Health Law Advisor

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.

Although FDA appropriately identified the need for guidance on the Effect of Section 585 of the FD&C Act on Drug Product Tracing, Wholesale Drug Distributor and Third-Party Logistics Provider Licensing Standards and Requirements; the Draft Guidance issued by FDA this month does not ask the right questions.

In November 2013, Congress enacted the Drug Supply Chain Security Act ("DSCSA") with the intent of establishing a "Uniform National Policy" for wholesale distributor and third party logistics provider ("3PL") licensure.  Congress hoped to achieve this goal by adding Section ...