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  • Maureen May

Drug Product Manufacturers: Don't risk supply chain disruptions by overlooking state drug licensing

For companies engaged in the drug and medical device supply chain, there’s no shortage of requirements to get their products to market. Many drug product manufacturers don’t realize the quantity of pharmaceutical state licensing that’s required, putting them at risk for delays and disruptions. In this article–illustrated through a hypothetical story—we’ll explore this common challenge and how companies can overcome it.

The Situation

Bob’s day wasn’t going well. As Regulatory Compliance Manager for a prescription drug company we’ll call A2Z Drugs, Bob was contacted by A2Z’s distributor, we’ll call Distribcorp. The reason? The distributor needed proof of licensure for all the regulated states where A2Z’s products would be distributed and sold.

Bob was perplexed. After all, A2Z was already licensed as an in-state manufacturer and held distributor licenses in states where their distributors’ warehouses are located. Bob’s team believed once the product shipped to Distribcorp, A2Z would be covered by the Distribcorp’s state licenses. But Bob overlooked states that also require manufacturers whose products will be sold into their state to hold a manufacturer license. A2Z Drug did not hold these licenses in all regulated states where their products were eventually sold. And A2Z couldn’t ship their products to suppliers or customers until they secured the applicable state drug licenses.

A2Z Drug's distributor was a long time trading partner, so how did this happen? Increasingly, state board of pharmacies are requiring manufacturers, wholesale distributors, and retailers to provide state licensing details on their trading partners as a requirement to obtain or renew their own licenses. For example, a state drug agency will request a list of manufacturers—including the manufacturer's state license number—for which the distributor circulates products. When the distributor fails to confirm their trading partners hold appropriate state licenses, it puts their license in jeopardy.

A2Z Drug needed several state licenses to legally distribute and sell into regulated states. And, understandably, Bob was anxious to secure the licenses as soon as possible. Unfortunately, applying for and obtaining state licenses can take 6 months or more. As agencies increasingly struggle with staffing shortages and remote work challenges, delays in reviewing and issuing licenses are on the rise.

At first, Bob set out to tackle the compliance gap using internal resources to research and determine A2Z’S licensing requirements. Navigating the complex patchwork of state regulations quickly overwhelmed his small compliance team.

The Solution

While Bob, A2Z Drug, and Distribcorp are hypothetical characters, the challenge they faced is realistic and applicable.

If this were a real situation, Bob could reach out to Complete Compliance Solutions for help. CCS partners with manufacturers, distributors, and third party logistics providers (3PLs) to identify state licensing requirements based on their unique business models.

Author: Maureen May


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