Industry Wants FDA Help, Guidance on New Drug Tracking System

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By Bronwyn Mixter

The FDA may be falling behind its schedule for implementing a national drug tracking system intended to prevent counterfeit and substandard medicines from entering the supply chain.

Drug distributors and pharmacists told Bloomberg BNA the implementation of the tracking system has been slow and the Food and Drug Administration is behind on issuing guidance needed by industry. The Drug Supply Chain Security Act ( DSCSA) outlines critical steps to build an electronic, interoperable system to identify and trace certain prescription drugs within the U.S. by 2023. The DSCSA is part of the Drug Quality and Security Act (Pub. L. No. 113-54), signed into law in November 2013.

As well as keeping counterfeit drugs from entering the supply chain, the system also is intended to prevent the diversion of legitimate drug products for illegal use and the importation of unapproved drugs. The goal is to keep dangerous drugs that could harm patients from entering the drug supply chain. This is a big challenge as about 4 billion prescriptions were filled at U.S. retail pharmacies in 2016, according to the FDA’s website.

Concerns About 2023 Deadline

Implementation has been slow, and it’s a major challenge for every part of the drug supply chain, Patrick Kelly, executive vice president of government affairs at the Healthcare Distribution Alliance (HDA). told Bloomberg BNA Sept. 18.

Kelly said the HDA is concerned about whether the 2023 deadline for implementation will be met without specific directions from the FDA on how to do it. The HDA represents wholesale distributors that purchase drugs from manufacturers and sell them to pharmacies, hospitals, and others. Three of the biggest distributors are AmerisourceBergen Corp., Cardinal Health, and McKesson Corp.

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The lack of specificity from the FDA on implementing the system “is a challenge and it will present a challenge moving forward,” Kelly said.

As part of the implementation, drug manufacturers are required to put product identifiers with serial numbers on all of their products by Nov. 27, 2017. But the FDA recently delayed the enforcement of that requirement until Nov. 27, 2018.

Kelly said the one-year delay for serializing products decreases the time wholesalers will have to make sure their systems can handle serialized products.

“Anything that’s late in happening, delays the ultimate endpoint of 2023 being realistic,” Kelly said. “That said, we’ve got five solid years to go, but there’s a lot of territory to cover between now and November 2023.”

Jenna Ventresca, director of health policy at the American Pharmacists Association (APhA), told Bloomberg BNA she doesn’t think the 2023 deadline “is reasonable anymore. The compliance time is very short given the size of the task, issues that have arisen in current compliance efforts, and delays that have already occurred.”

The FDA didn’t return a request for comment on how implementation is going, but it has issued some guidance documents on topics such as how to exchange product tracing information and identifying suspect products. Also, in July, the FDA announced plans to hold three public meetings intended to give pharmaceutical supply chain members an opportunity to provide input on strategies and issues related to the enhanced drug distribution security provisions of the DSCSA.

The agency held the first meeting in August, and will hold two additional meetings in December and in February 2018. The August meeting focused on exploring the vision for the electronic, interoperable system for 2023 and what is needed for enhanced drug distribution security. Ilisa Bernstein, deputy director of the FDA’s Office of Compliance, said at the meeting that “time is ticking away and 2023 will be here in no time” and “we must work together to get this right.”

Topics for the other two meetings include management and maintenance of product tracing data, the use of aggregation and inference for enhanced product tracing and verification, and building capacity for a unit-level system for product tracing and verification.

Opioid Epidemic May Spur FDA to Act

Health-care attorney Julie K. Letwat with Faegre Baker Daniels LLP in Chicago has a different view on the system’s implementation. She told Bloomberg BNA the current focus on the opioid painkiller market and the diversion that is happening within that market will pressure the FDA “to get this done.”

Nearly 12 million Americans misused an opioid in 2016, according to a survey released Sept. 7 by the Substance Abuse and Mental Health Services Administration (SAMHSA), an agency within the Department of Health and Human Services.

Letwat said the tracking system is designed to identify counterfeit or suspect products to prevent diversion, and she thinks “there’s going to be push to do this on time.”

More Guidance From FDA Needed

HDA’s Kelly told Bloomberg BNA the FDA was supposed to issue more guidance in 2015 but hasn’t yet. Specifically, he said the FDA was supposed to provide guidance on how pharmaceutical distributors should be licensed by the states and how to handle drug products that don’t have serial numbers.

All pharmaceutical distributors must be licensed by the state in which they are located. Under the DSCSA, the FDA is statutorily required to publish model state licensure standards that factor in requirements pertaining to serialized products, obligations to keep and maintain records of transaction information, product storage, and other appropriate specifications.

The second guidance deals with how to handle grandfathered products that don’t have serial numbers, Kelly said. “After the serialized products come on the market, you’re still going to have a marketplace full of unserialized product that is valid, legitimate product but is essentially noncompliant” with the DSCSA. Pulling all of those products off the market could create drug shortages, he said.

APhA’s Ventresca said that the “scope and contents of the grandfathering guidance will impact the systems that are developed to handle those products, along with current implementation efforts.”

Wholesalers will have to confirm whether products came to them before the compliance date, during the grace period from Nov. 27, 2017, to Nov. 27, 2018, or after the compliance date, and “have systems and processes in place to handle all that complexity,” Abraham Gitterman, an attorney with Arnold & Porter Kaye Scholer LLP in Washington, told Bloomberg BNA. Gitterman focuses on FDA and health-care regulatory, compliance, and fraud and abuse matters involving pharmaceutical and medical device manufacturers.

Gitterman said a lack of these systems triggers other provisions in the law. For example, the FDA has said a drug product without a serial number is a reason for the wholesaler or other downstream partner to initiate a quarantine of the drug product and then investigate whether it is a suspect product, Gitterman said.

Medication Sharing Between Hospitals

More guidance also is needed from the FDA on how hospitals share medications, Letwat told Bloomberg BNA.

Letwat said hospitals typically share medications if they run out and it isn’t clear whether that is allowable under the DSCSA because it is not considered a sale. But Letwat said the law does contain an exception for a drug intended for a specific patient need, but the FDA hasn’t defined what is meant by specific need.

The FDA hasn’t provided guidance on whether the name of the patient is needed to document specific patient need and how the use of the patient’s name interacts with the Health Insurance Portability and Accountability Act (HIPAA), Letwat said. HIPAA contains data privacy and security provisions for safeguarding medical information.

Exchanging Drug Transaction Information

As part of the phased-in requirements for the interoperable system, the DSCSA required drug trading partners to capture, maintain, and provide the subsequent purchaser of prescription drugs with certain transaction information. Manufacturers, wholesale distributors, and repackagers were required to meet this requirement by Jan. 1, 2015, and dispensers by July 1, 2015. The FDA extended the deadline for manufacturers, wholesale distributors, and repackers until May 2, 2015, in a compliance policy guidance.

A report released in September by the Health and Human Services Office of Inspector General on how wholesalers are complying with exchanging the drug transaction information found that some smaller wholesalers still aren’t exchanging all of the required drug transaction information.

While these smaller wholesalers account for a smaller portion of drug distribution revenues, it is still a concern that they aren’t exchanging all of the drug transaction information, the OIG said. Smaller wholesalers have had problems with illegitimate drugs and if complete drug product tracing information isn’t available, it will hinder investigations.

The OIG in its report recommended that the FDA provide technical assistance to wholesalers on how to exchange the information, and the FDA agreed.

The study is the first in a series to examine the implementation of the DSCSA. Future HHS OIG studies will examine how dispensers exchange product transaction information and whether the information can be used to trace drug product throughout the entire supply chain.

Pilot Projects

While the FDA is moving slowly on implementation, it is moving forward with pilot projects to assist in the development of the tracking system.

The FDA issued a July 20 Federal Register notice requesting comments on potential pilot projects. The agency said it will work with drug supply chain members to establish one or more voluntary pilot projects to enhance the safety and security of the pharmaceutical supply chain.

APhA’s Ventresca said the request for comments wasn’t clear on how the FDA will recruit for those pilot projects and whether supply chain members will develop the pilot projects and then approach the agency to help tailor the project, or whether FDA will be leading the pilot projects.

Ventresca said from her understanding, the pilot projects seem to be more industry-led, which could result in small dispensers being left out of pilot projects if they do not have adequate resources to participate or are not aware of opportunities to participate. She also pointed out that there are already industry-led pilot projects that have been going on independent of the FDA.

The Pharmaceutical Research and Manufacturers of America, the branded drug industry group, and the Association for Accessible Medicines, the generic industry group, didn’t return requests for comment. The Biotechnology Innovation Organization declined to comment.

To contact the reporter on this story: Bronwyn Mixter in Washington at

To contact the editor responsible for this story: Brian Broderick at

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