FDA Releases Guidance on Suspect and Illegitimate Product

On June 3, 2021, the U.S. Food and Drug Administration (FDA) issued a revised draft guidance¹ for definitions of suspect and illegitimate product and a final guidance for the identification of suspect and illegitimate product and notification under the Drug Supply Chain Security Act (DSCSA). These guidance documents provide clarification for when to conduct suspect product investigations and notify FDA and trading partners about illegitimate product.²

Definitions of Suspect and Illegitimate Product³

FDA updated its interpretation of "diverted products" to exclude product obtained as a result of FDA’s regulatory action to address a drug shortage or where an Emergency Use Authorization for the product has been issued. With this update, FDA is recognizing that these options for legitimate drug distribution within the United States fit within the DSCSA regime. Both of these pathways have been particularly relevant throughout the COVID-19 pandemic. Further, this guidance indicates that a firm would not be expected to seek a formal waiver of verification requirements for products approved for distribution through these pathways, simplifying DSCSA implementation for both industry and the agency. Notably, this interpretation applies strictly to a firm’s verification requirements in Section 582(b)(4), (c)(4), and (e)(4); thus, it is not clear whether FDA expects firms to comply with all other DSCSA provisions for these products, such as for product identifiers and product tracing, or seek formal waivers.

In addition, FDA has clarified its interpretation of the concept of "stolen product" to include:

• any product in its entirety (i.e., the prescription drug and its packaging) that has been taken or removed without permission of the owner of the product, such as theft from a trading partner, cargo theft, warehouse theft, or courier theft;
• any packaging taken or removed without permission, such as an empty bottle or outer carton;
• any drug product taken or removed without permission, such as all or some tablets removed from a bottle; or
• any packaging that is missing all or any portion of drug product.

FDA updated its definition of "fraudulent transaction" to require knowing falsification of transaction data. This clarifies that FDA does not consider incorrect transaction data caused by errors or mistakes to be fraudulent.

FDA also updated its definition of “unfit for distribution” in two key ways. First, FDA indicated that in addition to the product’s sale violating the Federal Food, Drug, and Cosmetic Act, there must also be a reason to believe or credible evidence showing that the product would be reasonably likely to result in serious adverse health consequences or death to humans. Second, FDA clarified that products awaiting reverse distribution and processing do not require the initiation of a suspect product investigation. FDA noted, however, that products in these two categories may fall within other categories of suspect and illegitimate product.

Identification of Suspect Product and Notification⁴

FDA also finalized its guidance related to the identification of suspect product and related notifications. FDA clarified that immediate trading partners for notification would include those to whom a trading partner has sold the drugs and, in some cases, the firm from whom a trading partner purchased the drugs.

For manufacturers, FDA also added a new section to guide manufacturers in making the determination that there is a high risk of illegitimacy for one of its products. FDA indicated that a manufacturer may need to notify trading partners of a product with a high risk of illegitimacy if the manufacturer receives a suspect product notification for that product. Sources of this information may include trading partners in possession of counterfeit product, foreign regulators with knowledge of counterfeit production in another country, product stolen within the United States or a foreign country, or product that is intentionally adulterated and likely destined for the United States pharmaceutical distribution supply chain. FDA added that notifications may be made even though the manufacturer does not have reason to believe than an immediate trading partner has or possesses the high-risk product, such as when the product is possessed by a healthcare provider or consumer.

Finally, FDA updated its guidance related to notifications of illegitimate products and products with a high risk of illegitimacy submitted to the agency. Notably, FDA stated that it intends to inform the submitting entity if a notification was not required under the DSCSA after reviewing the circumstances surrounding the event. Although the mechanism for this communication is not defined, it has the potential to provide valuable feedback to firms for when future notifications would not be required. In practice, access to this information may be limited, since it will not be publicly available unless the submitting entity chooses to share it.

Firms should carefully review these guidance documents for impact to DSCSA compliance programs, including services provided by third-party contractors. Manufacturers, in particular, should determine whether their program for notifying FDA and trading partners of products with a high risk of illegitimacy aligns with FDA’s expectations.

¹ Draft guidance, when finalized, represents the current thinking of the FDA on a topic. It does not establish any rights for any person and is not binding on FDA or the public.
² FDA also issued guidance related to product identifiers and drug distribution security. See FDA, Product Identifiers Under the Drug Supply Chain Security Act Questions and Answers, Guidance for Industry (2021) (available at https://www.fda.gov/media/116304/download); FDA, Enhanced Drug Distribution Security at the Package Level Under the Drug Supply Chain Security Act, Draft Guidance for Industry (2021) (available at https://www.fda.gov/media/149704/download).
³ FDA, Definitions of Suspect Product and Illegitimate Product for Verification Obligations under the Drug Supply Chain Security Act, Draft Guidance for Industry (2021) (available at https://www.fda.gov/media/111468/download).
⁴ FDA, Drug Supply Chain Security Act Implementation: Identification of Suspect Product and Notification, Guidance for Industry (2021) (available at https://www.fda.gov/media/88790/download).