Penalties Under the Drug Supply Chain Security Act

The Drug Supply Chain Security Act (DSCSA) was passed to meet a serious need: the need to protect the American public from the effects of fake or stolen prescription drugs. The penalties that can be imposed for failure to meet the terms of the Act are correspondingly severe, with possible fines up to $500,000, together with terms of imprisonment.

 

The first thing to remember is that it is only breaches of the Act that will be punished. Two types of instruction are given to entities that form part of the drug supply chain:

  • Mandatory; and
  • Advisory

The “Advisory” category embraces all of the guidance from the FDA since the Act was passed. This guidance does not have the force of law and failure to follow it will not result in prosecution or the imposition of penalties so long as what is in the Act is followed.

For example, in October last year the FDA issued a document, DSCSA Implementation: Product Tracing Requirements for Dispensers – Compliance Policy (Revised). On the cover page it says, “This guidance is for immediate implementation.” It goes on with a lot of words about how to respond, should you wish to, but those words “for immediate implementation” suggest that this is something that dispensers have to do, and have to do NOW.

And it isn’t so. Not until you reach the fourth page do you find the words “Contains Non-binding Recommendations” followed by this: “This guidance represents the current thinking of the Food and Drug Administration (FDA or Agency) on this topic.  It does not establish any rights for any person and is not binding on FDA or the public.  You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.  To discuss an alternative approach, contact the FDA staff responsible for this guidance as listed on the title page.”

So now we know that, not only do dispensers not have to follow the guidance in this document, but the FDA makes no promise (“not binding on FDA”) that it won’t prosecute someone for following the advice should it (the FDA) subsequently decide that the advice wasn’t such a good idea after all.

In short, this guidance is advisory and not mandatory. The document goes on to make this even clearer than it already is: “In general, FDA’s guidance documents do not establish legally enforceable responsibilities.  Instead, guidances describe the Agency’s current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited.” So what MUST be followed is not what it says in the guidance but what it says in the Act.

The guidance contains an interesting date for anyone reading this at the time it is posted because one of the things it says is that until 1st March 2016 the Agency (that’s the FDA) will not prosecute any dispenser for accepting ownership of prescription drugs without receiving the product tracing information. If you are reading this, then that date is already past and now the FDA will prosecute (or certainly may prosecute) any dispenser who accepts ownership of prescription drugs without being provided with the product tracing information. That prosecution will not be under this guidance document but under section 582(d)(1)(A)(i) of the Act. If a dispenser complies with that section but fails to maintain the product tracing information received, that will be a breach of section 582(d)(1)(A)(iii) of the Act and is also likely to result in prosecution.

We’ve gone into detail on this one small section of the act in order to point up the difference between the advisory (guidance documents from the FDA) and the mandatory (what’s in the Act). This example could be repeated many times because there are a number of guidance documents and it’s a complex and detailed act; the question now is: what penalties may be applied?

Here are some things to bear in mind:

  • If you don’t comply with the DCSA’s traceability provisions or licensure requirements you are committing a prohibited act
  • If no product identifier is affixed to the product as the DSCSA requires, this will be regarded as misbranding and is a prohibited act.

Prohibited acts also include the following:

  • The resale of a compounded drug that is labelled “not for resale.”
  • The intentional falsification of a prescription.
  • The failure to report drugs or adverse events by a registered entity.
  • Advertising or promoting a compounded drug in a way that is false or misleading in any particular.

Depending on which prohibited act has been committed, the penalties include:

  • Imprisonment for not more than one year and/or a fine of not more than $1,000.
  • For subsequent or intentional violations, imprisonment for not more than three years and/or a fine of not more than $10,000.
  • Equitable remedies may also be applied and these can include: restitution; disgorgement of profits; and confiscation of product.

There is an additional provision under the Federal Criminal Code allowing a general fine of up to $250,000 for individuals and $500,000 for entities.

All of that is in addition to the penalties for failing to meet the requirements for T3 documentation, failure to meet any of the deadlines in the Act (though, as we have seen, the FDA has extended some of these deadlines), or failing to meet the serialization requirements of the Act as the relevant date milestones are past.

In the case of those infringements, the penalties include fines, imprisonment and suspension or revocation of licenses.

So, if the question is: What penalties are available under DSCSA? then the answer is: Penalties severe enough to make it worth the while of every involved entity to ensure they do not infringe on the Act in any way. If i had to bet the farm here is what is at risk:

Loss of License
Fines
Patient Risks
Negative Reputation

Free DSCSA Evaluation

Contact TrackTraceRx today to receive a free evaluation of your DSCSA current policy and procedures. This free consultation will allow you to have a piece of mind that you are following the correct procedures in order to meet ALL DSCSA requirements. TrackTraceRx will also provide you with a FREE Standard Operating Procedure (SOP) template which is required by the DSCSA during a FDA inspection.

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