Managed Inventory (VMI) back in 2013 which was aimed at what would likely happen to VMI under the California pedigree law (see “Vendor Managed Inventory Under California ePedigree”).  But even though that law is now obsolete (see “The California Pedigree Law Is Now Officially Inoperative“), surprise, some of the

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4 thoughts on “Vendor Managed Inventory Under the DSCSA”

  1. Well said, Dirk. This will surely be a significant gap that must be addressed. Fortunately for me, my current clients do not have such requirements; I will have to wait for the experts to weigh in on this one.

    Would be useful to hear your thoughts on CMO. Specifically toll manufacturing, where the pharma outsources production but legally owns the components and finished goods. Perhaps drop shipment direct to the wholesaler/customer from the CMO would be a good topic as well.

    Thanks again for all your work. I eagerly await your posts every Monday morning!


  2. This is not a happy path scenario, but how would you handle damaged product that the customer sends to destruction company directly which is part of VMI inventory.?

    1. Sunil,
      The VMI customer is under contract to document the sale and disposition of all product. That would certainly include any destruction. It would be a serious error for the VMI customer to do anything with the VMI supplier’s product without their knowledge and consent, and the customer should be well aware of those obligations. In the end, the supplier normally reserves the right (and actually follows through with) to do a full physical inventory of their product in the customer’s location on a regular frequency. Any missing product would normally be the responsibility of the customer.

      Thanks for reading,

  3. Dirk,
    It would be interesting to flow out the events to support VMI in Pharma. I imagine, due to latency issues, trading partners would want to decide on an event prior to dispensing that would trigger the transfer of ownership (and transfer of DSCSA info). From a VMI standpoint, it would also be interesting to see how the supplier would receive the signal (which event) to trigger replenishment. Lastly, it would be interesting to see how the par value of each “managed” inventory point would be communicated to the supplier. Serialization certainly brings an additional layer of information that could translate to an additional layer of trust between trading partners that share data openly with each other as in VMI or CPFR scenarios.

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