FDA releases rule for drug distributors


The United States Food and Drug Administration (FDA) released its draft National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers on February 4, 2022. Proposed rule establishes national standards for licensing prescription drug wholesale distributors) and third-party logistics providers (3PLs) in an effort to enhance drug supply chain security in the United States . Once finalized and effective, these licensing regulations will prevail over state and local licensing standards, requirements and regulations that are different from these federal requirements.

The deadline for submitting comments to the FDA on the proposed rule is June 6, 2022 (Docket No. FDA-2020-N-1663).

IN DEPTH

The Drug Supply Chain Security Act (DSCSA), signed into law by Congress on November 27, 2013, as part of the Drug Quality and Safety Act (DQSA), established a federal system for identify and trace certain prescription pharmaceutical products throughout the pharmaceutical distribution supply chain. in the USA. Currently, requirements for WDDs and 3PLs vary widely across state and local lines. In passing the DSCSA, Congress felt that a uniform national standard would ameliorate this problem. Therefore, among the various requirements set forth in the DSCSA, Congress directed the FDA to establish national standards for the approval of WDDs and 3PLs. The proposed rule removes and replaces the current 21 CFR Part 205 in its entirety with a new Part 205 that will implement DSCSA licensing requirements and govern the domestic licensing of WDDs and 3PLs. In addition, the DSCSA establishes the FDA as the licensing authority for WDDs and 3PLs in states that have not established a licensing program under the proposed rule. When the proposed rule is final and effective, all U.S. WDDs and 3PLs will be required to meet these standards.

The DSCSA includes a provision that prevents states and localities from establishing or maintaining requirements for obtaining a WDD or 3PL license that are different from national standards and requirements. The FDA has interpreted this to mean that national clearance standards will establish both a “floor” and a “ceiling”. However, the proposed rule declares that state and local authorization requirements that differ from applicable national standards and requirements under the Federal Food, Drug, and Cosmetic Act will not be preempted until the proposed rule will not be finalized and effective. Indeed, the “standards and requirements” that will prevail over national and local laws in this regard will be established by the proposed rule. The proposed rule will supersede state and local licensing requirements for WDDs two years after it becomes final and one year after it becomes final for 3PLs. However, the FDA said it does not intend to enforce licensing requirements for 3PLs until two years after the proposed rule becomes final. Accordingly, state and local licensing of WDDs and 3PLs may continue during the interim period. In addition, areas within historic state police powers will not be affected by the proposed rule, including prohibiting employees of WDDs and 3PLs from engaging in criminal acts related to prescription drugs, provided that these state requirements are not tied to obtaining a WDD or 3PL license.

Key provisions of the proposed rule include the following:

  • Definitions of additional terms to help clarify the requirements of the proposed rule and to align with current industry practice and existing legislation, including “3PL activities”, “key personnel”, “minimum quantities”, ” other logistics services”, “other than a consumer or patient”, “product” and “wholesale distribution”;

  • National licensing and application requirements for WDDs and 3PLs, as well as the federal licensing review process;

  • Standards and procedures that establish denial, suspension, reinstatement, revocation, and voluntary termination of licensure, including notification and the ability to request a formal public hearing into evidence in court proceedings. existing FDA hearing;

  • Pre-licensing and post-licensing inspection requirements;

  • Personnel requirements and qualifications necessary for licensing;

  • Bonding requirements for WDDs;

  • Requirements to establish good warehousing practices, including personnel requirements and qualifications necessary for compliance with good warehousing practices;

  • Requirements and standards for written policies and procedures regarding selling, purchasing, receiving, reviewing, security, storage, handling, inventory, shipping, transportation, disposal, and distribution of a product;

  • Requirements, standards and procedures for record keeping, document maintenance and initial and annual reports; and

  • Requirements, Standards, and Procedures for FDA Approval of Third-Party Accreditation or Inspection Services or Programs (“Accredited Organizations” or “AOs”) to Review 3PL Qualifications for Licensing and Perform 3PL and WDD facility inspections, including standards and procedures for organizations whose approval requests are denied and for AOs whose approvals are suspended or revoked.

Next steps

The FDA intends to release a webinar to provide an overview of the proposed rule to help stakeholders understand the proposed rule and prepare comments. Because the proposed rule, once final and effective, could have a significant impact on the business operations of WDDs and 3PLs, companies should consider submitting comments on how the regulations may affect their operations. As noted, the deadline for submitting comments to the FDA on the proposed rule is June 6, 2022 (Docket No. FDA-2020-N-1663).

© 2022 McDermott Will & EmeryNational Law Review, Volume XII, Number 70

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