This coming November, the Drug Supply Chain Security Act is reaching the end of a 10-year implementation plan to achieve an interoperable and electronic way to identify and trace certain prescription drugs at the package level as they move through the supply chain. What steps are left to do?

Reaching the end of a 10-year implementation plan
The Drug Quality and Security Act (DQSA), was enacted by Congress on November 27, 2013, and Title II of DQSA, the Drug Supply Chain Security Act (DSCSA), outlines steps to achieve interoperable, electronic tracing of products at the package level to identify and trace certain prescription drugs as they are distributed in the US. Since 2013, the US Food and Drug Administration (FDA) has been implementing DSCSA, which gives the FDA more regulatory tools to detect and help ensure the removal of unwanted drugs from the supply chain, such as those that may be counterfeit, stolen, contaminated, or otherwise harmful.

Requirements of this law improve supply-chain security activities by trading partners (i.e., prescription drug manufacturers, repackagers, wholesale distributors, third-party logistics providers, and dispensers, primarily pharmacies). Gradual implementation of the requirements for product tracing, product identification, authorized trading partners, and verification, has allowed trading partners to develop required systems for interoperable, electronic tracing of products down to the package level. Interoperable electronic systems are those that can exchange data accurately, efficiently, and consistently about each package (i.e., smallest individual saleable unit) as it is distributed in the US. DSCSA requires trading partners to provide, receive, and maintain documentation about prescription drugs and their chain of ownership from manufacturer to dispenser.

Implementation of the DSCSA has occurred over a 10-year period, with additional requirements coming into play this year (2024), effective November 27, 2024. The traceability requirements in effect under DSCSA from 2015 to 2023 generally required products to be traceable at the lot level. A second phase of requirements, now going into effect November 27, 2024, require the interoperable, electronic tracing of products at the package level. DSCSA requires trading partners to provide, receive, and maintain documentation about prescription drugs and their chain of ownership from manufacturer to dispenser.

The November 27, 2024, deadline represented in essence an extension for compliance for these enhanced drug distribution security requirements under DSCSA, which were originally slated to go into effect on November 27, 2023. Last August and September (August and September 2023), FDA announced in two compliance policy guidance documents its intent to not take action to enforce certain DSCSA requirements until November 27, 2024. This one-year “stabilization period” was intended to accommodate trading partners’ ability to implement, troubleshoot, and mature their interoperable electronic systems and processes to meet requirements under DSCSA for electronic drug tracing at the package level. The stabilization period was intended to avoid disruption to the supply chain and ensure continued access to drug products as trading partners work to fully implement the enhanced drug security requirements. In providing for this one-year stabilization period, FDA made clear that the additional time for compliance to DSCSA was to allow trading partners to build and validate interoperable systems and processes, manage products and data, and ensure continuity of the supply chain and product availability and that this stabilization period was not intended to provide a justification for delaying efforts to comply with DSCSA.

The requirements now coming into effect
Now with the one-year stabilization period ending November 27, 2024, the enhanced drug distribution security requirements under DSCSA will come into effect (see Figure 1).

Under the DSCSA, effective November 27, 2024, trading partners (i.e., prescription drug manufacturers, repackagers, wholesale distributors, third-party logistics providers, and dispensers, primarily pharmacies) are required to:

1. Use secure, interoperable, electronic approaches to exchange transaction information, which must include package-level product identifiers for each package included in the transaction, and to exchange transaction statements;
2. Have systems and processes in place to verify products at the package level;
3. Have systems and processes in place to promptly respond with the transaction information and transaction statement for a product upon a request by US federal or state officials in the event of a recall or for investigations of suspect or illegitimate products
4.  Have systems and processes in place to facilitate the gathering of information needed to produce the transaction information for a product going back to the manufacturer. Would apply to instances such as recalls, illegitimate product investigations, or requests by authorized trading partners for purposes of investigating a suspect product or assisting with such a governmental request; and 
5.  Have systems and processes in place to accept saleable returns under appropriate conditions.

Exemptions under DSCSA
Although the window is closing for compliance to the enhanced drug distribution security requirements under DSCSA, FDA recently announced certain exemptions. Last month (July 2024), FDA announced it would exempt small business dispensers (defined as those having 25 or fewer full-time employees licensed as pharmacists or qualified as pharmacy technicians) from the enhanced security and unit-level electronic traceability requirements of DSCSA until November. 27, 2026.

In addition, in conjunction with the exemption for small business dispensers, FDA specified that entities that do not expect to be in full compliance by the November 27, 2024, deadline but do not qualify for the small dispenser enforcement discretion to request a waiver, exception, or exemption (WEE). While the WEE pathway is one way in FDA is providing to limit supply disruption while stabilization continues, there is concern among trading partners about the complexity of managing widespread and diverse WEEs as they represent an added layer of risk that trading partners will need to manage—and dedicate attention to—as stabilization continues.

Progress being made but challenges remain
So where does the industry and other stakeholders now stand in meeting the upcoming November deadline for DSCSA compliance? In June (June 2024), FDA and the Partnership for DSCSA Governance (PDG), an FDA public–private partnership focusing on implementing the interoperability requirements under DSCSA, held a joint public meeting on DSCSA implementation and stabilization efforts to serve as a checkpoint in the stabilization period to allow industry, FDA, and other stakeholders share stabilization progress that has been made, stabilization activity that remains, and areas of remaining concern.

A key take-away from the joint PDG–FDA meeting is that the meeting participants validated that the stabilization period has afforded stakeholders a defined period to improve DSCSA data exchange and data quality while minimizing disruption to product distribution as systems and processes advance through the early adoption stages. The stabilization period has enabled trading partners to complete the work needed to establish necessary technical connections for serialized data exchange, increase the volume of data being exchanged, improve the quality of data exchanged, and refine processes for managing data exceptions. Those activities have supported continued implementation without interrupting product access. However, meeting participants shared that although the stabilization period has supported implementation efforts, stabilization activities (i.e., the continued maturity of systems and processes to improve the accuracy and reliability of DSCSA data) will continue well beyond November 27, 2024. Even as systems and processes achieve stabilization, continuous improvement will be ongoing as the industry pursues improved data quality to support enhanced security and improved efficiency.

Data accuracy remains a challenge
Meeting participants acknowledged repeatedly throughout the public meeting that 100% accuracy of DSCSA data is not attainable, even in the long-term. The meeting participants noted that billions of unit-level transactions occur each year, and perfection is simply unrealistic at that level of granularity and volume. The public meeting emphasized two key areas for industry focus based on this reality.

1. Trading partners should have well-controlled, risk-based processes established for managing the expected errors (i.e., exceptions) in DSCSA data. By focusing on quality management and continuous improvement, trading partners should be empowered to make business decisions that balance patient need, patient protection, and data accuracy rather than striving for an unattainable level of data perfection.
2. Continuous improvement efforts—ongoing processes to analyze data quality, identify the root causes of errors, and make incremental changes to systems and processes to address those root causes—are needed to attain the maximum achievable level of accuracy. Perfection is not attainable, and continuous improvement is essential.

In presenting a summary of the PDG–FDA  meeting, PDG–FDA says work among stakeholders is underway on exception-handling processes grounded throughout many parts of the supply chain, and the trading partners doing so are actively progressing toward successful implementation and compliance. They said that sustained work on these processes among the well-engaged, and continued education on risk-based continuous improvement and processes among the less-engaged, is critical to avoid supply chain disruption.   

View from drug manufacturers
Regarding drug manufacturers’ transactions—predominantly transactions between manufacturers and wholesale distributors, but also between manufacturers and dispensers or repackagers—the meeting participants suggested that “a corner has been turned” in the stabilization process. Significant work remains, particularly regarding data misalignment exceptions, but progress has been significant and encouraging in recent months, according to the PDG–FDA summary.

As to progress being made, manufacturers generally reported both progress and challenges as outlined below.

• Data connections. Data connections are nearing completion, with most reporting near100% rates of customer onboarding. Where connection setup remains a challenge, data can typically be provided via a portal.
• Volume of data. The volume of data flowing from manufacturers to their customers has increased significantly in recent months. Among manufacturers active in the public meeting dialogue, many reported that they are provided data for all or nearly all transactions. Wholesale distributors reported significantly lower volumes of data across all manufacturers, but nonetheless indicated that there has been a marked improvement. 
• Data quality. Data quality and accuracy remains a significant challenge and is a primary focus among drug manufacturers. While there is significant diversity in data quality, many manufacturers expressed they have seen a positive shift with less of a focus on systemic data quality issues and more one-off data quality issues. Manufacturers emphasized that continued and expanded feedback on data quality from wholesale distributors and dispensers is critical to continued progress. 

Data issues further down the supply chain
With respect to data issues, a far greater challenge and concern exists regarding downstream transactions between wholesale distributors and dispensers, according to the PDG–FDA summary of the public meeting. Although progress has been made, wholesaler distributors have been hamstrung by the practical necessity to receive higher volumes of data for product they purchase to ramp up the volume of data they provide for downstream transactions.

Public meeting participants (wholesale distributors and dispensers) generally indicated certain key challenges as outlined below.

• Data connections. Data connections have increased significantly, and many participants indicate they are on track to complete remaining data connections soon. Where connection setup is not complete (or not desired), data can typically be provided via a portal. 
• Volume of data flowing from wholesaler distributors to their customers is beginning to increase, but remains at least partially dependent on improved data from upstream suppliers. 
• Data quality and accuracy. Data quality and accuracy. remains a challenge, and trading partners are just beginning to understand the quality of the data being provided for these downstream transactions.

Going forward: successful stabilization and continuous improvement
Measuring continued progress toward stabilization, referring to the continued maturity of systems and processes to improve the accuracy and reliability of DSCSA data and onto continuous improvement, is dependent on a clear understanding of what stabilization means in practice. While stabilization will inevitably look different across different stakeholder groups, several themes emerged throughout the PDG–FDA public meeting, including what successful stabilization means. The key characteristics of successful stabilization are outlined below;

• Consistent and timely exchange of data for all transactions;
•  Broad trading partner confidence in DSCSA data;
• The ability to quickly and efficiently resolve the data errors that persist;
•  Consistent and reliable access to DSCSA data and the ability to use it to respond effectively and efficiently to suspect and illegitimate products;
• Broad understanding and adoption of risk-based standard operating procedures (SOPs) for resolution of data misalignment exceptions;
• Consistent application of standards across systems;
• Seamless integration of systems between and within trading partners in a manner that limits latency;  
• Minimized risk of quarantine, return, or destruction of legitimate product due to DSCSA compliance activities;   
• Ease of communication and collaboration built on strong relationships among trading partners.