Gateway Checker founder and president Gary Lerner recently had the opportunity to speak on the Next Level Supply Chain Podcast, hosted by GS1 US. His conversation focused on DSCSA guidelines and their benefits on the supply chain, best practices for conformance, and tons more. The episode will be released on January 22nd—to watch the full episode when it releases, visit this link.
Following his election victory, president-elect Donald Trump announced intentions of implementing tariffs on Canada, Mexico, and China; these tariffs include 25% tax on imports from both Mexico and Canada, and an additional 10% increase on the tariffs already in place on Chinese exports to the United States. The goals of these imports, according to the Trump administration, are to protect U.S. manufacturing; incentivize companies to build facilities in the U.S. (and create American jobs); provide billions to the federal reserve to help offset the cost of tax cuts; and deter the flow of illegal immigrants, fentanyl, and other illicit drugs.
However, those opposed to the tariffs (including many economists) emphasize how taxing goods could result in price increases for consumers, including prescription drugs. About 85% of the Active Pharmaceutical Ingredients (APIs) used by U.S. manufacturers for generic pharmaceuticals are from India and China; Mexico and Canada are also exporters of these materials. Taxing these APIs as they enter the United States could result in higher prices for finished goods. Companies importing these goods may simply pass the cost of the tariffs to end consumers, who are already burdened by inflation.
According to the Active Pharmaceutical Ingredient Innovation Center (APIIC), this overreliance on China, India, and other foreign nations for most of our APIs is detrimentally impacting the supply of essential medications in the United States. The APIIC also believes rising imports of pharmaceuticals to the U.S. “creates serious risks to national security and patient safety.” In the past decade, the number of API-facility locations has decreased by 61%, while foreign nations continue to scale their operations. Reshoring the manufacturing process could help mitigate these concerns, and eliminate the financial risk of higher costs associated with tariffs; could Trump’s tariff plan present further opportunity to invest in domestic API production facilities?
What do you think about the impact of tariffs on drug prices? Will tariffs raise prescription drug prices, or could the benefits of in-country production outweigh the potential-price hikes in the long run?
Published November 26th, 2024
Recently, I shared that eligible trading partners were temporarily exempted from specific components of the Drug Supply Chain Security Act, “Latest DSCSA Exemption”. However, considering the stabilization period ends tomorrow, I thought I’d share some further insights on what isn’t part of the recent exemption.
First, as noted in my previous posts, the recent exemption doesn’t apply to everyone. As the FDA emphasized in their release, trading partners who are eligible for the exemption include “those who have initiated their systems and processes by successfully completing data connections with their immediate trading partners”, and “those who initiated processes including documentation of efforts to establish data connections but were not able to fully complete them with all immediate trading partners.” In other words, now is not time for trading partners to start initiating their systems and processes (that ship has sailed)—it’s time for trading partners to refine them.
The FDA wants to see progress made toward finalizing systems and processes capable of exchanging DSCSA transaction information and transaction statements with one another. Key enablers of this progress include:
In addition to documentation of progress, the FDA expects trading partners who plan to rely on the extension to communicate their intentions with immediate trading partners.
The FDA, similarly to when they announced their decision to implement the stabilization period, does not want trading partners to view this exemption as a “justification for delaying efforts to implement enhanced drug distribution security requirements.”
The deadline for compliance will come sooner than many expect, especially for manufacturers. In fact, there are only 129 working days until the May 27th, 2025 EDDS deadline.
For those who haven’t initiated these systems and processes, punishments could be severe, and include:
Partners who do not meet the exemption criteria will need to submit a Waiver, Exception, or Exemption, or will more than likely face the consequences outlined above.
Navigating DSCSA compliance amidst the constant changes to legislation can be tricky. However, one thing is for sure: if your business lacks systems and processes in place to implement EDDS requirements, the business is at risk.
With stabilization behind us, let Gateway Checker put you on the fast path towards supply integrity and regulatory compliance. Visit our website to view our services, or contact our team with any questions.
The deadline for DSCSA stabilization is just days away, mandating Enhanced Drug Distribution Security (EDDS) requirements for manufacturers, repackagers, wholesale distributors, and dispensers. While the FDA announced an extension from certain components of the FD&C in the form of a phased approach, this extension only applies to certain eligible trading partners. Eligible trading partners include those who have either completed connections with immediate trading partners, or who have initiated efforts (with documented evidence) but could not complete them by the November 27th deadline.
The phased approach to exemptions arose after industry stakeholders and House of Representatives members called for additional reform, emphasizing how a lack of government intervention can lead to drug shortages. The deadline for eligible trading partners is as follows:
In light of these exemptions, it’s important that we understand the details: who is and isn’t exempt, and from what specific requirements are eligible trading partners exempt from?
Unlike the 1-year stabilization period announced in August of 2023, this exemption only applies to certain eligible trading partners. To be eligible for the exemption, trading partners must have initiated their systems and processes in alignment with requirements outlined in section 582(g)(1) of the FD&C Act by the November 27th, 2024, start date. Section 582(g)(1) mandates the exchange of transaction data in an electronic and interoperable manner, implements procedures for product verification, and requires partners to keep transaction records in the case of a recall or in case product may be illegitimate or counterfeit. The announcement states,
“In order to prevent confusion, the FDA made it very clear in their announcement who they consider eligible for the exemption; they stated, “eligible trading partners are those who have initiated their systems and processes by successfully completing data connections with their immediate trading partners and those who initiated processes including documentation of efforts to establish data connections but were not able to fully complete them with all immediate trading partners.”
Additionally, this exemption “extends to trading partners throughout the pharmaceutical distribution supply chain who subsequently transact such product.” In other words, if a manufacturer is exempt and sends product downstream to a wholesale distributor, then that partner would be exempt for that product as well.
It’s also important to highlight the specific regulations eligible partners are exempt from. The announcement clarifies eligible partners are only exempt from certain subsections of 582(g)(1), 582(c)(4), and 582(d)(4). These specific regulations are as follows:
To read these specific requirements in full, click here.
With FDA inquiries and audits to confirm compliance on the horizon, here’s a few steps you can take to ensure you aren’t at risk:
According to the DSCSA Exemption Announcement from the FDA on October 9th, here are the specific components of the legislation that eligible trading partners are exempt from.
‘‘(A) The transaction information and the transaction statements as required under this section shall be exchanged in a secure, interoperable, electronic manner in accordance with the standards established under the guidance issued pursuant to paragraphs (3) and (4) of subsection (h), including any revision of such guidance issued in accordance with paragraph (5) of such subsection.
‘‘(B) The transaction information required under this section shall include the product identifier at the package level for each package included in the transaction.
‘‘(C) Systems and processes for verification of product at the package level, including the standardized numerical identifier, shall be required in accordance with the standards established under the guidance issued pursuant to subsection (a)(2) and the guidances issued pursuant to paragraphs (2), (3), and (4) of subsection (h), including any revision of such guidances issued in accordance with paragraph (5) of such subsection, which may include the use of aggregation and inference as necessary.
‘‘(D) The systems and processes necessary to promptly respond with the transaction information and transaction statement for a product upon a request by the Secretary (or other appropriate Federal or State official) in the event of a recall or for the purposes of investigating a suspect product or an illegitimate product shall be required.
‘‘(E) The systems and processes necessary to promptly facilitate gathering the information necessary to produce the transaction information for each transaction going back to the manufacturer, as applicable, shall be required—
‘‘(i) in the event of a request by the Secretary (or other appropriate Federal or State official), on account of a recall or for the purposes of investigating a suspect product or an illegitimate product; or
‘‘(ii) in the event of a request by an authorized trading partner, in a secure manner that ensures the protection of confidential commercial information and trade secrets, for purposes of investigating a suspect product or assisting the Secretary (or other appropriate Federal or State official) with a request described in clause (i).
‘‘(F) Each person accepting a saleable return shall have systems and processes in place to allow acceptance of such product and may accept saleable returns only if such person can associate the saleable return product with the trans- action information and transaction statement associated with that product.
(D) VERIFICATION OF SALEABLE RETURNED PRODUCT: Beginning 6 years after the date of enactment of the Drug Supply Chain Security Act, upon receipt of a returned product that the wholesale distributor intends to further distribute, before further distributing such product, the wholesale distributor shall verify the product identifier, including the standardized numerical identifier, for each sealed homogeneous case of such product or, if such product is not in a sealed homogeneous case, verify the product identifier, including the standardized numerical identifier, on each package.
‘‘(II) Dispenser must promptly conduct an investigation in coordination with trading partners, as applicable, to determine whether the product is an illegitimate product beginning 7 years after the date of enactment of such Act, verifying that the product identifier, including the standardized numerical identifier, of at least 3 packages or 10 percent of such suspect product, whichever is greater, or all pack- ages, if there are fewer than 3, corresponds with the product identifier for such product
‘‘(iii) RESPONDING TO A NOTIFICATION —Upon the receipt of a notification from the Secretary or a trading partner that a determination has been made that a product is an illegitimate product, a dispenser shall identify all illegitimate product subject to such notification that is in the possession or control of the dispenser, including any product that is subsequently received, and shall perform the activities described in subparagraph (A).
*Recall that an exemption was given to dispensers with 25 or less full-time employees already until November 27th, 2026. This is one year after the dispensers with 26 or more full time employees.
For any questions regarding the exemption, feel free to contact the Gateway Checker team
