Key takeaways:
· Manufacturers' exemptions expired on May 27, distributors' on August 27, and dispensers' are set to expire on November 27.
· The exemptions were primarily designed to prevent supply chain disruptions stemming from data exchange failures.
· As it stands, the industry appears ready for full implementation.
The FDA's decision to implement phased exemptions for manufacturers, distributors, and dispensers under the Drug Supply Chain Security Act (DSCSA) is a strategic move to address data exchange issues and ensure smooth compliance. Kayla Shankle, the Healthcare Distribution Alliance's (HDA) Vice President of Regulatory Affairs, explains that these exemptions, which began last October, were designed to prevent supply chain disruptions stemming from data exchange failures.
"The FDA aimed to avoid forcing a premature cutover that would've disrupted product movement," she nots. “It was a very welcomed phased exemption period for the supply chain, and it was a balanced approach by the FDA.”
The approach provided the opportunity for trading partners to continue progressing toward full DSCSA implementation by avoiding the practical reality that maybe not all systems and processes were aligned and ready to go live by November of last year.
The phased exemptions have been rolled out with specific expiration dates: manufacturers' exemptions expired on May 27, distributors' on August 27, and dispensers' are set to expire on November 27.
The exemptions were primarily designed to prevent supply chain disruptions stemming from data exchange failures. This includes data exchange gaps as well as potential onboarding bottlenecks (specifically for smaller trading partners), and then the overall concern around system stability.
By allowing more time for resolution, the FDA aims to avoid situations where distributors will have to reject products solely because the serialized data could not be successfully transmitted to them. Over the past year, the exemptions provided breathing room for resolution without jeopardizing patient access to critical medicines.
According to Shankle, the HDA recently held public town hall meetings with stakeholders to assess readiness, and the feedback indicated a significant improvement in data accuracy.
"In June of this year, a median of the reporting members said that 97.5% of the data received from upstream trading partners was accurate," she reports. “This is a significant increase since August of last year, where 75% of data was reported as accurate.”
Transparency is key
Fr full compliance, clear communication between distributors and trading partners is what is key.
"The FDA has been very clear that transparency is key," says Shankle. “You did need to communicate with your trading partners that you were relying on the exemptions, and that's true even if you get your own individual exemption.”
In practice that means proactive outreach, clear timelines, and status updates. The FDA has stated that communication and knowing your trading partners is one of the underlying key points of the DSCSA, “and so that expectation was absolutely there during these phased exemption periods throughout the past year,” says Shankle.
As the industry moves toward full compliance, the potential risks for distributors who fail to meet the criteria include regulatory enforcement in the form of FDA Warning Letters or injunctions. But there’s also business disruption as well as reputational damage.
“Trading partners might refuse to send shipments to you or deprioritize you because you cannot exchange data in an accurate and timely manner,” says Shankle.
Despite these potential risks looming over the industry, the overall sentiment within the industry is one of readiness. "The phrase I hear a lot is 'we're ready to go live,'" Shankle shares.
Looking ahead, the DSCSA represents a foundational shift toward a digital, interoperable pharmaceutical supply chain. This shift is expected to enhance patient safety, improve supply chain integrity, and boost operational efficiencies. “Over time these capabilities can support broader innovations in the supply chain,” says Shankle.
While there are still technical issues to address, the industry is poised to implement the spirit and intent of the law, which was passed over a decade ago.
“It's a very exciting time. I talk to members often, and there's a sense of pride and excitement to see what this looks like for the supply chain and what it looks like for patients,” says Shankle.
On August 27, the Healthcare Distribution Alliance released a statement from President and CEO Chester “Chip” Davis, Jr., at the close of the Food and Drug Administration’s Drug Supply Chain Security Act exemption period for distributors.
“With today’s DSCSA distributor deadline, we have reached a milestone that goes beyond just compliance — it is about strengthening the safety and security of the entire healthcare supply chain for patients. HDA is pleased that, at the conclusion of the FDA’s exemption period, the distribution sector has been successful in meeting its implementation responsibilities. According to the most recent survey of HDA members, as of early June, the median level of accurate data exchange between trading partners at the pieces level was 98.5 percent. This high completion rate was only made possible through FDA’s willingness to extend the implementation period, and we thank the agency for their leadership.”
You can read the full statement here.
