Why the FDA Extended The Saleable Returns Verification from 2020 to 2023

In 2020, most things did not go as planned. Considering the overwhelming impact of the worldwide pandemic, the pharmaceutical industry was far from immune to last year’s instability.

One of the major changes came with the Saleable Returns Verification’s extension. Despite being originally scheduled for a 2020 enactment, the FDA recently announced their plan to extend, yet again, the Saleable Returns Verification enforcement until 2023.

What does this really mean? Well the FDA won’t enforce it. So should you not care? It’s not that simple.

Legal liability

Remember, the law is the law. So the Saleable Returns Verifcation did become a requirement of the law this past November 27th 2020.

Meaning you must follow it. But Christian, you say, the FDA won’t enforce it. Yes, but there is still a legal liability to follow a law correct? Technically if you don’t follow it, you are liable. Why do you think members of the Big 3s are almost making it a mandate to their respective trading partners to perform VRS? So finally, you won’t get a bill from the FDA, but you could be sued or your trading partner will not do business with you if you are not a part of a VRS network.

So why did it Delay?

Some suspect COVID-19 as the obvious culprit to the three-year pushback, while others aren’t so sure. The FDA for sure didn’t want any medication during these trying times to be delayed due to the Saleable Returns requirements.

Today we will explore the different possibilities, and most importantly, what they mean for you.

Understanding DSCSA and Saleable Returns:

Since being signed into action by the Obama Administration in November of 2013, the DSCSA looks to impact the pharmaceutical industry in three ways: creating systems for easily tracing products within the pharmaceutical supply chain, securing product integrity, and facilitating more efficient recalls. These three elements, ultimately, will ensure consumer safety.

The DSCSA, found in Title II of the Drug Supply Chain Security Act (DQSA), is separated into two phases. The first phase, beginning in 2015, got the ball rolling, requiring all supply chain participants to work with authorized trading partners and provide Transaction History to verify illegitimate or counterfeit products. The second phase, commonly thought of as the serialization and verification phase, was originally planned to roll out in November of 2017, but has now been pushed back into 2023. Despite delays, phase II is optimistic for a complete transformation to the industry, focusing on the implementation of a fully electronic, interoperable, traceability system at the unit-package level.

As a reminder, the DSCSA calls for:

product tracing
product identifiers (PIs)
authorized trading partners
verification requirements for manufacturers, wholesale distributors, repackagers, and dispensers (pharmacies).

For stakeholders, 2023 is approaching very, very quickly. DSCSA Phase II has very ambitious plans and it’s pushing for a major technological overhaul, so the forced development and implementation of technology in a short period is creating a major headache for all parties involved.

How does the Saleable Returns Verification and how does it fit into all of this?

Saleable returns are a piece of this overall puzzle, as well. A saleable return in the world of pharmaceuticals is, “defined as prescription drugs that are returned to the original supplier by a pharmacy unable to identify their origin. In many cases, pharmacies and other drug dispensers return these products because they are over-stocked or unidentified and want to get a refund. Products that are returned for ANY reason, must be verified, as per the health department.”
Each year in the United States, countless amounts of pharmaceutical products are returned for resale—and of course, these are the “saleable returns.” To protect the integrity of the product, the DSCSA outlines how to proceed when this happens through what is known as “The Saleable Returns Verification.”

Under the DSCSA Saleable Returns Verification requirement, wholesalers must apply a unique identifier onto a saleable unit and onto homogeneous, or common, cases of product. Each unit of product must be labeled with four data elements: a Global Trade Item Number (GTIN), a unique serial number, a lot ID, and an expiration date.

Together, these elements compose the lot’s product identifier, or PI. When products are returned with PI’s, they can be scanned, examined, and traced before being reintroduced into the supply chain. In other words, every returned drug has to be vetted — declared as safe and legitimate — before it can be sold again.

The DSCSA saleable returns verification requirement will be a great forward for the industry–a big win for ensuring product integrity, quality, and safety to the patients who rely on their efficacy—but the delays keep pushing the deadline further away, so we must ask: why is it taking so long to get set into action?

The First Delay: When and Why

The Saleable Returns Verifications requirement was originally scheduled to take effect on November 27, 2019. However, in late September 2019, only two months away from the scheduled date of implementation, the FDA announced a “1-year delay in enforcement of the requirement for wholesale distributors to verify saleable returned product” and that it did “not intend to take action against” wholesalers that did not meet the requirement before November 27, 2020.

The extra year bought some much-needed time, but ultimately it would not be the last of the delays.

Still, a big question circling the first delay is why it happened?

One common explanation was many wholesale distributors and other stakeholders had reached out to the FDA “expressing [their] concern with industry-wide readiness for implementation of the verification of saleable returned product requirement for wholesale distributors.”

This concern with the readiness of the industry boiled down to three concerns that the FDA was hearing from all the stakeholders at play.

The concerns were as follows:

Large volume: Verification of saleable returns will involve “very large volume of saleable returned product requiring verification.” This statement points to the need to ensure testing with higher volumes across all VRS participants.

More testing: More testing is required with higher volumes “during actual production.” The specific FDA language identifies the “need to refine and test verification systems during actual production using real-time volumes of saleable returned product rather than simply in pilots.”

Interoperability readiness: This highlights the “the complexities of building an interoperable … system … amid immature technologies.” In short, the VRS is new and there are multiple participants that must be tested together.

To break this down, in 2019 stakeholders were concerned that several aspects of the new plan, but felt especially unprepared for the volume testing and verification that the Saleable Returns Verification would require. Many wholesale distributors felt that their technologies were too immature to handle the impending change and saw the delay as a win for the industry as technology would have more time to ready itself for the more extreme demands.

Recognizing the validity of these claims, the FDA granted the year-long postponement. This gave pharma supply chain stakeholders more time to prepare and practice, as long as they worked, in the meantime, to ready themselves for the 27th of November, 2020.

2020: Another Delay. Plus, why is this delay different?

On October 22, 2020, just over a month before the scheduled once-delayed deadline, the FDA issued yet another guidance stating that enforcement of wholesale distributor compliance with the DSCSA’s saleable return verification requirement will be postponed again, but this time until 2023. The FDA guidance states that it “does not intend to take action against wholesale distributors who do not, prior to November 27, 2023, verify the product identifier prior to further distributing returned product as required under the” saleable return verification requirement of the DSCSA.

The guidance seems to indicate that, just as in 2019, many stakeholders felt largely unprepared for the wide-scale change in procedure, stating that they again received comments that “point out continuing challenges posed by the large volume of saleable returned product, explaining that wholesale distributors still need more time to test verification systems using real-time volumes of saleable returned product with all trading partners involved, as opposed to using small-scale pilot test projects.”

Once again, limited technological capabilities was a contributing factor, with the FDA acknowledging “industry-wide readiness for implementation of the verification of saleable returned product requirement for wholesale distributors and the challenges stakeholders face with developing interoperable, electronic systems to enable such verification and achieve interoperability between networks.”

As explained in the post by Crowell Moring, in this new update, the FDA relieves pressure from dispensers, who, now, do not–or at least not until November 2023–have to “verify statutorily-designated portion of product identifiers of suspect product, as well as enforcement of dispenser verification of product when responding to a notification of illegitimate product from FDA or another trading partner.”

According to the FDA, this additional three-year delay will provide the necessary time for wholesale distributors and dispensers to ensure the required systems and processes for compliance with the saleable return verification requirements are in place by November 27, 2023. Optimistic about the future, the FDA expressed they fully express that the next three years will yield sufficient time for the implementation of the new technologies entailed within the DSCSA compliance.

As summarized by Healthcare Packaging, the guidance listed a few complaints stakeholders had specifically mentioned that had accounted for the additional delay. They were:

Difficulty with developing interoperable, electronic systems that reliably verify product and achieve interoperability between networks
More time needed to test verification systems, which would allow them to practice with real-time volumes of returned product with all trading partners Because many logistics and supply chain experts were reassigned from DSCSA preparation to respond to the pandemic, COVID-19 caused long delays that made it difficult to test verification systems.

Also worth noting: the length of this extension is significantly longer than the first, most likely, because of the pandemic. Due to the breakout of COVID-19 and the obvious precedence that matter would take within the industry, it had already been highly speculated before the released guidance that another delay might be on the horizon. However, what few were expecting was how long this one would be extended. It was unusual that this waiting period will last from 2020 to 2023—a three-year stretch opposed to the normal protocol of delaying one-year at a time—but the COVID-19 pandemic forced many industries to lean into the “unusual,” so that is the most likely explanation for the lengthy delay.

Final Thoughts

An essential requirement of the DSCSA, The Saleable Returns Verification specifies the exact means by which a recalled product would be vetted and cleared for resale. The system, which has been in development for nearly ten years now, requires the exchange of information at the individual package level about the drug’s location history within the supply chain, the detection of illegitimate products, and the facilitation of more efficient product recalls. Like most aspects of 2020, its planned implementation in the fall of last year was thrown off course and delayed for the second time, following the first delay in 2019. Now, with three years of extension time granted, we wait eagerly to see if stakeholders will finally get their act together and finally comply with the FDA for 2023.

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

2 thoughts on “Why the FDA Extended The Saleable Returns Verification from 2020 to 2023”

  1. Thanks for the insight! I’m not sure I agree with this statement, though: “Why do you think members of the Big 3s are almost making it a mandate to their respective trading partners to perform VRS? So finally, you won’t get a bill from the FDA, but you could be sued or your trading partner will not do business with you if you are not a part of a VRS network.”

    I have seen supplier letters from two of the Big 3 that specifically indicated they are moving forward with VRS but are rolling it out in a more controlled fashion. They do not require manufacturers to implement it right away, only that manufactures update them with information about their plans for implementing VRS including the anticipated timing.

    Also, who would likely to sue a manufacturer for not a part of a VRS network? Once the manufacturer sells the product to the wholesale distributor then the onus is on the wholesale distributor. In fact, VRS is not even a regulatory requirement for manufacturers at all, just a means to enable the distributors’ saleable returns verification process with an instantaneous response rather than the 24 hours manufacturers generally have to respond to a request to verify a product identifier.

    I’d love to get more of your take on this.

    1. Hi Stephanie, Thanks for your comments. The reason i made that statement is that I have received multiple feedback from people who have said they have received pressure to have this ready in order to do business.

      Manufacturers have to respond to saleable return requests. Be it manually or using a VRS. Regardless if you believe someone will be sued or not, the liability is still there.

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