Wholesale Distributor Verification Requirement for Saleable Returned Drug Product and Dispenser Verification Requirements When Investigating a Suspect or Illegitimate Product- Compliance Policies Guidance for Industry This guidance is for immediate implementation. FDA is issuing this guidance for immediate implementation in accordance with 21 CFR 10.115(g)(2). Submit one set of either electronic or written comments on this guidance at any time. Submit electronic comments to https://www.regulations.gov. Submit written comments to the Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852. You should identify all comments with the docket number listed in the notice of availability that publishes in the Federal Register. For questions regarding this document, contact (CDER) Office of Compliance at 301-796-3130, or (CBER) Office of Communication, Outreach and Development, 800-835-4709 or 240-402- 8010. U.S. Department of Health and Human Services Food and Drug Administration Center for Drug Evaluation and Research (CDER) Center for Biologics Evaluation and Research (CBER) Office of Regulatory Affairs (ORA) August 2023 Administrative/Procedural Revision 1 Wholesale Distributor Verification Requirement for Saleable Returned Drug Product and Dispenser Verification Requirements When Investigating a Suspect or Illegitimate Product- Compliance Policies Guidance for Industry Additional copies are available from: Office of Communications, Division of Drug Information Center for Drug Evaluation and Research Food and Drug Administration 10001 New Hampshire Ave., Hillandale Bldg., 4th Floor Silver Spring, MD 20993-0002 Phone: 855-543-3784 or 301-796-3400; Fax: 301-431-6353 Email: druginfo@fda.hhs.gov https://www.fda.gov/drugs/guidance-compliance-regulatory-information/guidances-drugs and/or Office of Communication, Outreach and Development Center for Biologics Evaluation and Research Food and Drug Administration 10903 New Hampshire Ave., Bldg. 71, Room 3128 Silver Spring, MD 20993-0002 Phone: 800-835-4709 or 240-402-8010 Email: ocod@fda.hhs.gov https://www.fda.gov/vaccines-blood-biologics/guidance-compliance-regulatory-information-biologics/biologics-guidances U.S. Department of Health and Human Services Food and Drug Administration Center for Drug Evaluation and Research (CDER) Center for Biologics Evaluation and Research (CBER) Office of Regulatory Affairs (ORA) August 2023 Administrative/Procedural Revision 1 Contains Nonbinding Recommendations TABLE OF CONTENTS I. INTRODUCTION............................................................................................................. 1 II. BACKGROUND ............................................................................................................... 3 III. COMPLIANCE POLICY FOR WHOLESALE DISTRIBUTOR VERIFICATION OF SALEABLE RETURNED PRODUCT .................................................................... 4 IV. COMPLIANCE POLICY FOR DISPENSER VERIFICATION REQUIREMENTS REGARDING SUSPECT OR ILLEGITIMATE PRODUCT ..................................... 6 Contains Nonbinding Recommendations Wholesale Distributor Verification Requirement for Saleable Returned Drug Product and Dispenser Verification Requirements When Investigating a Suspect or Illegitimate Product-Compliance Policies Guidance for Industry1 This guidance represents the current thinking of the Food and Drug Administration (FDA or Agency) on this topic. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. To discuss an alternative approach, contact the FDA office responsible for this guidance as listed on the title page. I. INTRODUCTION On October 23, 2020, FDA published the Wholesale Distributor Verification Requirement for Saleable Returned Drug Product and Dispenser Verification Requirements When Investigating a Suspect or Illegitimate Product-Compliance Policies guidance (the 2020 Compliance Policies). This guidance revises and extends the 2020 Compliance Policies for an additional year, from November 27, 2023, to November 27, 2024. Previously, on September 24, 2019, FDA published the Wholesale Distributor Verification Requirement for Saleable Returned Drug Product-Compliance Policy guidance (the 2019 Compliance Policy), where FDA announced a 1-year delay in enforcement of the requirement for wholesale distributors 2 to verify 3 saleable returned product 4 as required under section 582(c)(4)(D) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360eee- 1(c)(4)(D)) 5. The 2019 Compliance Policy explained that the Agency intended to delay enforcement of this requirement until November 27, 2020. Subsequently, the 2020 Compliance Policies announced FDA's extension of the enforcement policy embodied in the 2019 1 This guidance has been prepared by the Office of Compliance in the Center for Drug Evaluation and Research (CDER) in cooperation with the Center for Biologics Evaluation and Research (CBER) and the Office of Regulatory Affairs (ORA) at the Food and Drug Administration. 2 Wholesale distributor is defined in section 581(29) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360eee(29)). 3 Verification or verify is defined in section 581(28) of the FD&C Act. 4 Product is defined in section 581(13) of the FD&C Act. Return is defined in section 581(17) of the FD&C Act. 5 Under section 582(c)(4)(D) of the FD&C Act, upon receipt of a returned product that the wholesale distributor intends to further distribute, before further distributing such product, the wholesale distributor shall verify the product identifier, including the standardized numerical identifier, for each sealed homogeneous case of such product or, if such product is not in a sealed homogeneous case, verify the product identifier, including the standardized numerical identifier, on each package. 1 Contains Nonbinding Recommendations Compliance Policy with respect to this requirement for an additional three years, until November 27, 2023. This guidance, like the 2019 and 2020 Compliance Policies, addresses the readiness of wholesale distributors to comply with the requirement under section 582(c)(4)(D) of the FD&C Act to verify the product identifier 6 upon receipt of a returned product that the wholesale distributor intends to further distribute. The requirement under section 582(c)(4)(D) of the FD&C Act for wholesale distributors to verify saleable returned products prior to redistribution went into effect on November 27, 2019. 7 For reasons discussed below, FDA does not intend to take action against wholesale distributors who do not, prior to November 27, 2024, verify the product identifier prior to further distributing saleable returned product as required under section 582(c)(4)(D) of the FD&C Act. This represents a 1-year extension of the 2020 Compliance Policies, from November 27, 2023, until November 27, 2024, with respect to enforcement of this requirement for wholesale distributors. The 2020 Compliance Polices also set forth the Agency's enforcement policy with respect to section 582(d)(4)(A)(ii)(II) and (d)(4)(B)(iii) of the FD&C Act (21 U.S.C. 360eee- 1(d)(4)(A)(ii)(II) and (d)(4)(B)(iii)), which generally provide that, beginning November 27, 2020, a dispenser 8 must verify the product identifier of suspect or illegitimate product 9 in the dispenser's possession or control. The 2020 Compliance Policies announced that FDA did not intend to take action before November 27, 2023, against dispensers who do not verify the product identifiers of suspect product as required by section 582(d)(4)(A)(ii)(II) of the FD&C Act. In addition, the 2020 Compliance Policies stated that FDA did not intend to take action before November 27, 2023, against dispensers who do not verify the product identifiers of illegitimate product that are the subject of a notification from FDA or a trading partner 10 as required by section 582(d)(4)(B)(iii) of the FD&C Act. This represented a 3-year enforcement policy with respect to the requirements for dispensers to verify the product identifier when investigating suspect or illegitimate product. For the reasons discussed below, FDA does not intend to take action before November 27, 2024, against dispensers who do not verify the product identifiers of suspect product as required by section 582(d)(4)(A)(ii)(II) of the FD&C Act. In addition, FDA does not intend to take action before November 27, 2024, against dispensers who do not verify the product identifiers of illegitimate product that are the subject of a notification from FDA or a trading partner as required by section 582(d)(4)(B)(iii) of the FD&C Act. This represents a 1-year extension of the 2020 Compliance Policies, from November 27, 2023, until November 27, 2024, with respect to enforcement of these requirements for dispensers to verify the product identifier when investigating suspect or illegitimate product. 6 Product Identifier is defined in section 581(14) of the FD&C Act. 7 See section 582(c)(4)(D) of the FD&C Act. 8 Dispenser is defined in section 581(3) of the FD&C Act. 9 Suspect product is defined in section 581(21) and illegitimate product is defined in section 581(8) of the FD&C Act. 10 Trading partner is defined as described in section 581(23)(A) of the FD&C Act. Although third-party logistics providers are also considered trading partners under section 581(23)(B) of the FD&C Act, they are not subject to the same product tracing requirements of section 582 of the FD&C Act. 2 Contains Nonbinding Recommendations In general, FDA's guidance documents do not establish legally enforceable responsibilities. Instead, guidances describe the Agency's current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited. The use of the word should in Agency guidances means that something is suggested or recommended, but not required. II. BACKGROUND The Drug Supply Chain Security Act (DSCSA) (Title II of Public Law 113-54) was signed into law on November 27, 2013. Section 202 of the DSCSA added section 582 to the FD&C Act. This section established product tracing, product identifier, authorized trading partner, and verification requirements for manufacturers, wholesale distributors, repackagers, and dispensers to facilitate the tracing of a product through the pharmaceutical distribution supply chain. Failure to comply with the requirements of section 582 of the FD&C Act is prohibited under section 301(t) of the FD&C Act (21 U.S.C. 331(t)) and subject to enforcement action under the FD&C Act. One requirement of the verification scheme outlined in the DSCSA is the verification of saleable returned product. Under section 582(c)(4)(D) of the FD&C Act, wholesale distributors must have systems in place that will enable them to verify the product identifier, including the standardized numerical identifier, 11 for each sealed homogeneous case 12 of saleable returned product, or, if such product is not in a sealed homogeneous case, on each package 13 of saleable returned product. A saleable returned product may not be further distributed until the product identifier is verified. 14 The product should be handled as suspect product if the product identifier is not successfully verified (i.e., it should be quarantined and investigated). 15, 16 FDA published the 2019 Compliance Policy on September 24, 2019, announcing a 1-year delay in enforcement against wholesale distributors who do not verify the product identifier of saleable returned product prior to further distributing such product as required by section 582(c)(4)(D) of the FD&C Act. FDA subsequently published the 2020 Compliance Policies announcing a 3-year extension of the enforcement policy described in the 2019 Compliance Policy with respect to this requirement. In addition, section 582 of the FD&C Act requires certain trading partners (manufacturers, repackagers, wholesale distributors, and dispensers) to exchange transaction information, transaction history, and a transaction statement when engaging in transactions involving certain 11 Standardized numerical identifier is defined in section 581(20) of the FD&C Act. 12 Homogeneous case is defined in section 581(7) of the FD&C Act. 13 Package is defined in section 581(11) of the FD&C Act. 14 See section 582(c)(4)(D) of the FD&C Act. 15 See the draft guidance for industry Verification Systems Under the Drug Supply Chain Security Act for Certain Prescription Drugs (March 2022). When final, this guidance will represent the FDA's current thinking on this topic. For the most recent version of a guidance, check the FDA guidance web page at https://www.fda.gov/regulatory-information/search-fda-guidance-documents. 16 Section 582(c)(4)(A)(i) of the FD&C Act details how wholesale distributors must handle suspect product. 3 Contains Nonbinding Recommendations prescription drugs. 17,18 A transaction statement must include a statement that the entity transferring ownership in a transaction had systems and processes in place to comply with verification requirements under section 582 of the FD&C Act. 19 In the 2019 Compliance Policy, FDA acknowledged that wholesale distributors may not have systems in place by November 27, 2019, to enable the wholesale distributor to timely and efficiently comply with the verification of saleable returned product requirements under section 582(c)(4)(D) of the FD&C Act without potentially causing a disruption to the pharmaceutical distribution supply chain. Therefore, the 2019 Compliance Policy indicated FDA's intent to take no enforcement action prior to November 27, 2020, against a wholesale distributor that provided a transaction statement to a subsequent purchaser of product on the basis that such wholesale distributor did not yet have systems and processes in place to comply with the saleable return verification requirements under section 582(c)(4)(D) of the FD&C Act. The 2020 Compliance Policies extended this enforcement policy for an additional 3 years, until November 27, 2023. Section 582 also includes requirements for dispensers to verify product identifiers when investigating suspect or illegitimate product. Specifically, section 582(d)(4)(A)(ii)(II) of the FD&C Act provides that, effective November 27, 2020, dispensers must verify "the product identifier, including the standardized numerical identifier, of at least 3 packages or 10 percent of such suspect product, whichever is greater, or all packages, if there are fewer than 3, corresponds with the product identifier for such product [in the dispenser's possession or control]". 20 Section 582(d)(4)(B)(iii) of the FD&C Act requires dispensers to verify product as described in 582(d)(4)(A)(ii) of the FD&C Act when they have received a notification from FDA or a trading partner that the product is an illegitimate product. The 2020 Compliance Policies also provided a 3-year enforcement discretion policy with respect to these dispenser requirements, until November 27, 2023. III. COMPLIANCE POLICY FOR WHOLESALE DISTRIBUTOR VERIFICATION OF SALEABLE RETURNED PRODUCT After publishing the 2020 Compliance Policies, FDA has continued to receive comments and feedback from wholesale distributors, as well as other trading partners and stakeholders, expressing additional concern with industry-wide readiness for implementation of the verification of saleable returned product requirement for wholesale distributors. Stakeholders have explained that the primary factors FDA considered when issuing the 2019 Compliance Policy still exist: (1) the very large volume of saleable returned products requiring verification; (2) the need to refine and test verification systems during actual production using real-time 17 Transaction, transaction history, transaction information, and transaction statement are defined under sections 581(24), (25), (26), and (27) of the FD&C Act. 18 See section 582(b)(1), (c)(1), (d)(1), and (e)(1) of the FD&C Act. Beginning November 27, 2023, section 582(k)(1) of the FD&C Act effectively ends the requirements for trading partners to provide and receive transaction history. However, under section 582(g)(1)(E) of the FD&C Act, trading partners must by that date have systems and processes necessary to promptly facilitate the gathering of information necessary to produce the transaction information for each transaction going back to the manufacturer, as applicable, in the event of a recall or for certain investigations. 19 See section 581(27)(E) of the FD&C Act. 20 See section 582(d)(4)(A)(ii) of the FD&C Act. 4 Contains Nonbinding Recommendations volumes of saleable returned product rather than simply in pilots; and (3) the complexities of building an interoperable, electronic system with the capabilities to timely and efficiently verify the large volume of saleable returned products amid immature technologies. 21 Given the continuing concerns expressed, FDA recognizes that some wholesale distributors may still need additional time beyond November 27, 2023, when the enforcement policy set forth in the 2020 Compliance Policies expires, before they can begin verifying returned products prior to resale or other further distribution as required by section 582(c)(4)(D) of the FD&C Act in an efficient, secure, and timely manner. To minimize possible disruptions in the distribution of certain prescription drugs in the United States, FDA does not intend to take action before November 27, 2024, against wholesale distributors who do not verify a product identifier prior to resale or other further distribution of a package or sealed homogenous case of product as required by section 582(c)(4)(D) of the FD&C Act. Additionally, FDA recognizes that some wholesale distributors may still not have systems in place by November 27, 2023, to enable the wholesale distributor to timely and efficiently comply with the verification of saleable returned product requirements under section 582(c)(4)(D) of the FD&C Act without potentially causing a disruption to the pharmaceutical distribution supply chain. Therefore, prior to November 27, 2024, FDA does not intend to take action against a wholesale distributor for providing a transaction statement to a subsequent purchaser of product on the basis that such wholesale distributor does not yet have systems and processes in place to comply with the saleable return verification requirements under section 582(c)(4)(D) of the FD&C Act. 22 This compliance policy aligns with FDA's intention to generally not enforce the DSCSA's enhanced drug distribution security requirements, i.e., for interoperable, electronic, package- level product tracing, including specified systems and processes, 23 before November 27, 2024. 24 Enhanced drug distribution security includes, among other things, incorporation of the product identifier into product tracing and utilization of the product identifier to verify a product at the package level. 25 FDA believes that the extension of the enforcement policy embodied in the 2020 Compliance Policies for another year, until November 27, 2024, will allow wholesale distributors to focus resources and efforts on implementing the enhanced drug distribution security requirements. We envision that, along with other enhanced drug distribution security requirements, wholesale distributors can increase their efficiency by incorporating the saleable return verification requirements into the enhanced verification required by enhanced drug distribution security instead of developing separate processes or infrastructures. Extending the 2020 Compliance Policies in this respect also accommodates the additional time that may be 21 Public Meeting (Virtual): The Drug Supply Chain Security Act (DSCSA) Implementation and Readiness Efforts for 2023. December 7-8, 2022. 22 See section 581(27)(E) of the FD&C Act which defines "transaction statement" to include systems and processes to comply with the verification requirements of section 582, including the saleable returns requirements of section 582(c)(4)(D). 23 See section 582(g) of the FD&C Act, as added by the DSCSA. 24 See Enhanced Drug Distribution Security Requirements Under Section 582(g)(1) of the Federal Food, Drug, and Cosmetic Act – Compliance Policies (88 FR 58498). 25 See section 582(g)(1)(B) and (C) of the FD&C Act. 5 Contains Nonbinding Recommendations needed for wholesale distributors to test their ability to verify saleable returns using real-time volume, involving all trading partners. The compliance policy described in this section is limited to the requirements that wholesale distributors verify saleable returned products prior to further distribution and have verification systems in place to comply with the requirements of section 582(c)(4)(D) of the FD&C Act; it does not extend to the other requirements in section 582 of the FD&C Act. For example, it does not affect the requirement that a wholesale distributor must have verification systems in place to determine whether a returned product is a suspect product. 26 This compliance policy does not affect the requirement that a wholesale distributor may engage in transactions involving a product only if such product is encoded with a product identifier (except as provided pursuant to section 582(a)(5) of the FD&C Act). 27 This compliance policy does not relieve a manufacturer of its verification obligations pursuant to section 582(b)(4)(C) of the FD&C Act upon receiving a request for verification from an authorized wholesale distributor. FDA previously issued a draft guidance for industry Verification Systems Under the Drug Supply Chain Security Act for Certain Prescription Drugs (March 2022) (Verification Systems Guidance) to describe FDA's interpretation of the requirements of section 582 of the FD&C Act regarding verification systems. 28 Wholesale distributors should refer to the Verification Systems Guidance for a detailed description of responsibilities that are applicable to them. This compliance policy is not applicable with respect to returns of saleable packages and sealed homogeneous cases of product without product identifiers that were in the pharmaceutical distribution supply chain before November 27, 2018. The guidance for industry Grandfathering Policy for Packages and Homogenous Cases of Product Without a Product Identifier (September 2018), addresses such returns. 29 IV. COMPLIANCE POLICY FOR DISPENSER VERIFICATION REQUIREMENTS REGARDING SUSPECT OR ILLEGITIMATE PRODUCT In the years since publication of the 2020 Compliance Policies, FDA has continued to receive comments and feedback from dispensers expressing concern with readiness for implementation of certain requirements under section 582(d) of the FD&C Act, including the verification requirements addressed in this compliance policy. 30 Specifically, dispensers have described challenges with implementation of these verification requirements due to the time necessary to develop technologies and processes that would support a robust verification system. Given the concerns expressed, FDA recognizes that some dispensers may need additional time beyond November 27, 2023, before they can begin to verify the product identifier of the 26 See section 582(c)(4)(A) of the FD&C Act. 27 See section 582(c)(2) of the FD&C Act. 28 When final, this guidance will represent the FDA's current thinking on this topic. 29 We update guidances periodically. To make sure you have the most recent version of a guidance, check the FDA guidance web page at https://www.fda.gov/regulatory-information/search-fda-guidance-documents. 30 Public Meeting (Virtual): The Drug Supply Chain Security Act (DSCSA) Implementation and Readiness Efforts for 2023. December 7-8, 2022. 6 Contains Nonbinding Recommendations statutorily designated proportion of suspect and illegitimate products as described in sections 582(d)(4)(A)(ii)(II) and (B)(iii) of the FD&C Act. To minimize possible disruptions in the distribution of certain prescription drugs in the United States, FDA does not intend to take action before November 27, 2024, against dispensers who do not verify the product identifier of the statutorily designated proportion of suspect product as required by section 582(d)(4)(A)(ii)(II) of the FD&C Act. In addition, FDA does not intend to take enforcement action before November 27, 2024, against dispensers who do not verify, as required by section 582(d)(4)(B)(iii) of the FD&C Act, the product identifier of the statutorily designated proportion of product that is the subject of an illegitimate product notification by FDA or a trading partner. Dispensers should refer to the Verification Systems Guidance for a detailed description of responsibilities that are applicable to them, as the compliance policy described in this section applies only to the dispenser requirements regarding verification of product identifiers described in sections 582(d)(4)(A)(ii)(II) and (B)(iii) of the FD&C Act and does not apply to any other provision in section 582 of the FD&C Act. This compliance policy does not address any of the other verification requirements set forth in section 582(d)(4) of the FD&C Act. For example, this compliance policy does not affect the requirement that as of November 27, 2020, a dispenser may engage in transactions involving a product only if such product is encoded with a product identifier (except as provided pursuant to section 582(a)(5) of the FD&C Act), 31 and this compliance policy does not affect the other activities required by section 582(d)(4)(A) and section 582(d)(4)(B) by incorporation (e.g., dispensers must still quarantine product, conduct investigations, and disposition illegitimate product). This compliance policy does not relieve a manufacturer of its verification obligations pursuant to section 582(b)(4)(C) of the FD&C Act upon receiving a request for verification from an authorized dispenser. The duration of this compliance policy aligns with that of FDA's enforcement policy with respect to the enhanced drug distribution security requirements, as discussed above in section III of this guidance and addressed in the guidance for industry Enhanced Drug Distribution Security Requirements Under Section 582(g)(1) of the Federal Food, Drug, and Cosmetic Act – Compliance Policies (August 2023). As more specifically detailed in section 582(g)(1), enhanced drug distribution security includes as part of the transaction information the product identifier for each package in the transaction. 32 Enhanced drug distribution security also includes verification of product at the package level. 33 Generally speaking, enhanced drug distribution security also incorporates the ability to promptly generate and provide specific product and transaction documentation upon request by FDA, another Federal or State official, or an authorized trading partner for purposes of investigating suspect or illegitimate product. 34 FDA believes that aligning the duration of the compliance policy under this revised guidance with the compliance policy applicable to enhanced drug distribution security under section 582(g)(1) will facilitate the ability of dispensers to ensure the systems and processes that are put into place to meet the enhanced drug distribution security requirements will also fulfill the dispenser verification requirements under section 582(d)(4) of the FD&C Act. 31 See section 582(d)(2) of the FD&C Act. 32 See section 582(g)(1)(B) of the FD&C Act. 33 See section 582(g)(1)(C) of the FD&C Act. 34 See section 582(g)(1)(D) of the FD&C Act. 7