September 6, 2022
By Electronic Submission
The Honorable Robert M. Califf M.D., Commissioner
Food and Drug Administration
Department of Health and Human Services
5630 Fishers Lane, Rm. 1061
Rockville, MD 20852
Re: [Docket No. FDA-2020-N-1663] Federal Register Notice Requesting Comments on the Proposed Rule on National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers as Required by the Drug Supply Chain Security Act
Dear Commissioner Califf:
On behalf of the Health Industry Distributors Association (HIDA), I write to submit comments in response to FDA-2020-N-1663 regarding a national uniform policy for the licensure of wholesale drug distributors (WDDs) and third-party logistics providers (3PLs) as required by the Drug Supply Chain Security Act (DSCSA). HIDA is the industry trade association representing 118 healthcare supply distribution companies operating 500+ distribution centers. HIDA members support patient care by delivering healthcare products and supplies to the nation’s healthcare providers. They manage logistics and offer customer services to care settings including hospitals, nursing homes, physician practices, home care, and laboratories.
HIDA would like to thank FDA for its willingness to take industry’s input as the agency developed a uniform policy on drug product tracing and wholesale distributor licensure. Currently, licensure requirements vary considerably across state lines creating an overly burdensome patchwork system. In passing DSCSA, Congress believed a uniform national standard would address this issue. We agree with the Food and Drug Administration (FDA) that, “This proposed rule, when finalized, will provide much needed certainty and clarity for wholesale distributors and 3PLs seeking licensure.”1
HIDA would like to offer comments on the proposed rule that will address the following:
- Preemption of state licensing requirements
- Inconsistencies in WDD and 3PL language
- Designated Representatives/Facility Manager requirements
- Unfit for distribution language
- Validation
- Clarification of initial inspection requirements
- Change of ownership
- Standardized fees and bond requirements
- Personnel requirements and qualifications
Preemption Of State Licensing Requirements
The goal of the DSCSA is to strengthen the security of the U.S. drug supply chain. National standards for WDD licensure will help reduce opportunities for dangerous and criminal conduct affecting the supply of prescription drugs in the United States. HIDA agrees with FDA’s scope of preemption. “FDA interprets section 585(b)(1) of the Food, Drug & Cosmetics Act (FD&C Act) as preempting States and localities from establishing or continuing requirements for 3PL or WDD licensure that are different from the standards and requirements applicable under sections 584 and amended 503(e) of the FD&C Act. In other words, States and local governments may not establish or continue licensure requirements for 3PLs or WDDs unless those State requirements are the same as Federal requirements; different requirements are preempted.”2
When finalized and effective, these licensing regulations will preempt state and local licensing standards, requirements, and regulations that are different from federal requirements. It is crucial that these national licensure standards establish both a floor and a ceiling.
HIDA recommends:
- The final licensure rule must emphasize that the uniform national requirements will preempt state standards and regulations that differ from the federal requirements.
- FDA should provide examples to States of common requirements that would be preempted by these federal standards. This will aid the transition and adoption of a national uniform licensure rule.
Inconsistencies In WDD And 3PL Language
While the proposed rule is much more comprehensive than the current version of 21 CFR, Part 205, there are inconsistencies between the detailed requirements for WDDs and 3PLs. The differences in language will likely lead to confusion. For example, there are two different sets of rules for the inspection process, even when a WDD and 3PL reside in the same building. This means two different trainings for two different systems and an increased chance for mistakes. Additional examples of these inconsistencies include:
- 3PLs holding state licenses will need to obtain new licenses under the new licensure requirements once the proposed rule goes into effect. However, it is unclear whether WDDs holding state licenses will also need to obtain new licenses.
- Despite the regulation establishing a federal licensing structure, if a WDD or 3PL’s facility is located in a state with state-licensing requirements, the facility will need to obtain a state license (rather than a federal license). This is particularly notable for 3PLs that ship product in interstate commerce.
- Per the proposed rule, state-licensed 3PLs will still need to obtain licenses in both the facility’s home state and states into which a product is sent (to the extent required). However, if the 3PL is licensed on the federal level, it will not be required to obtain out-of-state licenses.
- Unlike 3PLs, WDDs will still be required to obtain licensure from the state into which the drug is distributed (to the extent required), regardless of whether the WDD’s facility is licensed on the federal or home state level.
These inconsistencies run counter to the rule’s intent to eliminate the patchwork system of overly burdensome requirements that vary from state to state.
HIDA recommends:
- The final rule should better align the language regarding 3PL and WDD requirements to reduce confusion and inconsistencies in implementing a uniform policy on drug product tracing and wholesale distributor licensure.
- The FDA should meet with stakeholder subject matter experts to ensure 3PL and WDD requirements are appropriately consistent.
Designated Representatives/Facility Manager Requirements
The requirements for facility managers and designated representatives vary widely across the States. Some States require testing, while others require proof of a high school diploma, even though a candidate may have years of warehouse, pharmacy, or manufacturing experience. In addition, there is great variation among States with regard to fingerprinting and criminal background checks – tasks that are already laborious and complicated. It is important that the final licensure rule provide clarity around the qualifications for designated representatives/facility managers, including fingerprinting and background checks. States must be required to follow these federal standards without imposing additional requirements.
HIDA recommends:
- The final licensure rule should identify a single standardized form for the collection of fingerprints or the use of a digital fingerprint scan.
- As fingerprints do not change, a facility manager/designated representative’s fingerprints should be submitted one time – not annually. Once fingerprints are on file with the licensing authority they should not have to submit them again.
Unfit For Distribution Language
The definition of unfit for distribution is too broad and requirements on the identification and handling of unfit prescription drugs are found in several places in the proposal. A wholesale distributor only purchases, warehouses, and sells sealed, packaged, and finished products. Therefore they may not know or even notice most of the conditions that would make a product unfit for distribution. Unless a product has visible damage or is expired, a wholesale distributor will not know if a product is unfit for distribution unless a trading partner or government authority provides notification.
HIDA Recommends:
- The final licensure rule should clarify that the obligations around the handling of unfit products apply when wholesale distributors have identified the product as unfit or have been notified it is unfit by a trading partner or other entity.
Validation
While we agree with most of the proposed equipment requirements at 3PL and WDD facilities, proposed § 205.10(c)(5)(i) and proposed § 205.26(b)(3)(i) state that 3PLs and WDDs must have “validated” equipment. Good manufacturing practice (GMP) requirements, such as validation, do not apply to wholesale distributors and the use of this term with an established definition within the industry adds unnecessary confusion to equipment requirements.
HIDA recommends:
- The word “validated” should be removed from the licensure final rule and replaced with a more appropriate term.
Clarification Of Initial Inspection Requirements
As previously stated, the goal of the DSCSA WDD licensure section was to establish a uniform national standard. In the proposed rule, it is not clear that Approved Organizations follow DSCSA requirements with regard to inspections and not their own criteria. The proposed language could give additional value to the National Association of Boards of Pharmacy (NABP) accreditation program, which is contrary to congressional intent. Without clarification, states are likely to continue adopting accreditation in lieu of federal criteria.
HIDA recommends:
- FDA should clarify that Approved Organizations follow DSCSA requirements regarding inspections and not follow criteria from other organizations.
Change Of Ownership
Currently, not every state requires the filing of a new application for a change of ownership. The proposed rule would require a new application each time this occurs to be completed within 30 days. There are extensive steps to filing a new license, including obtaining signatures from designated representatives and officers, copies of invoices and packing slips, pictures of facilities, official license verifications from the home state, background checks, and fingerprinting, among other things. This is a massive undertaking in a short time frame, particularly for companies with large portfolios.
HIDA recommends:
- FDA should allow 90 days to complete the filing of a new application in order to insure accuracy and completeness.
Standardized Fees And Bond Requirements
There should be clarity as to whether fees for licensing will be in line with current state assigned pricing or will there be standardized pricing. We propose that licensure application fees should be standardized. Additionally, FDA is proposing to require surety bonds for all licenses. We recommend that only one surety bond be required covering all facilities within the corporation.
HIDA recommends:
- The standardization of all licensure application fees.
- That FDA allow the use of a single surety bond that covers the entire corporation, as opposed to individual, facility-specific bonds.
Personnel Requirements And Qualifications
It is extremely difficult to keep qualified personnel – especially during the current public health emergency with so much turnover and so many people leaving the workforce. The proposed rule does not contain necessary language on training and education requirements. There should be clarification around the need for flexibility in both training and communication of key personnel changes. It is too burdensome to require notification any time there is a change in personnel.
Additionally, we recommend that FDA reexamine the timelines for onboarding personnel. For example, background checks can take up to 90 days and some states require their own background checks. Fingerprinting requirements are also problematic in some cases as some states are slower to adopt electronic fingerprinting technology.
HIDA recommends:
- FDA’s final rule must address the need for training and education requirements of qualified personnel with the necessary flexibility to reflect current work force challenges.
- FDA must align its timelines based on realistic estimates of the requirements for state background checks and processes.
HIDA appreciates the opportunity to provide comments to the Proposed Rule on National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers as Required by the Drug Supply Chain Security Act. If you have any further questions or need additional information, please contact Christina Lavoie, HIDA’s Director of Policy, at lavoie@hida.org.
Sincerely,
Linda Rouse O’Neill
Vice President, Supply Chain Policy & Executive Branch Relations
Health Industry Distributors Association
Footnotes