Health Law Advisor

On July 12, 2024, the FDA provided small dispensers—those employing 25 or fewer full-time pharmacists or pharmacy technicians—with an exemption from the Drug Supply Chain Security Act’s (“DSCSA”) enhanced drug distribution security (“EDDS”) requirements until November 27, 2026.^[1]  The FDA had previously announced a stabilization period effectively delaying enforcement of these EDDS requirements for all trading partners until November 27, 2024.^[2]   Generally, the EDDS requirements are the DSCSA compliance requirements that become effective once trading partners are required to exchange drug product data through an interoperable secure electronic system, as further summarized here. Recently, the FDA widened the exemption from the EDDS requirements to apply to other DSCSA stakeholders, though the length of time for the exemption varies by stakeholder type.

Missing and Incomplete Data Issues

On July 29, 2024, the National Association of Chain Drug Stores (“NACDS”) published a letter to the FDA raising the concern that only 25% to 50% of drug products received by pharmacies had accurate, consistent, and complete EPCIS data.^[3]  NACDS asked for staggered start dates for the EDDS requirements based on trading partner type.^[4]  The Healthcare Distribution Alliance (“HDA”) raised similar concerns and endorsed a similar approach in an August 19, 2024 letter to the FDA.^[5]  If incomplete or inaccurate DSCSA data is not received by a trading partner from an upstream trading partner, then the receiving trading partner should not accept or further distribute that drug product. With such a large volume of inaccurate data, the risk to patient access to drugs and shortages would be high.

Following these two letters, both NACDS and HDA engaged in separate listening sessions with the FDA in late September. During those sessions, they reiterated the concerns that they had outlined in their summer letters. The stakeholders noted that while the percentage of inaccurate or missing data had dropped to 25%, that still meant that on any given day a quarter of serialized drug packages had inaccurate data. The stakeholders also raised concerns that the large volume of independent waiver, exception, and exemption (“WEE”) requests that had been submitted to the FDA if granted, would make the November 27, 2024 transition complex and difficult, and emphasized that further stabilization would be necessary to avoid risks to patient drug access and public health.^[6] 

On July 31, the Centers for Medicare and Medicaid Services (“CMS”) published its mammoth proposed rule entitled “Medicare and Medicaid Programs: Calendar Year 2025 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Prescription Drug Inflation Rebate Program; and Medicare Overpayments” (“CY25 PFS Proposed Rule”).

The CY25 PFS Proposed Rule came on the heels of another CMS rule, published on July 22, covering “Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems”—and more (“CY25 OPPS Proposed Rule”). Both rules have a comment period that closes on September 9.

The recent Supreme Court decisions of SEC v. Jarkesy[1] and Loper Bright Enterprises v. Raimondo[2] have the potential to meaningfully impact the implementation and enforcement of the Drug Supply Chain Security Act[3] (“DSCSA”) as industry transitions away from the “stabilization period” ending on November 27, 2024.  The DSCSA statute contemplated that the Enhanced Drug Distribution Security system (“EDDS”) was to be effective November 27, 2023.[4]  Recognizing that many Trading Partners were not yet ready to fully comply with the November 27, 2023 deadline, in August 2023, the FDA issued a compliance policy guidance document with regard to EDDS.[5]  This guidance document provided Trading Partners with a one-year “stabilization period”, through November 27, 2024, during which the FDA would not enforce the statutory EDDS requirements.[6] The stabilization period was implemented to avoid supply chain disruption and to ensure continued patient access to prescription drug products, while Trading Partners continue to work towards compliance with the EDDS requirements.

As we move from the “stabilization period” to perhaps a period of greater enforcement, each of these decisions favor the potential positions of regulated trading partners over the FDA in application to the DSCSA.

In June 2024, the U.S. Food and Drug Administration ("FDA") clarified, with respect to the Drug Supply Chain Security Act (“DSCSA”)[1], that it will not extend the one-year stabilization period for the enhanced drug distribution requirements beyond November 27, 2024.[2] At the same time, the FDA also issued exemptions, through November 27, 2026, for small pharmacies from certain DSCSA requirements, and is allowing all other trading partners to request waivers or exemptions from the enhanced drug distribution security requirements.[3]

DSCSA Background

The DSCSA provides for the tracking and tracing of drug products from drug manufacturers through the supply chain down to dispensers, requirements for investigating and dispositioning suspect and illegitimate drug products and federal licensing requirements for wholesalers and third-party logistics providers. The driving force behind the DSCSA is to prevent counterfeit drugs from entering the supply chain and to prevent such drugs from harming patients if they do enter the supply chain. Under the law, manufacturers, repackagers, wholesale distributors, third-party logistics providers, and dispensers (“Trading Partners”) each have affirmative obligations governing how they must transfer ownership of prescription drug products and the specific product data or tracking data that must be maintained and shared between buyers and sellers of such products. Further, Trading Partners must have processes in place for drug product verification, as well as an affirmative obligation to identify, investigate and manage suspect or illegitimate products, such as counterfeit or intentionally adulterated products.

We recently outlined key provisions of the Environmental Protection Agency’s (EPA’s) Final Rule modifying the standards governing industry management of hazardous waste pharmaceuticals, which become effective August 21, 2019. Client Alert

Impacted industries must immediately comply with the nationwide ban on the sewering of hazardous waste pharmaceuticals as of the August 21^st effective date.  The ban applies to a wide range of stakeholders, including, but not limited to reverse distributors, pharmacies, hospitals, and wholesalers.

Additional regulatory changes ...