3 Reasons Pharma Distributors Should be Wary of Pandemic-Related DSCSA Exemptions

3 Reasons Pharma Distributors Should be Wary of Pandemic-Related DSCSA Exemptions

The Drug Supply Chain Security Act (DSCSA) obligates US pharmaceutical manufacturers, wholesale distributors, dispensers and re-packagers to participate in an interoperable exchange that monitors the distribution of drugs to prevent counterfeit or contaminated drugs. However, for pharmaceutical distributors, the COVID-19 pandemic constitutes a public health emergency that automatically excludes certain activities from DSCSA requirements.

COVID-19 exemptions for wholesale pharmaceutical distributors

Distributors sit squarely in the middle of the pharmaceutical supply chain, connecting 180,000 healthcare providers and pharmacies with 1,300 drug manufacturers across the country.  In the midst of the pandemic, distributors support both frontline providers as well as the manufacturing partners striving to discover treatments for the increasing number of patients afflicted with COVID-19.

Section 319 of the PHS Act declares that distribution of a product for emergency medical reasons, including a public health emergency declaration, is exempted from the definition of a transaction and excluded from the definition of wholesale distribution under the DSCSA. The goal of the exemption is to balance effective distribution of products under emergency conditions with consumer safety; for example, by preventing exposure to counterfeit pharmaceutical products. In theory, by suspending some distributor requirements, suppliers should be able to deliver more quickly.

3 reasons distributors should be cautious

In theory, this means that supply chain trading partners do not have to serialize a COVID-19-related product, nor exchange transaction data on that product. However, affected distributors should be cautious to not view this exemption as license to operate outside the auspices of regulation, and here’s why:

  1. There aren’t any hard-and-fast rules for determining which products are for a public health emergency. The FDA interprets the exemption and exclusion to cover the distribution of prescription drug products either (a) issued an emergency use authorization to combat COVID-19 or (b) approved by FDA to diagnose, cure, mitigate, treat, or prevent COVID-19. But COVID-19 patients in the ICU may be treated with a bevy of pharmaceuticals, including painkillers, sedatives, steroids, anesthetics and muscle relaxants. How can you know which of these, if any, fall under the FDA exemption?
  2. Other DSCSA requirements still apply. As the exemption only covers DSCSA requirements triggered by a “transaction,” it is by no means comprehensive. You can still only do business with authorized trading partners, for example, and you still have to have systems and processes in place to investigate and quarantine suspect and illegitimate products. The FDA indicates that “in most circumstances [distributors] remain obligated to take appropriate steps when suspect or illegitimate products are found to ensure that these products are not further distributed and do not reach patients.”
  3. The exemption doesn’t apply to state and local regulations. The FDA does not “interpret the exclusion from wholesale distribution for emergency medical reasons to affect the ability of States to require licensure of such entities as wholesale distributors under State law.” This means exempt distributors could still be subject to state and local regulations, or international regulations for customers or partners outside of the US. Given the state by state divisions on how to prepare and react to COVID outbreaks, an excess of caution is appropriate here.

The safest course of action for distributors

So how should exempt pharmaceutical distributors proceed? The safest thing to do would be to essentially ignore the exemption. Industry experts have warned distributors to maintain serialization regardless, and manufacturers to carefully document any distribution activities that depart from normal compliant practices.

Apart from the COVID-19 exemption, all distributors should be keeping clear lines of communication with manufacturing partners so both parties will be in the know in case the supply chain is impacted by the pandemic. As a distributor, the faster you learn of a potential disruption, the quicker you can mitigate the impact to patient care.

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