DQSA Track and Trace Initiatives
and Enforcement
Kathleen Dooley, Partner, McGuireWoods LLP
Jacqueline Berman, Associate, Morgan, Lewis & Bockius LLP
Enforcement
Litigation and
Compliance
Washington, DC
December 9-10, 2015
Anne Marie Polak, Senior Director, Leavitt Partners, LLC
Moderated by Carolina Wirth, Counsel, Kilpatrick Townsend &
Stockton LLP
DQSA track and trace
initiatives and enforcement
Kathleen Dooley, Partner, McGuireWoods LLP
Jacqueline Berman, Associate, Morgan, Lewis & Bockius LLP
Anne Marie Polak, Senior Director, Leavitt Partners, LLC
Moderated by Carolina Wirth, Counsel, Kilpatrick Townsend & Stockton LLP
Drug Supply Chain Security
Act: Historical Context
Kathleen Dooley, Partner, McGuireWoods LLP
Drug Supply Chain Security Act
of 2013
• Title II of the Drug Quality Security Act
• Outlines critical, time-staged steps to build an
electronic interoperable system to identify and
trace prescription drugs as they are distributed
throughout the United States.
• Within 10 years of enactment, system will
facilitate the exchange of information at the
individual package level about where a drug has
been in the supply chain.
Drug Supply Chain Security Act
of 2013
• The New System will:
– Enable verification of the legitimacy of the
drug product identifier down to the package
level.
– Enhance detection and notification of
illegitimate products in the supply chain.
– Facilitate more efficient recalls of drug
products.
What Led to Enactment?
• Pharmaceutical Diversion
– Abuse of distribution system – pharmaceutical
products intended for specific markets were
diverted, i.e., sold to alternative, unauthorized
markets in violation of the parties’ stated
intent through unauthorized channels.
– Secondary markets facilitated movement of
counterfeit products.
– No traceability.
Effect of Diversion
• Single biggest factor contributing to counterfeit
drugs in the supply chain – see FDA Counterfeit
Drug Task Force Report 2/9/06
• “Corrupt” distributors in the supply chain are
responsible for supplying counterfeit drugs to
retail pharmacies – Roberts Brice, Ann – Life
Science Leader – March 2009 – Quoting
Katherine Eban, author of “Dangerous Doses”
• http://www.lifescienceleader.com/index.php?option=com
_jambozine&layout=article&view=page&aid=3790&Itemi
d=68
Green = Legitimate Yellow = Stolen/Diverted/Counterfeit Red = Counterfeit
Foreign
Countries
Exporter
Pharmaceutical Manufacturers
Destruction Sites
Secondary
Wholesalers/Repac
kagers
Discounted
Groups
Importers
Stolen/U-Boat/Donations
Repackagers
Primary
Wholesalers
Pharmacies
Counterfeiters
All Consumers
Internet
Pharmacies
Diverters
Counterfeit Drugs
• Counterfeit pharmaceuticals are a current
danger to the community
• Prior to the DSCSA, a web of state laws
impacted the tracking mechanisms in place
• The DSCSA creates continuity and closes a
loophole in black market pharmaceuticals
• Both the FDA and federal authorities have
tried to address counterfeit drug distribution
Online Pharmacies
• Numerous unregulated online pharmacies offer for
sale substances alleged to be FDA-regulated
pharmaceuticals
– The sources of the substances are not known
– The chemical composition of these substances is not
certain
– The FDA has taken the lead in identifying these
distributors
• VIPPS online pharmacies:
http://www.nabp.net/programs/accreditation/vipps/fin
d-a-vipps-online-pharmacy
Online Pharmacies: FDA
Warning Letters
• Since 2013, the FDA has issued 10
warning letters to online entities selling
substances alleged to be pharmaceuticals
but are in fact counterfeits
• The FDA, to date, has not issued a close
out letter for any of these online
pharmacies
Online Pharmacies: Common
Warning Letter Themes
• The FDA warning letters had common
themes:
– The substances were not named the proper
generic name
– The substances did not contain black box
warnings
– The substances did not have an approved
distribution or tracking mechanism
– Some substances were not approved in the
US
Counterfeit Drug Case StudyAvastin
Black Market Distribution
• Federal authorities have identified black
markets in the last several years that were
distributing drugs outside regulated
channels
• These involved the distribution of
legitimate drugs acquired from indigent
patients who would receive pennies on the
dollar for their monthly medications
Black Market Distribution:
Department of Justice (DOJ)
In 2013, the DOJ indicted three people for
conspiring to obtain prescription
pharmaceuticals from “street collectors” in
New York and Miami, and to selling those
prescription drugs to independent
pharmacies as though they were obtained
from legitimate wholesale distribution
companies
Mechanics of the Distribution
• Street diversion: Diverters repurchased medications that have been
dispensed to patients, removed the patient labels, and reintroduced
them into the wholesale market
• The defendants repackaged and distributed the drugs to
independent pharmacies alleging that the diverted drugs were
obtained from a licensed wholesale distributor
• The defendants directed their employees to remove the packaging
to conceal the source and to create false pedigrees and false entries
– They used lighter fluid to remove patient labels and replaced damaged
manufacturer labels with counterfeits prior to selling the drugs to licensed
distributors
• The defendants audaciously submitted to a federal grand jury 21
false pedigree documents stating that the drugs were acquired
legitimately
Drug Supply Chain Security
Act: Requirements,
Questions, and
Consequences
Jacqueline Berman, Associate, Morgan, Lewis &
Bockius LLP
DSCSA: Basic Requirements
• Transfer of transaction history, transaction
information, and transaction statement
• Product identifiers
• Business only with authorized trading
partners
• Returns
• Suspect and illegitimate product
quarantine, investigation, and notifications
DSCSA: Applicability
• Application-Manufacturers, repackagers, distributors, dispensers
• Exemptions (by example)
–
–
–
–
–
Over-the-counter products
Intracompany distributions
Emergency medical situations
Samples
Minimal quantities by a licensed retail pharmacy to practitioner for inoffice use
– Pharmacy/wholesale distributor mergers/acquisitions
– Certain combination products not subject to 505 approval or licensure
• Questions Raised
– Who is covered?-Contract manufactures?
DSCSA: Transaction
Documents
• Must be provided to and received from trading partners
– Transaction History
– Transaction Information
– Transaction Statement-statement that the entity transferring ownership is authorized;
received the product from a person that is authorized; received transaction information and a
transaction statement from the prior owner; did not knowingly ship a suspect or illegitimate
product; had systems and processes in place to comply with verification requirements; did
not knowingly provide false transaction information; and did not knowingly alter the
transaction history
• Questions Raised
– What does it mean to act knowingly?—actual knowledge, imputed
knowledge?
– What are the consequences of a false certification?
• FDA prohibited act to fail to comply with Section 582
• Other potential liability-e.g., False Claims Act
DSCSA: Product Identifier
• Standardized graphic that includes, in both humanreadable form and on a machine-readable internationally
recognized data carrier, the standardized numerical
identifier, lot number, and expiration date of the product
• Must be affixed to each package and homogenous case
• May not engage in transactions concerning a specific
product unless product is encoded with a product
identifier
• Questions Raised
– How to develop technology that will keep up with technological
advancements during the product shelf life and that will stay
ahead of potential illegitimate streams of commerce?
DSCSA: Authorized Trading
Partners
• Must verify that trading partners are authorized trading
partners
– Manufacturers/repackagers must be registered with FDA
– Wholesale distributors/3PLs must have a valid state or federal
issued license and must comply with reporting requirements
– Dispensers must have valid state license
• Questions Raised
– What diligence efforts are trading partners required to undertake?
•
•
•
•
•
Contractual representations
Copies of registrations/licensure and required reports
Verification on public databases
Certified verification by the registration/licensing authority
How often must authorization be verified?
DSCSA: Suspect/Illegitimate Products
•
•
•
•
•
•
•
Quarantine
Conduct investigation in coordination with trading partners
FDA notification of cleared suspect products
Disposition of illegitimate products
FDA and trading partner illegitimate product notification
Request to FDA to terminate an illegitimate product notification
Questions Raised
–
–
–
–
What steps need to be taken to detect suspect/illegitimate products?
What steps must be taken to investigate a suspect/illegitimate product?
How much evidence indicates illegitimacy?
If a product is an illegitimate product, who is primarily responsible for the
disposition/what kind of assistance must be provided to trading partners?
– How is illegitimate product that is not in the hands of a trading partner
dispositioned?
– How are patients/doctors notified of any potential risks?
– What are the consequences of there being a high risk of illegitimacy?
DSCSA: Returns
• Manufacturer-Must verify product identifier
before further distributing a returned product
• Wholesale Distributors-May accept returned
product from dispenser or repackager only if can
associate the product with the transaction
information and statement; must verify product
identifier before further distributing a returned
product
• Repackagers-Must verify product identifier
before further distributing a returned product
DSCSA: FDA Guidance
From FDA Website:
http://www.fda.gov/Drugs/DrugSafety/DrugIntegrityandSupplyChainSecurity/DrugSupply
ChainSecurityAct/ucm424963.htm
Trading Partner Timeframe
(based upon Nov. 27, 2013 enactment)
Manufacturers
Distributors
Dispensers
Repackagers
Transaction Docs
May 1, 2015
May 1, 2015
Jul. 1, 2015
(Mar. 1, 2016 for
receipt)
May 1, 2015
Electronic Transaction Docs
Nov. 27, 2017
See Interoperable
Tracing
See Interoperable
Tracing
See Interoperable
Tracing
Product Identifier
Nov. 27, 2017
Nov. 27, 2019
Nov. 27, 2020
Nov. 27, 2018
Authorized Trading Partner
Jan. 1, 2015
Jan. 1, 2015
Jan. 1, 2015
Jan. 1, 2015
Suspect/Illegitimate Product
Jan 1. 2015
(package level
verification Nov.
27, 2017)
Jan. 1, 2015
(package level
verification Nov.
27, 2019)
Jan. 1, 2015
(lot/package level
verification Nov. 27,
2020)
Jan. 1, 2015
(package level
verification Nov. 27,
2018)
Requests for Verification
Nov. 27, 2017
NA
NA
Nov. 27, 2018
Returned Product
Nov. 27, 2017
Enhanced
requirements Nov.
27, 2019
NA
Nov. 27, 2018
Interoperable Electronic
Tracing at Package Level
Nov. 27, 2023
Nov. 27, 2023
Nov. 27, 2023
Nov. 27, 2023
DSCSA: Potential Broad Impact
• New contractual provisions
• New commercial relationships for
outsourced functions
• Consequences of false certifications
• New systems/policies and procedures
• Cost shifting
• Allocation of responsibility for remedial
actions
Drug Supply Chain Security
Act: Implementation
Anne Marie Polak, Senior Director, Leavitt
Partners, LLC
Industry Compliance with
DSCSA
Manufacturers,
repackagers
and wholesale
distributors
Jan. 1, 2015:
authorized trading
partner (ATP) and
verification of suspect
and illegitimate
products in effect
Enforcement
discretion until May 1,
2015 for product
tracing requirements
(exchange of
TI/TH/TS)
Dispensers
July 1, 2015: ATP and
verification of suspect
and illegitimate
products in effect
Enforcement
discretion until March
1, 2016 for product
tracing requirements
Forums for Collaboration
FDA
• Meetings with supply chain
participants and trade
associations
• At least 5 public workshops, (e.g.,
May 2014 Standards for the
Interoperable Exchange of
Information)
Pharmaceutical
Distribution Security
Alliance (PDSA)
• Industry Coalition that
responds to FDA guidances
and proposes responses to
DSCSA “open questions”
Industry Conferences
(HDMA, Rx360)
Open Questions
Definitions
Identifying Suspect and Illegitimate Products
Preemption
Grandfathering, Exceptions, Exemptions and Waivers
Licensing
Phase II Interoperability
Requirement
Rx360
Whitepaper
PDSA
Migration
Work Group
Pilots (FDA,
HDMA,
Other)
Questions?