FDA defines trading partners under DSCSA

The FDA's slow roll-out of Drug Supply Chain Security Act (DSCSA) guidance has continued with a document on entities and trading partners.

The draft guidance, which is currently open to comments and suggestions, intends to assist the industry, state and local governments in understanding how the DSCSA applies to the various entities in the US supply chain and to clarify which entities require licensure and annual reporting, alongside any other requirements.

Under the DSCSA, which comes fully into force in 2023, an electronic, interoperable track and trace system is to be introduced to monitor the distribution of drugs in the US to prevent counterfeit, contaminated and diverted drugs.

The Act requires product tracing requirements for certain trading partners in the drug supply chain - including manufacturers, repackagers, wholesale distributors and dispensers - while the trading partners of these entities must meet requirements in order to be classed as an authorised trading partner.

In addition, DSCSA requires the FDA to establish national licensing standards, which are still being drafted, for wholesale drug distributors and third-party logistics providers (3PLs).

The guidance notes that the FDA has received many inquiries about which entities meet the definitions of trading partners. For instance, there has been 'confusion' about how the definitions of wholesale distributor and wholesale distribution changed upon enactment of the DSCSA, the guidance says, as well as confusion as to whether DSCSA licensure and reporting requirements apply to certain types of entities, such as jobbers, brokers and certain contractors and solution providers.

"Whether an entity meets the statutory definition of a particular trading partner that would trigger the applicable requirements depends on the activities in which it engages. This may be particularly applicable to entities, such as private-label distributors who may have a variety of business models and may meet the definitions of a variety of trading partners", the guidance says. It goes on to provide definitions for each trading partner.

For example, 3PLs are seen as new entities in the drug supply chain which provide or co-ordinate warehousing or other logistics services of a product on behalf of a manufacturer, wholesale distributor or dispenser of a product but 3PLs do not take ownership of the product nor have responsibility to direct the sale or disposition of the product.

The FDA notes that there has also been debate as to what activities would be considered 'other logistics services' within the definition of 3PL. Its current thinking is that other logistics services means services provided by entities that accept or transfer direct possession of products from that entity’s facility within the US and its territories on behalf of a trading partner (i.e. manufacturer, repackager, wholesale drug distributor (WDD), or dispenser).

The agency also considers 'other logistics services' to include services provided by entities that accept or transfer direct possession of products from that entity's facility within the US and its territories on behalf of a repackager of products for further sale or a repackager acting on behalf of a manufacturer, WDD, or dispenser.

Under the DSCSA, 3PL facilities must be licensed and regulated separately from wholesale distributors.

According to the guidance, a 3PL is prohibited from conducting activities in any state unless each facility of the 3PL is licensed by the state from which the drug is distributed by the 3PL, and under certain circumstances the 3PL must also be licensed by the state into which the drug is distributed. 3PLs must report certain information to the FDA, including state licensure information for each facility.

The guidance states: "3PLs that do not accept or transfer direct possession of product are not considered trading partners. Therefore, the 'authorized trading partner' provisions of section 582 of the FD&C Act would not apply when manufacturers, wholesale distributors, dispensers, and repackagers engage 3PLs who are not trading partners."

Furthermore, 3PLs without a facility (defined as an establishment, warehouse, structure, or structures under common ownership at one general, permanent, physical location used to store or handle prescription drug products) are not required to be licensed.

"The FDA would not consider a truck or shipping container used to transport product to constitute a facility for purposes of DSCSA because such trucks or containers are not consistently located at one physical location and would not sensibly be covered by the storage requirements specific to 3PL facility licensure."

The guidance also states that common carriers that solely provide transportation services but do not take ownership of the product nor direct the sale of the product nor provide or coordinate warehousing to store or handle the products they transport are not considered as 3PLs and are not needed to be covered by the 3PL licensure requirements under the DSCSA.

Meanwhile, the first of three public meetings on the DSCSA will be held on 23 August and will focus on exploring the vision for the electronic, interoperable system that is expected in 2023 and what is needed for enhanced drug distribution security. The other meeting dates are: 5-6 December 2017, and 28 February 2018.

The full guidance on identifying trading partners can be found here: https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM572252.pdf