One Step Closer? House Passes a National Rx Track and Trace System

June 10, 2013

By William T. Koustas & Jessica A. Ritsick

In light of California’s looming electronic pedigree requirement, still scheduled to become effective in 2015, we have been following Congress’s progress toward a national prescription drug track and trace system (see our previous post here).  The U.S. House and Senate have been considering track and trace legislation this session, and on June 3, 2013, the House came one step closer to making a national prescription drug pedigree system a reality by passing the Safeguarding America’s Pharmaceuticals Act of 2013 (H.R. 1919).  The House bill has several sponsors, led by Representatives Latta (R-OH) and Matheson (D-UT).  A detailed outline of the bill prepared by Hyman, Phelps & McNamara, P.C. can be found here.

The House bill would amend the Federal Food, Drug, and Cosmetic Act (“FDCA”) to incorporate national standards for a prescription drug track and trace system as well as national standards for prescription drug wholesale distributors (“wholesalers”) and third-party logistics providers (“3PLs”).  Both the track and trace system and national standards (e.g., storage, facility requirements, maintenance of records, etc.) for wholesalers and 3PLs set forth in this legislation would preempt state pedigree and certain other wholesaler and 3PL requirements. 

This legislation provides specific track and trace requirements for prescription drug manufacturers, wholesalers, repackagers, 3PLs, and dispensers (e.g., pharmacies).  Beginning on January 1, 2015, manufacturers would be required to pass the transaction history (i.e., “pedigree”) with any prescription drug product they distribute.  Within five years of enactment, manufacturers would also be required to include a product identifier number on each “homogeneous case” of prescription drug product they produce.  By April 1, 2015, wholesalers would be required to pass and receive a transaction history for any prescription drug products they receive or distribute and, within seven years of enactment, would be permitted to distribute only those drug products that bear a product identifier.  Similarly, repackagers would be required to pass a transaction history for any prescription drugs they distribute by April 1, 2015 (with respect to drugs received from wholesalers) or January 1, 2015 (with respect to drugs received from entities other than wholesalers).  Repackagers would also be required to include product identifiers on “each package and homogenous case” of prescription drug products they repackage within six years after enactment.  By July 1, 2015, dispensers would not be able to accept prescription drug products unless they are accompanied by a transaction history.  Interestingly, 3PLs are not required to receive or pass a transaction history themselves, presumably because they do not own the product and are not responsible for directing its distribution.

In addition to the transaction history requirements, the legislation requires manufacturers, wholesalers, repackagers, dispensers, and 3PLs to implement a system to verify that the prescription drug products under their control are legitimate (e.g., not counterfeit, diverted, stolen, or otherwise adulterated).  If a “suspect” prescription drug product is determined to be illegitimate, the entity must take the necessary steps to purge it from the supply chain. 

Perhaps one of the most significant omissions from the House bill is the lack of near term electronic pedigree requirement.  Transaction histories required by the legislation may be transmitted and maintained in either paper or electronic format.  The legislation eventually allows for the creation of a national electronic track and trace system, but it calls for a variety of studies to determine the feasibility of implementing such a system, and it prohibits FDA from introducing regulations until January 1, 2027 at the earliest.    

In addition to a prescription drug track and trace system, the House legislation also standardizes many of the requirements wholesalers and 3PLs must comply with under current state laws.  It also requires wholesalers to submit annual reports to FDA that include, among other things, a list of their wholesaler licenses and any disciplinary actions.  FDA would be required to post certain of that information on its website.  This legislation does not, however, create a national wholesaler license and specifically notes that states may continue to license wholesalers and collect licensing fees.  The legislation does create a national 3PL license in cases where a state does not license 3PLs.

The Senate is also considering a prescription drug track and trace bill, the Drug Supply Chain Security Act (S. 957).  This bill recently passed the Senate Committee on Health, Education, Labor, & Pensions, but it was combined with the Pharmaceutical Compounding Quality and Accountability Act (S. 959) before going to the floor.  The Senate bill is similar to the House legislation in many respects, but there are significant differences regarding the timing of the implementation of an electronic track and trace system and preemption of state wholesaler and 3PL requirements. 

Though the House bill requires FDA to begin exploring the implementation of an electronic track and trace system shortly after enactment, it prohibits FDA from issuing regulations before January 1, 2027.  By contrast, the Senate bill mandates that an interoperable electronic track and trace system become effective within ten years after the date of enactment.  The House legislation also preempts state requirements with respect to standards for wholesalers and 3PLs, while the Senate bill permits states to enact more stringent requirements.  As such, the House bill may be more agreeable to industry while agencies may be more amenable to the Senate bill.  Indeed, according to recent trade press, the California Board of Pharmacy has even expressed a preference for the Senate bill.   

It is unclear when the full Senate will pass its bill and how long a potential conference committee would take.  Nonetheless, the Chairman of the House Committee on Energy and Commerce has said he hopes to have a bill for the President to sign by the August recess.