United States: FDA Clarifies Trading Partners Under The DSCSA

The Federal Food and Drug Administration ("FDA") recently published a draft guidance to assist industry and State and local governments in understanding how to categorize entities in the drug supply chain in accordance with the Drug Supply Chain Security Act ("DSCSA"). The DSCSA establishes product tracing, licensure, reporting, and other requirements for certain trading partners in the drug supply chain, including manufacturers, repackagers, wholesale distributors, dispensers, and third-party logistics providers or 3PLs.

Since November 2013, when the DSCSA became law, many clients have been concerned about whether and the extent to which the DSCSA applies to certain segments of the pharmaceutical supply chain industry. Other clients have been concerned about how to satisfy applicable DSCSA requirements for being considered an "authorized" trading partner, and whether some partners – such as solutions providers and logistics and administrative services contractors – should be considered a DSCSA trading partner at all.

The FDA's draft guidance helps to address many of these concerns. Among other things, it clarifies the applicability of DSCSA requirements to entities that take part in the distribution of prescription drugs in the United States. It also explains when and whether such entities are engaged in activities that require licensure and annual reporting, as well as other requirements related to being an "authorized" trading partner in the drug supply chain, as defined by the DSCSA.

Manufacturers. DSCSA treats three distinct entities – 1) the applicant (NDA/BLA) holder, 2) any co-licensed partners, and 3) any affiliates – as a single "Manufacturer" "with respect to a [single] product" for purposes of DSCSA drug pedigree compliance and supply chain security tracking.

Responding to concern about whether the first two entities should register with FDA to be considered a DSCSA authorized trading partner, the draft guidance acknowledges that these entities may meet the DSCSA definition of "manufacturer" even though they do not engage in activities traditionally considered those of a manufacturer (e.g., preparation, propagation, compounding, or processing). The draft guidance then clarifies that these entities "would not be required to register" with FDA, so long as the entities met their obligations under the FD&C Act and the DSCSA.

As for manufacturer affiliates, the draft guidance states that mere business relationships are not sufficient to meet the definition of an "affiliate"; rather, the affiliate-manufacturer relationship must be more robust. Notably, the draft guidance cites to FDA's 2001 final rule for foreign manufacturing registration standards, and thereby signals FDA's intent to interpret the term "affiliate" in a DSCSA context in the same way it does to assess user fees. We had suspected this was the case but it is helpful to have FDA confirm it in the draft guidance. In the user-fee context, FDA relies on and defers to the affiliation standards of the Small Business Administration ("SBA"). According to the SBA, affiliation generally exists when one business controls or has the power to control another, or when a third party (or parties) controls or has the power to control both businesses. Control may arise through ownership, management, or other relationships or interactions between the parties. Aside from standard relationships such as stock ownership and common management, an affiliation relationship can also exist when two companies have identical (or substantially identical) business or economic interests. Even patterns of subcontracting, comingling of staff and/or facilities may evidence an identity of interest. Additionally, an affiliation relationship may be viewed to exist when there are contractual relationships or economic dependencies between two parties.

Repackagers. The DSCSA defines a "Repackager" as a person who owns or operates an establishment that repacks and relabels a product or package for further sale or distribution without further transaction. FDA's draft guidance clarifies that dispensers, specifically pharmacy dispensers, which repackage product into unit-dose packages for administration to an individual patient, are not considered repackagers.

Wholesale distributors. The DSCSA defines a "Wholesale Distributor" as a person (other than a manufacturer, a manufacturer's co-licensed partner, 3PL, or repackager) distributing a product to a person other than a consumer or patient. FDA emphasizes in the draft guidance that many entities formerly within the definitions of wholesale distribution and distributor under the Prescription Drug Marketing Act of 1987 "are now considered 3PLs"; several of which are discussed herein. The draft guidance notes that the definition of "wholesale distribution" excludes the distribution of a manufacturer's own drug, and clarifies that manufacturers who distribute their own drugs are not required to meet licensure requirements for wholesale distributors. FDA also addresses "jobbers" (i.e., persons or entities that own or operate establishments engaging in small scale wholesale distribution, or sell product solely to retailers and institutions), and concludes that jobbers do, in fact, engage in wholesale distribution and are subject to the wholesale distributor requirements under DSCSA.

3PLs. The DSCSA defines a "third-party logistics provider" as an entity that provides or coordinates warehousing, or other logistics services of a product in interstate commerce on behalf of a manufacturer, wholesale distributor, or dispenser of a product, but does not take ownership of the product, nor have responsibility to direct the sale or disposition of the product. The draft guidance recognizes that the DSCSA defines 3PLs broadly, and explains whether six supply chain entities are considered "trading partners" under the DSCSA:

  1. Entities that warehouse but do not own or direct the sale or disposition of product;
  2. Brokers;
  3. Solutions providers;
  4. Common carriers;
  5. Logistics or administrative services contractors; and
  6. Returns processors and reverse logistics providers.

For each type of entity, the draft guidance provides definitions and factors when considering whether the entity is a 3PL. Specifically, FDA clarifies that an entity that warehouses, but does not own or direct the sale or disposition of product is considered a 3PL, even if the facility where warehousing occurs is under common ownership or control with another trading partner. Conversely, according to the draft guidance, brokers are not generally considered 3PLs because they do not provide or coordinate warehousing, nor do they accept or transfer direct possession of product. Similarly, solutions providers are not typically considered 3PLs as they only provide hardware, software, and systems solutions to help achieve compliance with the DSCSA. FDA does not consider entities that only provide transportation services, such as common carriers, to be 3PLs because they do not take ownership or direct the sale of product. (But common carriers that warehouse product that lacks identified consignees or delivery destinations will be considered 3PLs under the DSCSA.) Logistics and administrative services contractors, which FDA considers to be entities that solely contract with other trading partners to provide labor, logistics, or administrative services in a trading partner's facility, are not considered 3PLs. Lastly, the draft guidance confirms that returns processors and reverse logistics providers are considered 3PLs.

The draft guidance announces that FDA intends to regulate (as 3PLs) only entities that provide services that involve the acceptance or transfer of products "from that entity's facility within the United States and its territories on behalf of a trading partner (i.e., manufacturer, repackager, WDD, or dispenser)." It also announces that "3PLs without a facility are not required to be licensed."

Dispensers. FDA's draft guidance provides brief guidance addressing dispensers. It states that although there are circumstances where a dispenser is not required to provide product tracing information, it is recommended that dispensers document sales and transfers in order to support an investigation of suspect or illegitimate product or recall.

Notably, the draft guidance includes a useful table summarizing activities undertaken by each category of trading partner and provides examples of entities that are not typically considered trading partners. We have recreated the chart below as reference.

Comments to the draft guidance are due to FDA on or before October 20, 2017, and can be submitted here.

This article is presented for informational purposes only and is not intended to constitute legal advice.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.