FDA issues long-awaited licensing rules for drug distributors and 3PLs

The US Food and Drug Administration (FDA) on Thursday issued its widely anticipated proposed rule establishing uniform licensing standards for wholesale distributors and third-party-logistics providers (3PLs). The 2013 Drug Supply Chain Security Act (DSCSA) mandated that these rules be in place before these trading partners take possession of prescription drug products.
 
The agency announced that “the proposed rule, when finalized, would provide greater assurance that supply chain participants are sufficiently vetted and qualified to distribute prescription drugs, further strengthening the supply chain.”
 
The rule is six years overdue, and FDA’s delay in issuing these regulations has caused much consternation in the industry. (RELATED: FDA overdue on guidance as DSCSA deadline looms, Regulatory Focus, 19 April 2021)
 
DSCSA mandates that pharmaceutical manufacturers accept drug products from “authorized trading partners” only, or parties that are properly licensed or registered to receive or transfer products. Authorized trading partners include manufacturers, repackagers, dispensers, wholesale distributors and 3PLs.
 
The agency further noted that “unlicensed wholesale distribution has been a major source of diverted products both leaving and reentering the supply chain.”
 
FDA also issued two notices concurrently with the proposed rule, one withdrawing a proposed rule from 2011 that was never finalized due to the enactment of the DSCSA, and another that proposes amendments to certain prescription drug marketing requirements to “remove or revise outdated and conflicting regulatory requirements to align with changes or affected provisions of the [Federal Food, Drug, and Cosmetic Act] FD&C Act following enactment of the DSCSA.”
 
Rule requires on-site presence of facility managers
 
The 175-page proposed rule addresses licensure application requirements for 3PLs as well as general application requirements for licensure; the federal licensure process; changes to information, location, or ownership of a licensed 3PL; expiration and renewal of licenses; licensure denial, suspension, reinstatement and revocation; good storage practices for 3PL facilities; personnel requirements for good storage practices, and annual reporting to FDA.
 
DSCSA permits FDA to use third-party organizations to evaluate a 3PL’s qualifications for licensure. The rulemaking lists nine circumstances under which licensing authorities can deny a licensure request. FDA said the list “will help 3PLs focus on good storage practices ... that are necessary to protect the integrity of the products in the pharmaceutical distribution supply chain.”
 
FDA proposes that 3PLs keep illegitimate products in “clearly defined and designated areas” and separate from saleable products.
 
It further specifies that a facility manager, or designated representatives, can only serve in one facility at a time. Managers must be present in the facility and familiar with day-to-day operations. This will ensure that managers are “actively engaged in managing the daily operations of the facility and that they remain aware of any non-compliance issues that may arise.”
 
FDA also proposes that 3PLs report annual information to FDA electronically, this information should include the state they are located, and all trade names under which the facility conducts business.
 
Rule would preempt state laws
 
The rule would preempt state licensing laws. The national licensure standards “are intended to help ensure that the supply chain remains secure and that those finished prescription drug products subject to the DSCSA moving through the supply chain are properly stored, handled, and transported. These measures are intended to help protect U.S. consumers from drugs that may be counterfeit, stolen, contaminated, or otherwise harmful.”
 
Alongside the proposed rule, FDA finalized a 2014 guidance that addresses section 585 of the FD&C Act, which preempts states from establishing or continuing certain product tracing standards. The guidance offers four questions and answers meant to “help industry and States understand the law as it is currently in effect; and clarify the effect of section 585(a) on any regulation of drug product tracing by States.”
 
The proposed rule was developed with input from the National Association of Boards of Pharmacy, the Healthcare Distribution Alliance, the World Health Organization, and the Pharmaceutical Inspections Co-operation Scheme, and FDA said it aligns with current practices.
 
These national licensing standards will take effect two years after a final regulation is published for both 3PLs and wholesale distributors. While section 584 of the FD&C Act calls for national licensing standards for 3PLs to take effect one year after a final regulation is published, FDA said it “recognizes that 1 year may be insufficient time for States to implement 3PL licensure programs … and for 3PLs to apply for licensure under these programs.”
 
Manufacturers, wholesale distributors, dispensers and repackagers who have a 3PL as a trading partner would also get a one year break after the effective date of the final regulation from certain requirements under sections 582(b)(3), (c)(3), (d)(3) and (e)(3) of the FD&C Act, “unless the 3PL is not licensed because the Secretary or a state licensing body has made a finding that the 3PL does not utilize good handling and distribution practices and has published notice thereof.”
 
FDA is accepting comments on the proposed rule until 3 June 2022.
 
Proposed rule
 
Announcement