Tracking and Tracing Congress’ New Track and Trace Bills

April 25, 2013

By Jessica A. Ritsick & William T. Koustas

Within the last week, members of health committees in the House and Senate unveiled draft bills addressing prescription pharmaceutical supply chain security.  The House Energy & Commerce Committee is set to hold a hearing on the House bill on April 25, 2013.  Dr. Janet Woodcock, Director of FDA’s Center for Drug Evaluation and Research, will be a witness (witness list available here).  Witness’ prepared statements have been released prior to the hearing, and are available here.  The Senate Health, Education, Labor and Pensions Committee has not scheduled a hearing, but is accepting comments on its draft bill until April 26, 2013. 

In late 2012, we blogged about earlier Congressional efforts to create uniform, national standards for supply chain security.  The current drafts are not radically different from earlier proposals, but some provisions are worth mentioning.  Both draft bills endeavor to create uniform licensing standards for wholesale distributors and third-party logistics providers ("3PLs"), and a uniform standard for pharmaceutical pedigrees.

Each bill also requires the Secretary of Health and Human Services to establish though new regulations standards for the licensing of wholesale distributors and 3PLs, and describes in some detail what requirements these licensing standards must contain.  The licensing standards under both bills would include: recordkeeping requirements;  mandatory background checks and fingerprinting for facility managers or designated representatives; and a requirement that wholesalers and 3PLs to submit to FDA annual reports regarding licensure.  Under both bills, the annual reports from wholesalers and 3PLs must include the licensed entity’s name, address, and state licensure information.  The House bill, however, adds that annual reports must include information regarding any disciplinary actions taken against the entity by state or federal regulators; for wholesalers, this reporting requirement would extend to foreign governments.  The Senate bill would require FDA to maintain a public database of the reports, while the House bill would require FDA to make licensure information available via its website. 

Both bills include preemption provisions, although those provisions differ from each other.  The Senate bill provides that the federal licensing standards would be minimum requirements and that states could enact more stringent requirements.  In addition, the Senate bill calls for wholesalers and 3PLs to be licensed by the Secretary in the event the state does not have a licensure requirement.  The House bill would expressly preempt state licensing requirements, although states would continue to license drug wholesalers and 3PLs and collect associated fees.  However, the House bill later states that upon enactment, no state may establish or continue wholesaler or 3PL licensure requirements that are “inconsistent with, less stringent than, in addition to, or more stringent than, the standards and requirements under this Act,” which sounds like full-fledged preemption of state licensure of wholesalers and 3PLs.

The House and Senate bills differ regarding implementation and timing of the legislation.  For example, the Senate bill requires manufacturers to provide serialized products within four years of enactment; repackagers within five years; and wholesalers and 3PLs within six years.  Dispensers, under the Senate bill, must be able to accept serialized product within seven years after enactment.  The House serialization implementation requirements add an additional year  on to the Senate’s proposal for each type of entity.  The prescription drug product tracing requirements – such as the provision of a transaction history to downstream members in the supply chain – for manufacturers in the Senate bill are to begin “not later than 270 days after the date of enactment” of the bill, as compared to “5 years after the date of enactment” in the House bill.  Similar disparities exist for wholesalers, dispensers, and repackers, as well.  Interestingly, the Senate bill would require that an interoperable electronic unit level tracing system be in place 10 years after the date of enactment (pursuant to guidance by FDA).  The House bill does not have a firm timeline, but instead calls for studies to inform the implementation of a track-and-trace system, and requires a report from the GAO not later than 10 years after the bill’s enactment.

We are waiting to see what happens during the House hearing on the bill this week –  particularly what FDA has to say in terms of suggested timelines and the many new requirements the bills would place on the Agency.  It will also be interesting to see if states have any response to this legislation.  We have previously reported that the California Board of Pharmacy may be open to a national track-and-trace standard, but only if that system is “sufficient.”  In addition, FDA has for years advocated a uniform, national track-and-trace system, and perhaps this year the Agency will finally get its wish.