Final Definitions and Considerations for Trading Partners to Prepare for DSCSA Implementation
On March 16, 2023, the Food and Drug Administration (FDA) released final guidance regarding definitions of "suspect product" and "illegitimate product" as part of a continued effort to prepare trading partners for the November 27, 2023 final implementation of The Drug Supply Chain Security Act (DSCSA). This alert provides an update as to what has changed in the final definitions, as well as considerations for trading partners as they prepare for final DSCSA implementation.
The Drug Supply Chain Security Act (DSCSA) became law in November 2013 as a part of the larger Drug Quality and Security Act. The purpose of the DSCSA is to establish standards for "trading partners" (entities who are involved in the sale and distribution of prescription drugs) to trace distribution of prescription products at the package level throughout the United States, and protect consumers from stolen, counterfeit, or otherwise harmful products. On June 3, 2021, the FDA released draft guidance regarding the terms "suspect product" and "illegitimate product" as defined by the Federal Food, Drug, and Cosmetic Act (FD&C Act) and used throughout the DSCSA. Trading partners who identify suspect and illegitimate products must take further steps to verify and report the discovery of such substances. Currently, the terms are defined as follows:
Suspect Product - The term “suspect product” means a product for which there is reason to believe that such product:
(A) is potentially counterfeit, diverted, or stolen;
(B) is potentially intentionally adulterated such that the product would result in serious adverse health consequences or death to humans;
(C) is potentially the subject of a fraudulent transaction; or
(D) appears otherwise unfit for distribution such that the product would result in serious adverse health consequences or death to humans.
21 U.S.C.A. § 360eee(21)
Illegitimate Product - The term “illegitimate product” means a product for which credible evidence shows that the product:
(A) is counterfeit, diverted, or stolen;
(B) is intentionally adulterated such that the product would result in serious adverse health consequences or death to humans;
(C) is the subject of a fraudulent transaction; or
(D) appears otherwise unfit for distribution such that the product would be reasonably likely to result in serious adverse health consequences or death to humans.
21 U.S.C.A. § 360eee(8)
The March 2023 FDA guidance aims to clarify how regulated entities can determine if a product is counterfeit, diverted, stolen, part of a fraudulent transaction, or otherwise unfit for distribution, for the purpose of determining what DSCSA obligations to verify and report the product may follow.
Key Changes Made in March 2023 Final Guidance
The June 2021 guidance provided a draft analysis of how the FDA may interpret the terms "counterfeit", "diverted", "stolen", "fraudulent transaction", and "unfit for distribution" as they are used in the FD&C Act. Below is a brief summary of key changes made by the FDA between the June 2021 draft and the March 2023 final guidance.
Counterfeit - There is no change to the interpretation of the term "counterfeit" between the draft and final guidance. The FDA interprets "counterfeit" to mean:
[A] drug which, or the container or labeling of which, without authorization, bears the trademark, trade name, or other identifying mark, imprint, or device, or any likeness thereof, of a drug manufacturer, processor, packer, or distributor other than the person or persons who in fact manufactured, processed, packed, or distributed such drug and which thereby falsely purports or is represented to be the product of, or to have been packed or distributed by, such other drug manufacturer, processor, packer, or distributor.
Diverted - The final guidance includes several updates to the FDA's interpretation of the term "diverted". Namely, the final guidance:
- broadens how a drug can leave the U.S. supply chain by clarifying that this can occur not only through dispensing to a consumer, but due to a variety of other actions;
- clarifies the meaning of certain "surveillance activities" that do not constitute a product being considered diverted (including a trading partner obtaining a product from outside the U.S. pharmaceutical distribution supply chain, or from a consumer that obtained the product from outside the U.S. pharmaceutical distribution supply chain); and
- specifies that a product would not be considered diverted if the FDA has issued an emergency use authorization under the specific authority of 21 U.S.C. 360bbb-3.
Stolen - While the FDA's interpretation of the definition of "stolen" remains unchanged from the draft guidance, the final guidance includes additional commentary from the FDA that may aid trading partners in determining when a product is "unaccounted for" versus when product has been stolen. In a circumstance where a trading partner identifies unaccounted for product, the entity should look to its own policies and procedures and previous FDA guidance (including the Enhanced Drug Distribution Security at the Package Level Under the Drug Supply Chain Security Act publication) to aid in making such a determination.
Fraudulent Transaction - Similarly to the term "stolen", there is no change between the draft and final guidance to the FDA's interpretation of the term "fraudulent transaction", but the final guidance adds a discussion of how to differentiate between product whose tracing information is "knowingly falsified" (per the definition) and product whose tracing information is impacted by a clerical or administrative error. The FDA recommends ensuring that clerical errors have been resolved prior to determining that a product has been involved in a fraudulent transaction, therefore triggering verification and notification requirements.
Unfit for Distribution - The FDA's final guidance clarifies that whether a product is adulterated, nonsaleable due to conditions (such as temperature or expiry), potentially unsafe (due to issues such as purity or strength), or misbranded, efforts should be taken to 1) review internal policies and procedures to make such determinations and 2) analyze a product's level of fitness based on whether it would reasonably result in serious adverse health consequences or death to humans.
As evidenced above, the FDA has updated its final guidance with, among other things, a suggestion for entities to review, understand, and update their own internal policies and procedures to aid in the decision-making process surrounding identifying and potentially reporting suspect and illegitimate product. As the final November 27, 2023 implementation date for the DSCSA approaches, Quarles will continue to monitor the progress of any additional guidance from the FDA.
If you have questions regarding the DSCSA, please contact your Quarles attorney or: