How The DSCSA Is Designed To Work

There are quite a few people people in the industry who misunderstand how the Drug Supply Chain Security Act (DSCSA) was designed to protect the supply chain. The most common misunderstanding is that it is a full “track and trace” system where drugs are verified at each step. In fact, the DSCSA is mainly just a breadcrumb system that forces companies in the supply chain to retain standardized documentation of supply chain events, “just in case”. Very few drug packages will ever get “verified” at any point in their existence in the supply chain. And that’s by design.

The worst misconceptions of the DSCSA come from people who might have some familiarity with the California or Florida pedigree laws that were originally enacted in the 2000s and were later preempted by the DSCSA when it was enacted in 2013. If you understood how those laws were intended to work–even at just a high level–you tend to assume that the DSCSA would work, generally, the same way. But that’s not the case.

Those state laws required each owner of a drug in the supply chain to provide the next owner with signatures that certified the full transaction pedigree up to that point. The signatures were apparently intended to make a single person responsible for confirming the pedigree so if it was later found to be inaccurate, that person could pay the price legally. I think the hope was, those individuals would be so fearful of their obligation that they would be very careful about how drugs were handled in their part of the supply chain. Pedigrees were essentially a sequence of these signatures.

The DSCSA is not a pedigree system. Yes, the documentation that must be passed from seller to buyer is standardized, but it is not a pedigree. It does not include any signatures and the DSCSA does not contain an obligation for any one individual to look at this documentation for possible fraud. It is mainly just kept for six years in case there is a need to investigate something after-the-fact. That is, after something occurs that makes someone “suspicious” of a specific unit. At that point, the DSCSA requires an investigation that would likely spread to all companies in the supply chain that handled that unit.

The DSCSA is designed to assume that today’s supply chain is fundamentally safe and so we can let it operate without adding the overhead of analyzing every transaction of every unit or case. This maximizes the efficiency while the breadcrumbs should lead to fast and efficient investigations whenever problems are found to occur. This is a fair compromise for our “closed” supply chain.


But what if we open our closed supply chain to importation of drugs from Canada and elsewhere (see “The HHS Importation Proposed Rule“)? The current HHS proposal would quickly lead to our supply chain becoming a mix of drugs that have a complete set of breadcrumbs back to the original manufacturer, and those that only lead back to a company in Canada–or potentially elsewhere in the future–that is beyond the reach of our justice system. We would be forced to rely on extradition treaties to pursue prosecution of the crime of supply chain fraud when US supply chain laws are violated and patients are harmed as a result.

At least the exact mix of open/closed (risky/safe) products in the supply chain would be known. That’s because the proposed importation rule would require drugs imported under a Section 804 Importation Program (SIP) to be repackaged by the Importer and have a National Drug Code (NDC) assigned to them that is different from the original “FDA-Approved” drug packages from the original manufacturer. But if I’m right (see last week’s essay), this will likely cause insurance companies to force everyone to use the open/risky product over the closed/safe product, so this won’t really matter.

The misconceptions I’ve observed about how the DSCSA works is with people who work within the industry or close observers of it. Most everyday-Americans have no idea how their drugs arrive in their pharmacy prescription bottles or in the syringes or infusion pumps of their hospital or clinic. The distinctions between “open/closed” or “risky/safe” will likely continue to be unrecognizable to them. Even if illegitimate drugs are eventually discovered in the US supply chain, whether they enter through the open or closed branches, consumers are likely to fear the same fate could occur with all of their drugs, not just those under certain programs. To them, there is one supplier of any given drug: either their pharmacist or their hospital.

The problem is, the people who will need to evaluate the riskiness of the new HHS importation proposal may not have the knowledge to properly assess those risks. If they do, I don’t think they will be able to allow it to move forward.


2 thoughts on “How The DSCSA Is Designed To Work”

Leave a comment below...

This site uses Akismet to reduce spam. Learn how your comment data is processed.