Drug Supply Chain Security Act, Phase II: Here’s what you MUST know

As 2020 transitioned to 2021, we took another step closer toward the implementation of 2023 Drug Supply Chain Security Act, Phase II. From manufacturers to wholesalers, pharmacies and other stakeholders, many uncertainties are swirling around the subject, so today we are writing to try to dispel some of the concern.

Let’s start with an overview of DSCSA Phase II and its components.  

DSCSA Phase II, which goes into effect on November 27, 2023, is intended to roll out the electronic tracing of products at the package level.  To make this happen, the 2023 requirements are comprised of three specific parts, and they are as follows:

  1. Interoperable Exchange
  2. Interoperable Verification
  3. Interoperable Tracing

While each of these components will be unpacked in this article, the first major point to be drawn from this list is the level of ambition behind this project. To meet these interoperable objectives – exchange, verification, and tracing—new technologies will have to be introduced to the industry, along with a new level of coordination within the supply chain and the stakeholders therein. 

Keep in mind that Phase I, which began January 1, 2015 (with enforcement beginning May 1 of the same year) was a move to require manufacturers to make lot-level product tracking a mandatory requirement of every change of ownership of drugs and biologics in the US supply change.  

This included several expectations of the manufacturers, including recording all the information regarding the change of ownership – the “transaction”- for at least 6 years after the day it occurred. The manufacturer also was required to provide the next owner with the transactional information in a single document, to aid and expedite the process. 

Now, as Phase II comes into focus, the precedent that has been set in Phase I will be expounded upon, with all the Phase I requirements being kept in place and more added to them. The one exception to this, however, is the Phase I requirement that with every transaction, a full transaction history—tracing all the way back to the manufacturer—was to be included. This is being nixed because the FDA believes the interoperable tracing system will be capable of replacing this function.

Interoperability and the Changes Coming with It

Since Phase II is about transforming lot-based paper and electronic systems into an interoperable, electronic package-level tracing system that is serialization-based, there is a good deal of preparation work required. 

A large portion of the preparation is technological, primarily related to innovation and implementation. To achieve interoperability in the exchange, verification and tracing aspects that Phase II requires, the industry is continuing to evolve and implement new technologies and software since interoperability, or the capability of computer systems to exchange and track information, is based in technology.

As promised, to understand the changes in full, we need to understand the three components of interoperability. Including definitions taken straight from the DSCSA, they are as follows:

  1. Interoperable Exchange. Trading partners must exchange required transaction information (TI) and transaction statements (TS) in a secure, electronic, interoperable manner, and the TI must include the product identifier at the package level.
  2. Interoperable Verification. Trading partners must be able to verify the product identifier on a package or sealed homogenous case in a secure, electronic, interoperable manner.
  3. Interoperable Tracing. Trading partners must maintain secure, electronic, interoperable systems and processes to provide TI and TS in response to a request for it and to promptly facilitate gathering the information necessary to produce the TI for each transaction going back to the manufacturer.

Let’s dig in a bit here and consider some ramifications of all three parts.

For the first requirement, exchange, both manufacturers and suppliers will have to pass a good deal of information onto the downstream trading partner. This includes the item, quantity, the national drug code, and the biggest new addition as of Phase II: the serial number. 

Before Phase II, some manufacturers have been using advanced shipping notices to follow the transaction, but the inclusion of the serial number means the advanced shipping notices are no longer capable of storing adequate information to get the job done. Alternatives exist, such as an electronic product code information service (EPCIS), but to adjust to new alternatives of tracking will present challenges of system conversions. EPCIS is a standard developed by GS1 to handle track & trace with serialization. I will talk more about EPCIS below.

The second requirement, verification, takes the verification of the product to a new level. While in Phase I, verification was performed using the lot number. Phase II requirements mandate verification to extend to the serial number, therefore making it more specific. While there is a technological component to this in the pending changes that need to be addressed, there is also a streamlining component: since suppliers, manufacturers, and pharmacies are all in communication, a standard should be put in place regarding who can make requests and how they are answered. 

Lastly, tracing will also present a learning curve for many stakeholders by eliminating some of the information that is currently included within a standard transaction. As mentioned, since the FDA is eliminating the requirement of a full transaction history being included with every transaction, the industry needs to develop and implement new technology that will piece together a full transaction history if it is ever requested by the FDA. Within the transaction history, this could still be done by piecing together information from all the parties, but it needs to happen in real-time, and that is where the issues arise. Even as you are reading these words, this technology is still being researched and developed. To be quite honest. No one in the industry knows how this interoperable system will work. To achieve interoperability and its functioning services is still in its infancy. So the question ends up being, how do we start?

Step #1 – Pick a standard for communication between trading partners. Even though EPCIS seems that it is the clear winner here. There are companies in the industry wanting to use something else because EPCIS is very complex.  I believe it’s too late for that. EPCIS has been tried and it works. And if you don’t want to roll out EPCIS, then please lay out another standard that will solve this. Or let’s please stop suggesting this and let’s help to get EPCIS adapted.  

Step #2 – Follow the standards. Whichever standard is chosen, let’s please follow it. Many service providers are adding their own spin on EPCIS. This also needs to stop. If we want true interoperability, we must follow the standard exactly how it is written.

Step #3 – Execution. A lot of associations and groups are in what I like to call “Theory mode”. This is nice, but the clock is ticking. Planning and execution of an interoperable system must be executed. So let’s start with the adaptation of EPCIS.

More Potential Roadblocks on the Way to Phase II

The year 2023 and the expectations associated with Phase II seem like they are coming very quickly—especially to stakeholders. For the entire industry to prepare and converge on one solution, or at least a set of solutions, will take a good deal of time. There is no federal mandate that requires a certain action or implements a specific solution, so landing on a consensus will not be easy.  The finish line is in sight, but there are bumps in the road. 

Regarding these bumps, a few more need considered in addition to the previously mentioned obstacles, there are a few more to-dos to address and hurdles to clear, including a few great points recently outlined in a BioPress Online article

Sharpen up the details: Before completing the puzzle, stakeholders must be able to see the full picture on the box, and currently, that is not feasible. In fact, the industry is waiting on the FDA in many regards. While the FDA is required to publish further guidance and regulations clarifying the 2023 requirements, there is only so much that can be done before this takes place. The requirements of the FDA include documents that will address “the system attributes necessary to enable secure tracing at the package level and standards of interoperable data exchange necessary to enhance the security of the pharmaceutical distribution supply chain.” It is also worth noting that this is at a minimum. 

During a two-day public meeting held in December 2020, the FDA met with industry stakeholders to discuss the potential problems that have come up in preparing for Phase II and consider strategies that could be adopted moving forward. In addition to the required information the FDA is required to publish, other ideas have been suggested to further sharpen the details and scope. For one, creating a clear timeline of all the steps that the industry will take leading up to November 27, 2023 could better ground what needs to be done, while the FDA solidifying requirements for minimal compliance can put a bar in place that stakeholders recognize they must clear. 

The FDA and the industry must work together: This is an extension of the first point, but for the 2023 expectations to become realistic and obtainable, a constant stream of communication needs to flow between the FDA and the industry. The online public meetings are a good start, and the FDA is responding well to requests for delays in enforcing Phase II, but the positive interaction needs to continue. One example of a collaborative need would be the FDA and the industry working together to understand the ramifications of ending the requirement of the full transaction history from Phase I. If they can do this, it will help the FDA either offer guidance on how to proceed forward or see the early need for a tracing system.   When 200,000 dispensers are trying to work with 500 manufacturers, 200 wholesalers and the FDA, the communication is crucial and the FDA’s guidance is required.

Education: This is broader in scope, but the bottom line is that if the Phase II requirements are going to be met, all parties involved must continue to learn together while keeping an eye on the future and remembering what is to come. For example, manufacturers now need to consider verification more while learning how to address the pending requirements. With the serial number requirement built into Phase II, a trading partner can call upstream to the manufacturer and inquire about the serial number. If this is to occur, the manufacturers need to have a process in place for responding to these questions. 

Closing Thoughts – and Onward to Phase II

By the time all the requirements and expectations of Phase II are put into place, the net result is something we all strive for: enhanced security at all points of the supply chain. After all, that was the original intent when the Drug Quality and Security Act (DSQA) was signed into place on November 27, 2013. This signing concluded efforts by both the industry and groups of consumers who were pushing for a national pharmaceutical track and trace regulation that eliminated the hodgepodge of state laws while also providing new regulations for compounding pharmacies. 

Still, reaching the final product that has been envisioned after what will be a decade of work presents a number of challenges, many of which have been highlighted above. 

The Drug Supply Chain Security Act, as contained in Title II of the DQSA, focuses on the process that leads to the eventual DSCSA interoperability. In response, manufacturers, wholesalers, pharmacies and every other stakeholder are being forced to adjust to demands and requirements necessary for electronically tracking each product. 

The demands for interoperable exchange, verification and tracing are pushing for technological growth and change at a faster change than the industry would have evolved naturally, and to meet these demands, many stakeholders are learning and adjusting on the fly. 

For everybody, gaining momentum toward the Phase II expectations requires two things that you can start working on today.   For one, education. Roll up your sleeves, dig into the DSCSA and see what the future looks like for you and how you can start taking steps today to prepare for it.

Also, more and more often we are seeing the need for alignment in the drug supply chain on how to come together and address the expectations of DSCSA. Improving and strengthening communication systems throughout the industry and with the FDA is a change that must start immediately. 

Following the chaos of 2020, 2021 is going to be a critical year for deciding the best way for the industry to agree upon and then act upon the creation and installation of an interoperable system aligned with the basic requirements, which are still being outlined and sharpened as we get progressively closer toward Phase II and the moving target it presents.

About the Author: Christian Souza is the Co-Founder of TrackTraceRx


Leave a comment below...