I have now read the FDA’s new draft Grandfathering Policy that was published on Monday (see “FDA Publishes DSCSA Grandfathering Guidance Exactly 2 Years Late”) and for the life of me, I can’t figure out why it took two extra years beyond the due date to get it out. Back in September of 2015 I posted an essay that analyzed the options they had in front of them (see “Will Manufacturers Be Able To Grandfather Products In Their DC And 3PL?”). All they really had to do was chose from a short list of events that could trigger the drug’s transition into the pharmaceutical distribution supply chain at the time of the effective date. They had the following options:

• When the bulk drug is manufactured
• When the drug is packaged
• When the drug is sold
• When the drug is packed for shipment
• When the drug is shipped
• When the drug is received by the first buyer

That’s about it. So which did they choose?

They chose the obvious. They determined that the drug enters the pharma supply chain when the drug is packaged. The rest of the guidance just explains the regulatory implications of that decision.

The most complex part of the guidance is how downstream trading partners will decide if non-serialized drugs they receive after their respective dates that they must only engage in transactions involving serialized drugs, are under the exemption offered by the Grandfathering guidance. Remember, as the result of the FDA Compliance Policy from the summer (see “FDA Delays Enforcement of DSCSA November Deadline: What It Means” and “DSCSA Serialization Delay Eclipses Grandfathering”), the FDA does not intend to enforce the serialization or verification requirements on drug manufacturers until November 27, 2018—a one year delay. So downstream trading partners who receive non-serialized drugs after the date they are not allowed to, can still legally receive them, as long as the original manufacturer packaged them prior to November 27, 2018 (see “DSCSA Cascading Delays”).

The FDA’s compliance policy said that downstream companies could use one of several ways to determine exactly when the drugs entered the supply chain from the original manufacturer:

• Check the manufacturer’s shipping date in the DSCSA Transaction History that accompanies the product;
• Check the manufacturer’s shipping date on the manufacturer’s packing list;
• Other, unspecified ways that the recipient might come up with.

This seemed to establish the drug’s shipping date from the manufacturer as the date that determined when the drug entered the supply chain. At least I fell for that (see “DSCSA Serialization Delay Eclipses Grandfathering”). But this new draft grandfathering guidance makes it clear that the packaging date is the date which the drug entered the supply chain:

“For the purposes of this guidance, a package or homogeneous case of product is ‘in the pharmaceutical distribution supply chain’ if it was packaged by the product’s manufacturer before November 27, 2018.”

But how will a downstream trading partner know exactly when the product in question was packaged by the manufacturer? The guidance offers three ways to do that:

1. If the original date of sale by the manufacturer as documented in the product’s DSCSA Transaction History is before November 27, 2018, then the trading partner can reasonably conclude that the product was packaged by a manufacturer before that date.
2. But even if the TH indicates that the drug’s original date of sale by the manufacturer was after November 27, 2018, the potential buyer can check the DSCSA Transaction Statement that accompanies the shipment. As long as there is no evidence of potential suspect or illegitimate product, the Transaction Statement “…is one indication that the product was in the pharmaceutical distribution supply chain before that date.” In a footnote, the FDA says, “Per section 581(27)(d) of the FD&C Act, the transaction statement indicates that an owner did not knowingly ship a suspect or illegitimate product.”
3. Just contact the original manufacturer and ask them when the product was packaged.  “[T]hey should provide the packaging date to subsequent trading partners if they request it.”  No indication how the manufacturer will know that the caller is authorized to make the request.

The first and third way listed are logical, and seem pretty definitive, but the second way seems like a punt by the FDA. The number of products that would actually require the second way should be pretty small, but what this seems to do is let all downstream trading partners totally off the hook when it comes to making this decision.

Remember that for all drug transactions after January 1, 2015 had to be accompanied by Transaction Information, Transaction History and a Transaction Statement. The Transaction Statement is composed of seven assertions made by the seller in a transaction about the integrity of the current transaction and the product. One of the statements is

“(D) did not knowingly ship a suspect or illegitimate product;”

This seems to let the buyer off the hook and leaves all of the risk on the seller. As long as the buyer is given a valid Transaction Statement, they can trust that the product was packaged prior to November 27, 2018.  But for all supply chain transactions after the first one for a given drug, the TS provided by the seller only reflects their transaction, not the previous transactions, but that’s what the guidance seems to be saying.

The guidance is 11 pages long and I’ve only touched on the main points. If you are impacted by grandfathering, you need to study this document carefully.

Dirk.