President Obama's signing earlier this week of legislation establishing a nationwide template for the tracking and tracing of pharmaceutical shipments is likely to have profound multi-industry implications for third-party logistics providers (3PLs) and their warehouse operations, according to a leading warehouse logistics industry trade group.
The law, the "Drug Quality and Security Act," replaces a fragmented, state-by-state approach for monitoring pharmaceutical shipments with a uniform standard governing wholesale distributors and 3PLs. It caps a three-year legislative effort by the pharmaceutical industry and the International Warehouse Logistics Association (IWLA), the Des Planes, Ill.-based trade group representing the interests of warehouse logistics operators.
The law elevates warehouse logistics providers to equal partnership with drug manufacturers, wholesalers, distributors, and pharmacies in an effort to better safeguard the product supply chain. But for the 3PLs and their warehouse operations, it also clarifies the key distinction between product ownership and product possession, making clear that 3PLs are custodians of the merchandise but not owners.
The law puts the responsibility of product tracking and tracing in the hands of the product owners, not the custodians. In so doing, it relieves 3PL warehouse owners and operators of the onerous paperwork burdens that accompanied the responsibility of being considered part of the chain of ownership. In the past, 3PLs were grouped together with manufacturers and wholesalers. This meant that they were forced to provide detailed transaction information, history, and statements, and then keep that information for six years following transfer of the product to another party.
By clearly establishing what a 3PL's legal role is in the warehouse and what is outside its purview, Congress has provided a road map to guide warehouse logistics operations in other industry verticals, according to Pat O'Connor, IWLA's Washington representative.
"This is the first federal statute to contain a strong definition of a 3PL's place in the supply chain," O'Connor said in a statement hailing the bill's signing. "The impact is now we can point to this law on other issues affecting 3PLs."
In addition, by codifying the 3PLs importance in the drug supply chain, lawmakers have given the IWLA a critical platform from which it can better inform Congress and regulators on future issues affecting its members' operations, the group said.
"Having one set of standards for 3PLs who handle pharmaceuticals in the supply chain set at the federal level is a significant milestone for third-party logistics providers, who have never received formal recognition by the federal government in the form of...legislation," the group said in its statement.