The Drug Quality and Security Act institutes new requirements for tracing products through the supply chain including any recordkeeping and pedigree requirements.

The International Warehouse Logistics Association (IWLA) is following implementation of the Drug Quality and Security Act (DQSA) closely. The DQSA was signed into law on Nov. 27, 2013. According to IWLA Washington Representative Pat O’Connor, the FDA will soon issue an implementation plan, to be followed by a series of public meetings. In many cases, the FDA will implement the law with guidance rather than regulations.The primary focus as it relates to the warehouse-based third-party logistics industry rests in Title II of the law. It establishes a national system for tracing pharmaceutical products—prescription drugs in finished dosage form for human use—through the supply chain and sets national licensing standards for wholesale distributors and third-party logistics providers (3PLs). The traceability provisions of Title II generally apply with regard to each product “transaction,” meaning each transfer of ownership.

Here in lies an important distinction for 3PLs. Information is not required to be passed when transferring possession of a product or when a product is transferred to a corporate affiliate. This means that there is no requirement for the 3PL to capture:

• Transaction information (TI), which includes the name of the product, its strength and dosage form, its NDC, the container size, the number of containers, the lot number, the transaction date, the shipment date, and the name and address of the businesses from which and to which ownership is being transferred.
• Transaction history (TH), which is a paper or electronic statement that includes the transaction information for each prior transaction back to the manufacturer.
• Transaction statement (TS), which is a paper or electronic attestation by the business transferring ownership of the product that it has complied with the act.

However, it does require the manufactures, wholesale distributors and repackagers to pass and capture this information starting on Jan. 1, 2015 (July 1, 2015 for dispensers).

Fortunately, the act defines 3PL as providing and coordinating warehousing and other logistics services of the product in interstate commerce, relieving the industry from assuming ownership. But, as members are beginning to notice, this is not necessarily out of the 3PLs hands as customers may look to their warehouse to aid in compliance of this law.

“The traceability requirements of this act don’t apply to 3PLs but your customers may rely on 3PLs to handle some of the responsibilities in maintaining the TI, TH and TS information for release of the product,” O’Connor says.

This becomes even more important in products that are suspect or illegitimate.

By Jan. 1, 2015, trading partners must maintain systems and processes for investigating and quarantining products that are suspect or illegitimate. If a product is determined to be illegitimate, the partner must notify the secretary and its trading partners, take steps to dispose of the product, and, if requested by an appropriate government official, retain a sample.

If requested by the FDA (or other appropriate federal or state official), a trading partner must provide the TI, TH, and TS to the official as part of a recall or investigation of a product that is suspect or illegitimate within 48 hours.

Though the onus is on the manufacturer to retain and provide this information a 3PL could be responsible contractually with the client.

Currently, the traceability requirements apply to products at the lot level. Within 10 years, this will require supply chain members to electronically track and track product at the individual package level.

Licensing

Title II establishes uniform national licensing standards for wholesale distributors and 3PLs that handle pharmaceutical products. A 3PL must only deal with an authorized trading partner with a valid license, and a 3PL must also hold a valid license.

Right now, the FDA is tasked with issuing regulations to further define the licensing standards for 3PLs by November 2015. These standards will include storage and handling requirements. This is what is known:

1. The act immediately preempts all state laws, regulations and requirement for tracing, recordkeeping and pedigree requirements.
2. A 3PL is deemed to be licensed until FDA issues the licensing standards, except where the FDA finds that an individual 3PL has not followed good handling practices.
3. Immediately, states are specifically prohibited from regulating a 3PL as a wholesaler.
4. After the standards are issued in 2015, states cannot alter standards of the act, but they will have the option to regulate 3PLs in areas that are not covered by and not directly related to the licensing standards of the act.
5. After the standards are issued in 2015, in the absence of a state licensing program that satisfies the federal requirements, the federal licensing program will be established to licenses 3PLs in those states.

In other words, after 2015 a 3PL will need to be licensed in the state where it is located and be licensed by states in which it ships product to if those states require a 3PL license. If the state where the 3PL is located does not have its own 3PL licensing, the facility will fall under the federal licensing standard and is not required to be licensed in the states that it ships products to.

How will states respond? The hope of course, is that states will not adopt their own licensing standards. The California State Board of Pharmacy moved to set their own licensing standards for 3PLs as recently as last week. Discussion of eliminating 3PLs from licensing standards is ongoing, and O’Connor is working hard to meet with federal and state regulators to clarify the 3PL role in the supply chain.

What should 3PLs do now? The FDA has not issued the guidance and implementation plan yet.  The recommended actions at this point are to talk to your clients about the requirements and what is needed to manage inventory and stay in compliance of the law. Establish new processes to identify illegitimate product and processes that will follow in a quarantine situation.

The FDA has opened itself to discussions with IWLA and members of the Pharmaceutical Distribution Security Alliance about implementation planning and processes. The more that IWLA can do ahead of the release of guidance from the FDA, in formulating best practices, the more likely they will be taken into consideration in the final guidance documentation. IWLA continues to work with key members that handle pharmaceutical products to issue recommendations with the FDA in the next month.