LS&HC Horizons 2022 - Flipbook - Page 18
Hogan Lovells | 2022 Life Sciences and Health Care Horizons
18
Digital Health and AI
Distribution of prescription medical devices, including digital therapeutics and diagnostics
Medical device manufacturers who distribute prescription medical
devices are subject to complex and varied state licensing requirements
that can attach to their manufacturing and/or distribution activities, most
of which are set up for the distribution of traditional physical products.
Further, many manufacturers partner with third-party logistics providers
(3PL) that are also subject to separate state licensing requirements.
Licensing rules vary by state as well as between prescription and OTC
drug or device types, recipient, and facility/entity location. Adding to the
complexity, most state licensing paradigms were developed to handle
prescription drugs and controlled substances and, consequently, are not
always suitable for the distribution models used for prescription medical
devices. Further still, while distribution models are well developed for
distributing tangible things, they are often not well suited for digital
therapeutics and diagnostics for which there is no physical product,
including software downloads of applications and provision of access
codes. While some states do not have any licensure requirements for
prescription medical devices and similar products, such as digital
therapeutics, many states do.
The DSCSA by its terms does not apply to medical devices; however,
because the DQSA and the proposed rule seek to establish consistent
standards and drive uniformity for drug state licensing, we also anticipate
changes in how state Boards will regulate the wholesale distribution of
drugs and 3PLs. And because medical devices are largely regulated under
states’ drug licensing authorities, we expect the impacts of many of the
drug distribution regulations to spill over to medical devices, possibly
resulting in higher standards or additional licensure requirements.
It is therefore critical for prescription medical device manufacturers to
secure necessary state licenses and also monitor the impact of these rules
on medical devices, once implemented. Digital therapeutic and diagnostic
companies should also consider whether there is an opportunity to
shape the proposed rule to carve out their products or establish different
standards. Companies should expect an impact in the renewal process
and the need to address new or different infrastructure requirements,
or secure new licenses to comply with states that newly elect to require
licensure of medical device distributors.
In the last few years we have seen an uptick in state Boards pursuing
prescription medical device manufacturers and distributors for failure
to secure the necessary licenses. We expect this trend to continue.
Looking forward, changes to how manufacturers and distributors are
licensed are coming that may affect medical devices. When the Drug
Supply Chain Security Act (DSCSA) (Title II of the Drug Quality and
Security Act (DQSA)) was enacted, it included a provision intended to
harmonize rules for drug distribution across the states by establishing
standards. FDA recently issued a proposed rule, National Standards for
the Licensure of Wholesale Drug Distributors and Third-Party Logistics
Providers, 87 FR 6708 (Feb. 4, 2022) intending to provide clarity and
consistency for wholesale distributors and 3PLs desiring licensure.
Jodi Scott
Partner, Denver
Rachael Sakurai
Associate, Denver
