Drug Distribution Security: Title II of the Drug Quality and Security Act

Research & Analysis

Persistent weaknesses in the U.S. pharmaceutical distribution supply chain have jeopardized patient health. In 2012, for example, 48 people were charged in a scheme to purchase and repackage an estimated $500 million worth of prescription drugs that had already been dispensed to patients. The drugs were sold back to pharmacies through licensed wholesalers, exposing patients to potentially contaminated or expired medicines. Counterfeit drugs have also been discovered in the supply chain, including a version of the cancer drug Avastin that was missing its active ingredient and may have been purchased by a number of medical practices in California, Texas, and Illinois.

The landmark Drug Quality and Security Act was signed into law in late 2013 to address these risks and to create a new national framework for securing the drug distribution supply chain.

Title II of the law, the Drug Supply Chain Security Act, establishes a national system to enable supply chain partners and regulators to trace back each package of a drug from the pharmacy where it is dispensed to the manufacturer. The law, which will be phased in over 10 years, requires participation from all sectors, eliminates the previous patchwork of state laws, and allows for better detection and more efficient removal of suspect products from the supply chain.

Major elements of the Drug Supply Chain Security Act include:

  • Product serialization: Manufacturers and repackagers, establishments that repack and relabel pharmaceutical products for further sale and distribution, will place a unique product identifier on individual prescription drug packages. 
  • Product tracing: Manufacturers, wholesale distributors, repackagers, and dispensers will provide information about a drug and who handled it each time it is sold in the U.S. market. 
  • Product verification: Manufacturers and repackagers will respond within 24 hours to requests for verification that a product identifier is authentic. 
  • Detection and response: Manufacturers, wholesale distributors, repackagers, and dispensers will quarantine and investigate a drug that has been identified as suspect because it may be counterfeit, stolen, or adulterated.
  • Notification and removal: Manufacturers, wholesale distributors, repackagers, and dispensers will establish systems and processes to notify the Food and Drug Administration and other supply chain stakeholders if an illegitimate drug is identified and will take steps to remove the compromised medication from the supply chain.
  • Enhancements to licensure standards: Wholesale distributors must be licensed by the state from which the drug is distributed or must be licensed by FDA if the state has not established a licensure requirement that meets federal standards. Third-party logistic providers (companies that warehouse, store, or ship products on behalf of manufacturers, wholesale distributors, or dispensers) will also be subject to federal licensure standards for the first time.