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Wholesale Distributors

Serialization introduces regulatory demands, trade partner variations, and new opportunity.

Wholesale distributors in the U.S. and EU have distinct challenges under their respective laws, but in their middle-of-the-supply chain position, they share common ground around the impact of customer and supplier demands and differences. And as serialization data begins to flow into the supply chain, both groups ultimately stand to benefit from better visibility into inventory, product movement, and more.

United States

Distributors in the U.S. are several years into DSCSA lot-level compliance and—while their own serialization deadline doesn’t arrive until 2019—they are gearing up for November 2017, when manufacturers must begin serializing product.  As that serialized product begins to enter the supply chain, wholesalers will face several key challenges:

  • Aggregation: Because it’s not a DSCSA requirement, some manufacturers will aggregate and others will not.  Accordingly, wholesalers will receive a mix of aggregated and non-aggregated data and will need to manage both during product receipt and within their inventory.  Depending on who they sell to, they may decide to pass aggregation data downstream, so will need to address the outbound implications of that, as well. With lot-level, the industry learned that trade partner demands introduced as much—if not more—complexity than the regulatory requirements.  Aggregation will follow suit, as what their suppliers deliver and their customers prefer complicate compliance for wholesalers. 

  • Verification Requirements: Distributors will need to start managing verification requirements, driven largely by saleable returns.  How they will query for the data they need to verify product identifiers is still an open question, as the industry works on different models to address this. 

  • Managing hybrid inventory: Perhaps the biggest challenge is that for the foreseeable future, wholesale distributors need to plan for and manage hybrid inventory.  With FDA enforcement discretion, grandfathering, and DSCSA-exempt product in the mix, wholesalers will receive a mix of serialized and non-serialized—along with aggregated and non-aggregated—product.  To maintain efficiencies, they will need to have the triggers in place to manage all of that at operational speed.

European Union

Distributors in the European Union will have different requirements based largely on the origins of their product.  Variations include:

  • Primary wholesalers who buy from the original manufacturer do not need to do risk-based verification since the product is coming from a trusted source.
  • Secondary wholesalers who buy product off the market or from other wholesalers must complete risk-based verification, much like a pharmacy dispenser. 
  • Any wholesaler that sells “out of market”, as defined in the Delegated Regulation, must decommission serial numbers.  The exact events that are considered out of market vary by market, but examples include to universities for research, to the armed forces, and more. 
  • Distributors must complete risk-based verification for saleable returns prior to reselling the product, regardless of the product source

Regardless of exact requirements, EU distributors will need to manage the operational impact of serialization, understanding what is required in which scenarios, and what workflows must be triggered. 

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