While listening to a monthly Drug Supply Chain Security Act (DSCSA) call hosted by one of the Big-3 wholesale distributors I heard a comment that snapped me out of my conference call-induced stupor. Unfortunately I was in a location where I could not take notes so I don’t remember the exact comments that were made, but I remember what it was that brought me back to full consciousness.
The comment made me realize in a jolt why the Big-3—or at least the one running this monthly call—may be unwilling to give up on their claims that they will need aggregation data to accompany shipments of prescription drugs from manufacturers as early as November 2019. It may have to do with a mis-interpretation of their handling of saleable returned product within the DSCSA. Let me explain.
First, I have discussed aggregation as it relates to the DSCSA in quite a few previous essays and I usually focus on how the wholesale distributors are mistaken in their apparent thoughts that they will need it in 2019. See the following set of older essays for the full background.
|March 26th, 2012||Pharma Aggregation: How Companies Are Achieving Perfection Today|
|November 22nd, 2013||DQSA: Will U.S. Pharma Distributors Mandate Aggregation Data In Phase 1?|
|February 10th, 2014||Does The DQSA Require Manufacturers To Provide Aggregation Data? Survey Says…|
|June 9th, 2014||The Aggregation Hoax and PIA|
|February 23, 2015||When Will The DSCSA Ever Require Investments In Aggregation?|
The basic claim by these companies is that they will probably need the serial number-based packaging hierarchy, or “aggregation data” from manufacturers beginning on November 27, 2019 so that they are able to meet the new requirements that will go into effect for them on that day. What they are apparently referring to is the DSCSA provisions on saleable returned drugs. There are several DSCSA sections that touch on this topic. Here they are (for a full explanation of the DSCSA, including these sections, see “The ‘DSCSA Explained’”):
Section 582(c)(B)(i) applies to wholesale distributors and it reads:
“(i) SALEABLE RETURNS.—Notwithstanding subparagraph (A)(i), the following shall apply:
“(I) REQUIREMENTS.—Until the date that is 6 years after the date of enactment of the Drug Supply Chain Security Act (except as provided pursuant to subsection (a)(5)), a wholesale distributor may accept returned product from a dispenser or repackager pursuant to the terms and conditions of any agreement between the parties, and, notwithstanding subparagraph (A)(ii), may distribute such returned product without providing the transaction history. For transactions subsequent to the return, the transaction history of such product shall begin with the wholesale distributor that accepted the returned product, consistent with the requirements of this subsection.
“(II) ENHANCED REQUIREMENTS.—Beginning 6 years after the date of enactment of the Drug Supply Chain Security Act (except as provided pursuant to subsection (a)(5)), 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.”
Section 582(c)(4)(D) reads:
“(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.”
To help you calculate the effective dates, the DSCSA was enacted on November 27, 2013.
Prior to the DSCSA, wholesale distributors generally would take back saleable product as long as they had previously sold at least some of that same product to the returnee in the recent past. For larger or long term, trustworthy customers—and where there are no laws against it—they would usually even take “back” drugs that they probably did not sell originally. This long-standing practice was done for the purpose of providing maximum service to these important customers.
The DSCSA will put a stop to this practice in 2019, if not before. That is probably a good thing. Accepting “returns” from customers who did not buy those specific units from you, and then re-distributing them to other pharmacies, seems like a bit of a hole in the supply chain that could be exploited by criminals. I think closing this hole is the only affect Congress intended section 582(c)(i)(II) ENHANSED REQUIREMENTS to have on the supply chain, although, I will admit, it isn’t entirely clear.
Some of the wholesale distributors cling to the claim that they will need aggregation data when these provisions go into effect so they are able to fulfill these requirements. I still disagree and I think the problem stems from the unusual definition of the term “verify” in the DSCSA. I warned RxTrace readers back in early 2014 that you cannot properly understand the DSCSA unless you read and fully understand the definition of terms (see “Don’t Skip The DQSA Definition of Terms Section”). The term “verification or verify” are the terms that I was most worried about at that time. These terms are defined in Section 581(28). That definition is:
“(28) VERIFICATION OR VERIFY.—
The term ‘verification’ or ‘verify’ means determining whether the product identifier affixed to, or imprinted upon, a package or homogeneous case corresponds to the standardized numerical identifier or lot number and expiration date assigned to the product by the manufacturer or the repackager, as applicable in accordance with section 582.”
By using this definition in the wholesale distributor’s section on saleable returns, Section 582(c)(4)(D), you can see that, when wholesale distributors receive saleable returns after November 27, 2019, they will need to “determining whether the product identifier affixed to, or imprinted upon, a package or homogeneous case corresponds to the standardized numerical identifier or lot number and expiration date assigned to the product by the manufacturer or the repackager”.
HOW WILL THEY DO THAT?
Right now I think these wholesale distributors may be thinking the only way to do that will be if they receive the aggregation data from the manufacturer for every unit they receive. That would be a lot of data. But then later, when they receive some potentially saleable returns from one of their customers, they could search through all of the aggregation data they previously received from that manufacturer for the specific case- or unit-level serial numbers found in the set of returns. If they find those serial numbers in the aggregation data they can be confident that the manufacturer did assign those numbers to that product. That way, they have fulfilled the “verification” requirement of Section 582(c)(4)(D). And I agree, that would be one way to do it.
But that would be a mis-read of the DSCSA manufacturer provisions. Are the wholesale distributors reading the manufacturer’s DSCSA requirements? Maybe not as closely as they should. Perhaps they missed the manufacturer’s DSCSA Section 582(b)(4)(C) REQUESTS FOR VERIFICATION:
“(C) REQUESTS FOR VERIFICATION.—Beginning 4 years after the date of enactment of the Drug Supply Chain Security Act, upon receiving a request for verification from an authorized repackager, wholesale distributor, or dispenser that is in possession or control of a product such person believes to be manufactured by such manufacturer, a manufacturer shall, not later than 24 hours after receiving the request for verification or in other such reasonable time as determined by the Secretary, based on the circumstances of the request, notify the person making the request whether the product identifier, including the standardized numerical identifier, that is the subject of the request corresponds to the product identifier affixed or imprinted by the manufacturer. If a manufacturer responding to a request for verification identifies a product identifier that does not correspond to that affixed or imprinted by the manufacturer, the manufacturer shall treat such product as suspect product and conduct an investigation as described in subparagraph (A). If the manufacturer has reason to believe the product is an illegitimate product, the manufacturer shall advise the person making the request of such belief at the time such manufacturer responds to the request for verification.”
That is, starting in November 2017, manufacturers are required to respond to request for “verification” by wholesale distributors (and others). They are to “…notify the person making the request whether the product identifier, including the standardized numerical identifier, that is the subject of the request corresponds to the product identifier affixed or imprinted by the manufacturer.”
Rather than necessitating drug manufacturers to go through all of the expense and effort to provide wholesale distributors with aggregation data for all of their incoming shipments, just so they can properly process their saleable returns, Congress clearly intended those wholesale distributors to simply submit a “request for verification” to the manufacturer or repackager just for those returned units. That will be a lot easier for everyone, and a lot less costly for the manufacturers.
Remember, the DSCSA does not even mention aggregation until the “Enhanced Drug Distribution Security” (EDDS) phase that starts in November 2023, and everything else in the law results in a gradual escalation of technologies through a series of “plateaus”, as I call them (see “Plateaus of Pharma Supply Chain Security”). Why would Congress expect manufacturers to leap to one of the most costly technologies as early as 2019 without even mentioning it, and all just so wholesale distributors can meet a returns requirement for a handful of units each day? They wouldn’t!
If your wholesale distributor tries to claim they need aggregation data so they can meet their 2019 DSCSA returns requirement, ask them to explain why. And then send them a link to this essay.