Drug Quality and Security Act Clarifies 3PL’s Role

New set of standards better defines ownership and responsibilities for transfer of products.

Congress passed and President Obama signed the Drug Quality and Security Act (Public Law 113-54) on November 27th. It contains provisions for tracing pharmaceuticals in the supply chain and creates a uniform, national licensing standard for wholesale distributors and third-party logistics providers to safeguard the pharmaceutical distribution system.

The International Warehouse Logistics Association (IWLA) announced its support for the new law, stating that it caps a nearly three-year effort and will have multi-faceted impacts on the third-party logistics industry and IWLA's government affairs efforts.

“When dealing with supply chain security and safety, the influence stems from being recognized as an equal partner to the pharmaceutical manufacturers, primary and secondary wholesalers and distributors and pharmacies,” said Pat O'Connor, IWLA's Washington representative.

“By working with everyone in the sector, supporting both needs, we become stronger."

The traceability system is based on an ownership model whereby transaction information is provided upon a change of ownership rather than a change of possession. The traceability obligations require businesses to provide transaction information, history and statements, to each subsequent owner, and keep transaction information for six consecutive years following the transfer.

IWLA believes this distinction is critical to its members because it defines the title holders of the products they store. Regulations had typically grouped 3PLs in with manufacturers and wholesalers, O’Connor believes. Having one set of standards for 3PLs who handle pharmaceuticals in the supply chain is a significant milestone for third-party logistics providers, he added, because they have never received formal recognition by the federal government in the form of documented legislation.

"This is the first federal statute to contain a strong definition of a 3PL's place in the supply chain," O'Connor said. "The impact is now we can point to this law on other issues affecting 3PLs.

The Act sets uniform national licensing standards for warehouse-based 3Pls, preempts existing state licensing requirements for 3PLs and preempts all state laws, regulations and requirements for tracing products through the supply chain.

 

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