DSCSA Serialization Delay Eclipses Grandfathering

On August 21st, large portions of the United States and other places will experience a total eclipse of the sun by the moon.  On November 27th, the serialization and verification delay of the Drug Supply Chain Security Act (DSCSA) contained within the FDA’s recent draft compliance policy (see “FDA Delays Enforcement of DSCSA November Deadline: What It Means”) will eclipse the grandfathering guidance that hasn’t even been published yet.  In fact, the overdue grandfathering guidance should be easy for the FDA to write now (see “Who Is Being Harmed By Four Overdue FDA DSCSA Guidances?”).  Grandfathering probably just won’t exist.  Here’s why.

The original question that the FDA was supposed to address in the missing grandfathering guidance was what exactly the DSCSA means by the phrase “…under what circumstances product that is not labeled with a product identifier and that is in the pharmaceutical distribution supply chain at the time of the effective date of the requirements of this section shall be exempted from the [serialization] requirements…” [from Section 582(a)(5)(A)].  (See “Will Manufacturers Be Able To Grandfather Products In Their DC And 3PL?”.) 

Did this mean that any drug that had been manufactured by that date, or labeled by that date, or sold by the manufacturer by that date, or shipped by the manufacturer by that date, would be allowed?  Which of these is the correct interpretation of “…in the pharmaceutical distribution supply chain…”.  We still don’t know, because that guidance still hasn’t been published.  It is now 20 months overdue, along with three other mandated guidance documents.

But the way the recently announced delay in the serialization and verification requirements of the DSCSA changes the situation significantly.  In that announcement the FDA said they would address how the delay impacts grandfathering when they eventually publish the grandfathering guidance.  We don’t know what they will say, but let’s apply some logic. 

For drug manufacturers, FDA will not enforce the requirement to apply the DSCSA product identifier on drug packages and homogeneous cases that enter the pharmaceutical distribution chain between November 27, 2017 and November 26, 2018 (what I call the “magical year”).  This gives manufacturers one extra year to serialize their drug packages and cases.  Is it logical that the grandfathering allowance would simply shift from this year to next year?  Yes, maybe, but it also has to change the likely answer to the question above. 

Before the announcement of the delay, the Pharmaceutical Distribution Security Alliance (PDSA) recommended that companies assume grandfathering would cover drugs based on the date of packaging, and they informed the FDA their members would assume that was correct unless and until the FDA informed them otherwise (see ”In Absence Of FDA Guidance, Follow PDSA Recommendations”).  I agreed with that stance.  It made perfect sense…before the delay.  But now that the serialization requirement will not be enforced until November 27, 2018, it no longer works.

The reason is that once the FDA begins enforcing the serialization and verification requirements on November 27, 2018, they cannot allow non-serialized drugs to leave the possession of drug manufacturers, even if they were packaged prior to that date.  According to the draft compliance policy, only non-serialized drugs introduced into the supply chain by the manufacturer during that magical one year can be handled by repackagers after November 27, 2018, wholesale distributors after 2019, and dispensers after 2020.  These members of the supply chain will use the date of shipment from the drug manufacturer, as indicated in the Transaction History (TH) they receive (or comparable documentation), to determine whether or not they can buy or sell it.

Let’s construct an example, applying the PDSA recommendation for the original deadline to the new enforcement deadline.  They recommended that any drug that was packaged without a DSCSA Product Identifier before the original serialization deadline should be allowed to be sold even after that deadline (see “The DSCSA Product Identifier On Drug Packages”).  So if we apply that to November 27, 2018, it would mean that manufacturers would be able to sell non-serialized drugs after that date as long as they were packaged prior to that date.  But then the TH will indicate that those non-serialized drugs entered the supply chain from the manufacturer after the “magical year” was over.  That would indicate to them that they could not buy or sell those products.

In fact, after the delay, the only way to interpret the phrase “…in the pharmaceutical distribution supply chain…” is the moment they are shipped to the next owner by the original drug manufacturer, because on November 27, 2018, all drugs that they ship must be serialized so that downstream trading partners can easily determine what is, and is not, allowed.

I suppose the FDA could come up with some clever way of indicating in the TH that “these drugs were grandfathered on November 26, 2018”, and then allow them to be shipped by the manufacturer after that date, but that would add another layer of complexity, and it would extend the time when all drugs entering the supply chain are serialized even longer.  Odds are, they will conclude that the one year delay in enforcement eclipses grandfathering.

What do you think?  How long do you think we will have to wait to find out?


3 thoughts on “DSCSA Serialization Delay Eclipses Grandfathering”

  1. Great article, thanks Dirk. You have yet again successfully captured a complex topic!

  2. More generally:

    I believe that FDA has ignored the obvious “Law of Unintended Consequences” with their recent enforcement discretion one year “delay” Guidance, provided without the long overdue Grandfathering, Exceptions, and Exemptions Guidance.

    FDA thereby has set us all up for a world where long with the “It’s Complicated”,by both the DSCSA Law” and the “Law of Unintended Consequences” …

    The law of unintended consequences, often cited but rarely defined, is that actions of people—and especially of government—always have effects that are unanticipated or unintended. Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have largely ignored it.

    May we live in Interesting Times,

    1. Carl,
      Good point. The DSCSA is very complex, so I suspect we will see many more unintended consequences before we are all done.

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