Drug Supply Chain Security Act

What’s happening?

• The requirements of the Drug Supply Chain Security Act (DSCSA) took effect for distributors in November 2019 and will phase in fully by November 2023
• The purpose of the DSCSA is to improve the security of the pharmaceutical supply chain by reducing the risk of counterfeit, stolen, contaminated or otherwise harmful drugs from reaching patients and consumers
• The DSCSA directs the Food and Drug Administration (FDA) to establish national licensure standards for wholesale providers and requires them to report licensure annually to FDA
• The DSCSA will change how McKesson Medical-Surgical distributes low unit of measure prescription drugs and return of prescription drugs, as of November 2019

The Drug Supply Chain Security Act & McKesson Medical-Surgical

Under the DSCSA, the saleable units of measure of all prescription drugs must contain a serial number. Unfortunately, numerous manufacturers have elected to limit serialization to the case or carton level – and not apply a serial number on individual boxes or vials. 

Beginning November 27, 2019, McKesson Medical-Surgical stopped selling low unit of measure quantities of prescription drugs, such as vials and eaches, unless they have been serialized by the applicable manufacturer. Instead, we coordinate with repackagers to provide you the low unit of measure services that you have come to expect from us. Our repackagers create low unit of measure packaging that will comply with the DSCSA and address your prescription drug needs.

The DSCSA requires wholesaler distributors to perform a verification for returned prescription drug products. In order for McKesson Medical-Surgical to associate the returned prescription drug product with its DSCSA transactional data (transaction information & transaction statement): customers will need to provide an invoice reference or other related information (e.g.: sales order number, customer PO, order date, etc.) so that we are able to associate the drug product was originally purchased from McKesson Medical-Surgical. This information will be gathered during the return authorization generation process when you contact our customer service center.

Beginning November 27, 2020, dispensers should only engage in transactions involving prescription drug product encoded with a product identifier. According to the DSCSA, “a dispenser may only engage in transactions involving prescription drug products if such product is encoded with a product identifier.”

The second requirement for dispensers is effective on November 27, 2020 and relates to performing verifications of the product identifier when investigating suspect product. Since 2015, all DSCSA trading partners, including dispensers, have been required to have policies and procedures to detect and investigate suspect products. As a part of that suspect product investigation, dispensers are expected to add the verification of product identifiers to the process.

On October 28, 2020, the FDA deferred this requirement through enforcement discretion until November 27, 2023. DSCSA does not require the exchange of product identifier data until November 2023.         

How does this repackaging impact you?

Due to the increased expense related to repackaging, relabeling, handling and transportation, you will see an increase in price for prescription drugs sold by the vial or each.

Additionally, low unit of measure prescription drugs will be drop-shipped to meet timing guidelines for the new serialization requirements. Non-refrigerated items have a drop-ship fee of $5, while refrigerated items have a drop-ship fee of $25.

Key dates for DSCSA

November 27, 2013
Congress enacted the Drug Quality and Security Act (DQSA), which includes Title II, the Drug Supply Chain Security Act (DSCSA)

November 2014
DSCSA requirements begin phasing in steps over a 10-year timeline to move the United States to a serialized traceability model for pharmaceutical dug products

January 2015
All pharmaceutical suppliers are required to send to McKesson Medical-Surgical the DSCSA transaction data: transaction information, transaction statement & transaction history for prescription drugs. The DSCSA transaction data is commonly referred to as DSCSA 3T or T3 in the pharmaceutical industry. McKesson Medical-Surgical must provide the DSCSA transaction records to its customers

July 2015
McKesson Medical-Surgical will retain customer’s DSCSA transaction data for prescription drugs purchases from McKesson Medical-Surgical Distribution Centers for a period of six years (from the invoice date)

November 2018
All manufacturers and repackagers serialize product for all prescription drugs by affixing a product identifier (2d) bar code to each individual package and homogenous case

November 2019
Distributors must sell serialized units of measure for prescription drugs. In response, McKesson Medical-Surgical begins sourcing repackaged low unit of measure prescription drugs

November 2019
McKesson Medical-Surgical will only accept prescription drug returns if our customer purchased the prescription drug from McKesson Medical-Surgical

November 2020
Dispensers should only purchase and sell prescription drug products encoded with a product identifier

November 2020
Dispensers will need to perform verification of the product identifier when investigating suspect product as it relates to prescription drugs. 

On October 28, 2020 the FDA deferred this requirement through enforcement discretion until November 27, 2023. The salable verification requirement of the product identifier is not a requirement until November 2023

November 2023
DSCSA Transaction Information will change from lot-based to serial-based transactions. Currently, DSCSA transactions are traced at the lot level with a transaction history and transaction statement.

On November 27, 2023, in addition to the previous requirements for DSCSA transaction information, the DSCSA will require that the serialized product identifier information be added to the DSCSA Transaction information.

• A new serial number is provisioned by the manufacturer at each level to be uniquely identified.
• Each serial number must be tracked through all transactional events across the supply chain.

Frequently asked questions

Why is the price increasing for products sold by the each?
The higher price reflects additional expenses related to repackaging, relabeling, handling and transportation.

Why is the product being drop-shipped?
This is the most efficient way for the supply chain to accommodate the serialization requirements by the November 2023 deadline.

How much is the fee to drop-ship?
Drop-ship fees vary on if the item is refrigerated or not. Non-refrigerated items have a drop-ship fee of $5. Refrigerated items have a drop-ship fee of $25.

Are there GPO contracts on these items?
No. GPO contracts do not include low unit of measure items and all will be non-contract.

Will there be a separate customer invoice for these drop-shipped low unit of measure prescription drugs?
Yes.

How will I see this on my statements?
On statements or invoices, you will see the item price and a separate line for the drop-ship fee.

Are the new drop-shipped items returnable?
No. The new drop-shipped low unit of measure prescription drugs are NOT returnable.

What is the lead time with drop-ship vendors?
Drop-shipped prescription drugs will be sent UPS ground. Shipment time varies based on location but expected within 5 – 7 days.

What is required to return prescription drugs to McKesson Medical-Surgical?
A detailed prescription drug returns process communication is being developed and will be shared at a later date. To comply with the DSCSA, the new returns process will be effective November 27, 2023.

What is considered a valid invoice reference?
Customer will need to provide an invoice reference or other related information (e.g.: sales order number, customer PO, order date, etc.) so that we are able to associate the drug product was originally purchased from McKesson Medical-Surgical.

To be a valid invoice reference, the prescription drug needs to have been purchased on that account and invoice and there needs to be an available return quantity meaning that a return has not already been made against that reference exhausting the quantity purchased.

Are controlled (CRx) substances returnable to McKesson Medical-Surgical?
No, controlled substances are not returnable.

What happens if I am unable to provide a valid invoice reference?
A customer who provides an invalid invoice reference will be denied the saleable return request. No credit will be given without a valid invoice reference.

Does the FDA Drug Supply Chain Security Act (DSCSA) apply to over the counter (OTC) drugs?
No, OTC drugs does not apply to DSCSA. Only pharmaceutical drug products – controlled substances and prescription (Rx) drugs.

What is the definition of a “dispenser” under the DSCSA regulation?
The term “dispenser” as defined in the DSCSA means a retail pharmacy, hospital pharmacy, a group of chain pharmacies under common ownership and control that do not act as a wholesale distributor, or any other person authorized by law to dispense or administer prescription drugs, and the affiliated warehouses or distribution centers of such entities under common ownership and control that do not act as a wholesale distributor; and does not include a person who dispenses only products to be used in animals in accordance with section 512(a)(5).

How do I determine if I meet the definition of a “dispenser” under the FDA Drug Supply Chain Security Act (DSCSA)?
McKesson Medical-Surgical is not in a position to provide guidance as to whether a customer meets the definition of a “dispenser” or the criteria for an exception. If you have questions on whether you meet the definition of a “dispenser” under the FDA Drug Supply Chain Security Act (DSCSA), please consult with your regulatory team or legal counsel for guidance.