Unmarked Product to Become Risky
One Year Enforcement Delay – Not!?
Hidden Timetable in DSCSA Product Identifier Requirements
With about 100 working days left until the November 27, 2017 deadline for DSCSA item-level serialization, the FDA released a draft guidance delaying enforcement one year. Like many, you read the headline, scan a summary and you start breathing easy; the FDA is delaying enforcement of the Product Identifier Requirements until as late as November 26, 2018.
However, if the current draft remains unaltered there are two significant changes that will substantially reduce the time horizon for implementing DSCSA Product Identifiers.
“Introduced into Commerce”
Under the proposed guidance, FDA does not intend to take enforcement action against manufacturers who fail to apply a product identifier to products intended to be introduced in a transaction into commerce before November 26, 2018.
According to the FDA, this represents a one year delay in enforcement of the DSCSA Product Identifier requirement for manufacturers. Does this mean a manufacturer can wait until November 1, 2018 to start serializing their product?
Unfortunately, the same draft guidance goes on to say, “…this only applies to product without a product identifier that is introduced by a manufacturer in a transaction into commerce between November 27, 2017, and November 26, 2018”
So, what is the difference between “intended to be introduced in a transaction into commerce” and “introduced by a manufacturer in a transaction into commerce”?
We are not lawyers, so ask yours. To us “intended” means it has not yet happened, although that is the objective. Whereas “introduced” means it has already happened.
Continuing with that logic, the term “introduced in a transaction into commerce” requires a change-of-ownership transaction such as from a manufacturer to a separate repackager or wholesaler, as the term ‘transaction’ means the transfer of product between persons in which a change of ownership occurs. The term does not include intracompany distribution of any product between members of an affiliate or within a manufacturer. This renders unmarked product non-compliant as of November 26, 2018 unless it is accompanied by documentation proving that it has been introduced into commerce before that date.
Buy Before November 26, 2018
Provided product without Product Identifiers are introduced into commerce prior to November 26, 2018, then trading partners and dispenser can utilize the product without the need to verify the product identifiers.
How does a trading partner know when a product was introduced into commerce?
The FDA recommends that trading partners determine the date of introduction by examining transaction information documents for the product. These documents would need to describe an initial transaction date from the manufacturer that occurs between November 27, 2017 and November 26, 2018. Or the trading partner could rely on more conventional documentary evidence that would similarly contain a date establishing product introduction into commerce. Representative documents include a bill of lading, commercial invoices, and shipping invoices.
Before the enforcement delay, repackagers, and wholesale distributors were given a transition period of one and two years respectively, in which they could ship a mix of marked and unmarked product. The draft enforcement guideline now requires an unmarked product to have been “introduced into commerce” by the manufacturer between November 27, 2017 and November 26, 2018 and that the trading partner checks the documented proof of the commerce introduction date.
Supply Network Implications?
Obviously, every situation is different. Here is our prediction assuming the draft guidance remains intact: unmarked product is heading towards extinction within the next 12 months.
As the November 26, 2018 date nears, repackagers and wholesale distributors will be looking to acquire packages and homogeneous cases of products with product identifiers. Unmarked product regardless of the date of production will be risky for trading partners to procure. If the product was packaged during the one-year delay in enforcement trading partners will require documented evidence of the commerce introduction date to procure and distribute. Similarly, any product produced prior to the one-year enforcement delay will also likely require documented evidence to determine its date of packaging and introduction into commerce.
In either event, effectively managing inventory of unmarked product will become a challenging task. Too little product represents a supply risk, exacerbated if production of serialized product is stalled or delayed. And too much unmarked product might represent a financial risk as trading partners are reluctant to procure unmarked product too close to the deadline.
Some manufacturers might be lulled into thinking a one-year enforcement delay is a good opportunity to relax serialization efforts. However, a more thorough understanding of the revised product identifier requirements suggests that time is of the essence.
By mid-2018 possessing unmarked product will become a risky endeavor. Avoid the risk of supply shortages and inventory obsolescence by keeping serialization efforts engaged and initial targets intact.
Please note the Draft Guidance is being distributed for comment purposes only.
Submit electronic comments to https://www.regulations.gov.
Submit written comments to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
All comments should be identified with the docket number of 2017-13979 as listed in the notice of availability in the Federal Register.