The Drug Supply Chain Security Act Deadline is Sooner Than You Think

There are now less than two years left to comply with a federal law that will fundamentally change the way the healthcare supply chain currently operates; soon, products and data will move through the healthcare supply chain in tandem, and the tools we will have to trace product ownership will change. The Healthcare Distribution Alliance (HDA), the national organization representing primary pharmaceutical distributors, advocated for this law — the 2013 Drug Supply Chain Security Act (DSCSA) — and is now bringing supply chain partners together, including providers and manufacturers, to facilitate its implementation.

Healthcare distributors connect the nation’s pharmaceutical manufacturers with pharmacies, hospitals, long-term care facilities, clinics, and others, working behind the scenes to deliver life-saving medications and products. Since 1876, HDA has helped its members innovate and navigate industry regulations to support patient access to needed medications.

Chester “Chip” Davis is President and CEO of HDA and President of the HDA Research Foundation. He joined HDA in March 2020 from the Association for Accessible Medicines (AAM), where he served as President and CEO for five years. A key part of his mission is to ensure that HDA’s members have a strong advocacy voice in legislation, regulation, and policy.

Here, Davis talks to Pharm Exec about DSCSA, its impact on the industry, and how pharma manufacturers must prepare — in collaboration with their supply chain partners — for the imminent implementation deadline.

Pharm Exec: Can you summarize the 2013 Drug Supply Chain Security Act (DSCSA), its goals and purpose?

Chip Davis

Chip Davis: DSCSA is a federal framework for interoperable data exchange in the pharmaceutical supply chain to enable traceability when necessary, such as in the event of a suspect or illegitimate drug product. Replacing a 50-state patchwork of requirements with one federal approach, the DSCSA clarified and consolidated supply chain regulations, increasing efficiency and safety.

DSCSA involves unit-level serialization of pharmaceutical products. It establishes a framework, over a 10-year period, for exchanging data when products are transacted throughout the U.S. pharma supply chain. The ultimate goal, by November 2023, is to enable unit-level traceability in a secure, electronic, interoperable manner.

What have HDA and its members been doing to help the industry prep for DSCSA implementation?

As healthcare distributors, we are uniquely positioned within the supply chain to engage with manufacturers as well as our dispenser partners.

HDA has convened working groups with stakeholders to help manufacturers think through business practices, and we are facilitating conversations to help establish a common understanding of compliance needs and develop the necessary processes and data connections to get there. Additionally, we are communicating our progress, challenges, and business impact to the FDA based on our evolving experience and what our members have learned up to this point.

Some HDA members have enhanced their customer portals to ensure that manufacturers and dispensers can learn about DSCSA implementation requirements. HDA distributor members are at the center and help manage both front-end and back-end relationships. Approaching implementation, we are focused on the business aspects, ensuring partners in the supply chain can maintain their operational efficiency, to ensure patients continue to have access to critical medications.

How would you describe the scope of the impact DSCSA will have on pharma manufacturers?

Manufacturers have already felt the impact, from their bottom line to just about every department within their organizations.

The C-suite may not be in the weeds every day, but this is something their IT people, data experts, system engineers, operations, quality, packaging, and logistics departments are and have been working on. Across the board, manufacturers have already invested millions of dollars and hundreds of hours of manpower in DSCSA.

The need for individualized, serialized product — and the associated data — for every transaction is new. This change is monumental.

This complete reinvention of processes starts at the manufacturing line. It consists of installing equipment to aggregate products, changing all packaging and labeling, equipping warehouses with new barcode scanners, developing new ways systems capture and store the data, including the serialized identifiers, and sharing all this information efficiently throughout the rest of the supply chain.

Additionally, DSCSA prompts manufacturers to have tighter data quality and stronger processes. Manufacturers and sellers must maintain corresponding data at an individual unit level, resulting in myriad opportunities to fail.

Upgrading operations is expensive, but it pales in comparison to not being able to sell or move your product because of noncompliance, and to the resulting impact on patients if critical medicines cannot move through the supply chain safely and efficiently.

What are you seeing in terms of stakeholders’ readiness for the implementation deadline? Are we as an industry ready?

We have work to do.

HDA recently conducted and released a Serialization Readiness Survey, a snapshot of manufacturers’ and distributors’ ability to meet DSCSA requirements. As revealed in this year’s survey, manufacturer respondents note that aggregation, a prerequisite for sending serialized transaction data, has slowed. While 45% of respondents are currently aggregating, in a previous survey, 56% said they had planned to aggregate by the end of 2019. Additionally, 40% of manufacturers say they are currently sending or plan to send, by the end of 2021, at least some serialized data to their wholesale distributor customers upon shipment. Another 43% say they plan to do so much later, by November 2023, and 16% are still unsure when they will exchange data.

Regarding key compliance challenges, manufacturers and distributors cited “governance of the interoperable system for 2023,” “technical challenges,” “establishing standards,” “collaboration with trading partners” and “differing interpretations” of the law among their top concerns.

It is concerning to see these timelines continue to be pushed further out. Our larger wholesalers anticipate needing a year to check the data against the product they’re receiving. They also need compliant data for the product already in inventory. There are concerns about how much inventory is still not serialized and how much product will be sitting in warehouses without the correct data. We don’t anticipate the FDA using a “ramp-up” period. So, will manufacturers end up with warehouses full of medicines they can’t sell? We just don’t know yet — which is a good reason to begin preparing today.

What are five things pharma manufacturers should do right now to be ready for the 2023 implementation deadline?

The number one priority for manufacturers is to engage with your wholesalers now to ensure you have a plan. There are several prerequisites to even be able to onboard with your trading partner, so there’s homework to be done.

Secondly, if you have not done so, put a DSCSA implementation team in place. It should be cross functional, comprising IT and data experts, operational, quality, policy, legal, and compliance. DSCSA touches all aspects of the organization.

Thirdly, the only widely recognized standard of an international standards development organization that allows trading partners to exchange transaction data is GS1’s Electronic Product Code Information Services (EPCIS). So, it’s important to make sure your organization is EPCIS ready, or capable of getting there. That’s not a conversation that should wait.

Next, ensure today that your internal data are accurate and of high quality — everything comes down to data quality and accuracy.

Finally, be as forward-thinking as possible. We don’t yet know the full utility of all this serialized data that will be available because of DSCSA. To begin, most of the pharma sector is focused on meeting the compliance requirements for DSCSA, but if I were a manufacturing executive, I would ask, “What else can we do with all these systems in place? What else are these data capable of?” Consider how these data allow you to tighten up current processes and think about future uses and applications beyond the 2023 deadline. But – and I cannot stress this enough – let’s get there first.

Since the beginning, HDA and our members have fully supported DSCSA and worked hard to get the law enacted. Because 93% of all drug transactions go through HDA distributors, our members are implementing DSCSA at every step — for their companies, in partnership with their manufacturer suppliers, and in partnership with their pharmacy or dispenser customers. Our members support the law and have worked diligently to make it work as efficiently possible across the entire industry.

The Healthcare Distribution Alliance