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Speech | In Person

Event Title
Remarks on Enhancing Drug Distribution Security
February 28, 2018

Speech by
Scott Gottlieb, M.D.

Remarks by Scott Gottlieb, M.D.
Commissioner of Food and Drugs
FDA Public Meeting on Enhanced Drug Distribution Security under the Drug Supply Chain Security Act (DSCSA)
White Oak, MD

(Remarks as prepared for delivery)

Good morning. It’s a pleasure to be with you today.

Patient safety is at the core of FDA’s public health mission; and ensuring reliable patient access to safe and effective medicines requires maintaining a closed, secure U.S. drug supply chain for the distribution and delivery of finished drug products. 

Every link in that chain must be secure: From the moment finished drug products leave manufacturing facilities to final delivery to pharmacies or providers’ offices where medicines are ultimately dispensed to patients. 

That’s why FDA and stakeholders have been working collaboratively toward full implementation of the Drug Supply Chain Security Act in 2023. 

Reaching that milestone, on time, is a high priority for us.

I know this work is technically challenging. I know it requires close collaboration among multiple public and private stakeholders.  I know that reaching true interoperability for systems and processes that can produce full information for each transaction going back to the manufacturer – down to the individual package level, in near real time – is challenging. 

But that’s exactly why Congress planned for a stepwise, gradual implementation of the law over a decade.   

It’s also why we want to hold public meetings, like this one, to collaborate with stakeholders on issues related to the enhanced drug distribution security provisions of the law.   

Thanks to the hard work of my FDA colleagues, we’ve already accomplished a tremendous amount of work supporting implementation efforts. This includes our release of 11 guidances for industry. Four of these guidances are final.

They cover topics like standards for the interoperable exchange of product tracing information; annual reporting by wholesale distributors and third party logistics providers; product identifier requirements; and identifying trading partners.

Currently, authorized trading partners are exchanging tracing documentation in electronic or paper format.

Manufacturers, re-packagers, wholesale distributors, and the dispensers – who are mainly pharmacies – all have systems and processes in place to quarantine and investigate suspicious products. They can then notify trading partners and the FDA when illegitimate products are found. And they can respond rapidly to notifications of illegitimate products.  

While the U.S. drug supply chain is among the safest in the world, complacency isn’t an option. 

Continued improvements in supply chain security are vital because we face increasingly sophisticated criminal organizations who intend to profit from the introduction of fake, adulterated, or diverted drugs into the U.S. system.

We see a world where the risk from counterfeit drugs is increasing rapidly. Where the means to produce counterfeits and distribute them through sophisticated, illegal networks is increasing. And the volume is also rising sharply. We have numbers that speak to these risks. We have enforcement work underway that’ll -- unfortunately – illustrate that these concerns are real.

If we tolerate a single weak link in the system, they’ll find it.

And they’ll develop new ways to exploit it. 

The nature of global supply and distribution chains means that illegitimate products can cascade throughout the supply chain and reach patients if they’re not caught quickly. 

Seamless state-of-the-art security throughout the supply chain must be our shared goal. 

Today, I’d like to announce several important new FDA efforts that we believe will help advance implementation of the law, and that’ll further strengthen our supply chain security. 

We’re releasing two new draft guidances for industry.

The first is titled: Definitions of Suspect Product and Illegitimate Product For Verification Obligations Under the Drug Supply Chain Security Act.

The other is: Standardization of Data and Documentation Practices for Product Tracing. 

The first guidance will help industry identify suspect and illegitimate product in the drug distribution system. 

Under our statutory authorities, trading partners are required to take specific actions if they identify such products.    

The second guidance is intended to assist trading partners in standardizing the data contained in the product tracing information that trading partners must provide, capture, and maintain under section 582 of the FD&C Act. 

We believe this guidance will help trading partners understand the data elements that should be included in product tracing information.  In addition, this guidance recommends documentation practices that trading partners can use to satisfy the product tracing requirements of section 582. 

I’m also announcing our intent to update the agency’s interpretation of Section 585 of the FD&C Act, which contains express preemption provisions addressing both tracing and licensure. 

In draft guidance published in October 2014, FDA interpreted that provision to mean that states are not preempted from doing their own licensing of wholesale distributors and third party logistics providers so long as the state regulations didn’t contradict or fall below the minimum standards established by federal law before and after the new licensing standards in Part 205 become effective.  In other words, states could still impose their own requirements -- in excess of the federal scheme.

We’ve received comments to the draft guidance that questioned this interpretation, pointing out that Congress intended to preempt all state licensure laws that were not identical to federal law. In other words,  Congress wanted the federal system to provide both a floor and a ceiling when it came to the issue of preemption.

After close consideration, we intend to take a hard look at addressing this concern. 

Fragmentation of state licensing regimes was one of the security vulnerabilities Congress sought to address in the law.

We have heard your comments that a confusing, 50-state patchwork of requirements for wholesale and 3PL licensing would frustrate Congress’s intent; and leave vulnerabilities that would both increase costs for manufacturers and suppliers and complicate state and federal enforcement efforts.

We plan to release new regulations that, when final, will apply to all state and federal licenses issued to wholesale distributors and 3PLs.  We’re working to publish these regulations later this year. 

Finally, I want to be clear about our expectations regarding interoperability of the enhanced system.

In 2023, the current requirement that trading partners share full transaction history for products will sunset.

This does not mean that the historical information disappears. We’ll have an interoperable, electronic system in place that promptly generates that historical information when needed.

The FDA has an obligation to respond rapidly to breaches in the supply chain to protect patients from harmful drugs.

We can’t fulfill this obligation without essential tracing information about these products in the supply chain.

We’re not mandating any specific technology for meeting the interoperability standard; but it’s our obligation under the new law to enable that level of performance.

Technologies exist, both proprietary and open source, which allow this level of functionality and interoperability in near real time, down to the package level. And we’ll work with stakeholders to develop pilots for their implementation.   

Supply chain stakeholders also have an obligation to identify and prevent the distribution of illegitimate drugs.  We want to create a system that flags illegitimate drugs in the supply chain.  

Full implementation of the DSCSA will create a safe; secure pharmaceutical supply chain that will pay dividends for decades to come, including enhanced patient confidence. 

But it can also do far more than that.

A fully digitized supply chain can also help develop predictive analytics to reduce health care fraud, waste, and abuse. 

It can allow regulated industry and regulators to more easily manage or avoid costly or dangerous supply disruptions. 

It can help support innovative manufacturing and distribution technologies at a time when the drugs being developed are becoming increasingly tailored to specific patient populations.  

I look forward to working with you to build a practical path towards full implementation of the law in 2023.

To ensure that the system we build is agile enough to adapt to future security challenges. And advanced enough to embrace and unlock the full potential of future changes to manufacturing and distribution that can benefit patients.

Thank you.        

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