How Will The DSCSA Serialization Mandate Be Enforced After 2017?

iStock_38947550_smallerDrug manufacturers, contract manufacturers (CMOs) and contract packagers (CPOs) are all working hard right now preparing to meet the November 27, 2017 deadline when all prescription drugs entering the U.S. market must contain the new machine- and human-readable product identifier defined in the Drug Supply Chain Security Act (DSCSA) (see “The DSCSA Product Identifier On Drug Packages“).  The date for repackagers is one year later (see “Who Is A DSCSA Repackager?”).  From what I hear around the industry, some companies are going to make that date, but some will not.  What will happen next for those how are not ready?  I discussed this from a regulator perspective last year in one of my personal favorite essays, “An Open Letter To The FDA, EMA and ANVISA, RE: Who Are You Going To Punish?”, but what about from the perspective of those who will be late?

Some companies will come close, but will miss the deadline by just a few months.  Those companies will want to know how to make proper use of the grandfathering provision of the DSCSA.  We don’t know yet exactly how the FDA interprets that clause of the DSCSA so it’s hard to develop a workable plan for using grandfathering to ensure there is no disruption in the supply of your products after the deadline, but before you are able to ship serialized products.  The problem is that there are two different ways to interpret the applicable sections of the DSCSA and which lead to different strategies (see “Will Manufacturers Be Able To Grandfather Products In Their DC And 3PL?”).  Until the FDA publishes the guidance on grandfathering that Congress mandated, we just won’t know which strategy is right (see “Who Is Being Harmed By Four Overdue FDA DSCSA Guidances?”).

Odds are, a few companies are going to miss the deadline by a lot.  What is going to happen to those companies and their products?  Of course, that will be up to the FDA, but here are my thoughts.  Make your own decisions about what is likely to happen.  This is all just total speculation.

The first thing I will note is that, when you listen carefully to the presentations of the FDA about the DSCSA (see “FDA Speaks At GS1 Connect” and “DSCSA: Many Questions, Few Answers“), you will note that they always say something about the importance of not disrupting the supply of drugs as the result of the regulation.  Logically, this should be one of their top priorities.  Can you imagine the FDA absolutely baring all non-compliant, unserialized drugs from entering the supply chain the moment the deadline passes?  I can’t.  That would mean the supply of some essential medicines would quickly become constrained—and for no reason other than an arbitrary deadline.  So I suspect the FDA will not do anything in their enforcement of the serialization deadlines that will result in product being blocked from entering the supply chain.  Fines, maybe, but no blockage.

In theory, the FDA could get very selective about which non-compliant products are allowed to enter the supply chain and which are not.  That is, block non-compliant drug products as long as a competitor has an equivalent product that is compliant, and allow other non-compliant drugs to enter the supply chain if there is no equivalent that is compliant.  If the FDA were to take this approach they would need to do some accounting that is probably beyond what they will want to be responsible for, so I don’t think this is likely to happen.  On the other hand, I think the fear of something like this happening is what may be driving the DSCSA strategies of some generic drug manufacturers.

Another possibility is that the FDA will not do anything unless or until there is a real need to use requirements mandated in the DSCSA to conduct an investigation into true illegitimate product found somewhere in the supply chain.  That is, when a real crime is uncovered, everyone involved—whether complicit in the crime or just innocently caught up in it, or even just close-by in the supply chain—will be expected to be compliant with all applicable provisions.  If you are not, at that time, you should expect to be in big trouble.  Section 206 of the DSCSA puts drugs found in the supply chain failing to bear the DSCSA product identifier after the deadline into the “misbranded” category and are subject to penalties under that designation.

If the FDA does nothing to enforce the serialization deadline, they could just let the wholesale distributors “enforce” it for them two years later under the November 27, 2019 wholesaler requirement not to engage in transactions with drugs that do not bear the DSCSA product identifier.  You can bet as that deadline approaches the larger wholesale distributors are going to make sure their inventories are fully purged of all non-compliant product.  “Engaging in transactions” includes buying and selling, so after that date any drugs they have in inventory that are not compliant (and not subject to whatever grandfathering the FDA offers to wholesale distributors) will immediately become unsellable.  They will need to be returned to the manufacturer or destroyed.  Will the FDA offer some kind of grandfathering to wholesale distributors?  Again, we won’t know until the FDA publishes that overdue guidance document on that topic.

If the FDA does nothing to enforce the manufacturer’s serialization deadline, and then offers a wide and easy grandfathering capability to wholesale distributors at their deadline, and then dispensers at their deadline (November 27, 2020), we could see a very long slide toward full serialization.  November 27, 2023 could become the ultimate deadline.

And that’s what I predict will be the most likely outcome.  The reason is that the DSCSA did not come with any new funding for enforcement.  FDA has lots of people enforcing drug quality regulations at the manufacturers, but no existing staff to enforce the much more distributed and massive supply chain.  Look at the lax approach the FDA is taking with their own deadlines.  No funding, little staff, little attention.  On the other hand, odds are the more-active state Boards of Pharmacy will step in and enforce the wholesaler and dispenser requirements.  That could result in the kind of uneven enforcement the law was designed to prevent (see “Preemption: What Does It Mean?”).

What do you think will happen?  Leave a comment or send me an email.