United States: FDA Proposes National Standards For Wholesale Drug Distributors And Third-Party Logistics Providers

On February 4, 2022, the U.S. Food and Drug Administration ("FDA") published a proposed rule to create national standards for licensure of Wholesale Drug Distributors ("WDDs") and Third-Party Logistic Providers ("3PLs") to fulfill a mandate of the 2013 Drug Quality and Security Act ("DQSA"), which is directed in part at better insulating prescription drug distribution channels. The proposed rule would fundamentally change the existing regulatory scheme for WDDs and 3PLs, which currently exists as a patchwork system of state laws with multiple, different standards.

The actions-taken pursuant to Title II of the DQSA, the Drug Supply Chain Security Act ("DSCSA")-are intended to "strengthen the integrity of the pharmaceutical distribution supply chain" to "protect American consumers from drugs that may be counterfeit, stolen, contaminated, or otherwise harmful."  DSCSA requires WDDs and 3PLs to be licensed in each state from which they distribute products. Further, DSCSA directs the FDA to create regulations regarding the standards of licensing for WDDs and 3PLs.  WDD and 3PL licensure standards, if any, have historically been determined and administered at the state level.  However, this approach has resulted in uncoordinated and varied state licensure requirements, with heightened administrative burdens for WDDs and 3PLs and reduced security of pharmaceutical distribution systems overall.  

The FDA's proposed rule would supplant existing 21 CFR part 205 and establish national standards for the licensing of WDDs and 3PLs. The FDA has revised its preemption interpretation of a key section of the Federal Food, Drug, and Cosmetic Act that would apply to state and local licensure requirements and regulations. Specifically, state and local governments could not establish or continue licensure requirements for WDDs or 3PLs unless those requirements are the same as the new federal requirements. State and local licensing systems consistent with the national standards as finalized would be permitted to continue operating. The FDA will accept public comments regarding the proposed rule until June 6, 2022. Jones Day will provide additional commentary in the coming weeks to analyze specific issues related to the proposed rule in depth.

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