Safe Chain Shows the DSCSA Is a Compliance Mandate and a Criminal Boundary

Adhere to it and patient safety should be protected; subvert it and civil, regulatory, and criminal liabilities converge. The case also signals to prosecutors, state boards, and other enforcement authorities that the DSCSA’s controls and records are powerful tools to detect and prove bad‑actor conduct.

The facts, in brief, place the DSCSA at the center of the story. (For additional case coverage, please visit the ArentFox Schiff Investigations Blog.) According to the court, Safe Chain’s principals bought large volumes of diverted HIV medicines at steep discounts during 2020-2021 and moved them into pharmacy channels using falsified transaction documentation that made the products appear legitimate. Pharmacies reported red flags, including opened bottles, broken pills, and bottles labeled as HIV therapies that in fact contained other drugs. Despite these signals, purchasing and resale continued. The FDA inspected Safe Chain in 2022 and, in a June 2023 warning letter, cited DSCSA violations: trading with unauthorized entities; inadequate systems to comply with DSCSA requirements to address suspect and illegitimate product; failure to maintain records of suspect product investigations; and failure to respond to notifications of illegitimate product. While the FDA acknowledged corrective actions in March, criminal charges for the earlier conduct proceeded, culminating in guilty pleas and jury convictions earlier this week for conspiracy offenses tied to adulterated and misbranded drugs, trafficking with false documentation, and wire fraud. The same factual core underlies both the regulatory and criminal outcomes.

Understanding why the DSCSA mattered requires a short recap of key obligations under the law.

• Trading partners (manufacturers, repackagers, wholesale distributors, and dispensers) must trade only with authorized trading partners.

• Trading partners must exchange and retain accurate DSCSA transaction documentation with each prescription drug product ownership transfer and maintain those records for six years.

• Trading partners must promptly quarantine and investigate suspect product, refrain from further distribution until cleared, and notify the FDA and trading partners within defined timeframes when product is determined to be illegitimate.

The Safe Chain record shows how violations of those specific duties became both regulatory failures and elements of fraud.

• Unauthorized sourcing severed the authorized trading partner control that the DSCSA uses to keep counterfeit and diverted products out of commerce.

• Falsified DSCSA transaction documentation (referred to as T3s/pedigrees in the Florida case) undermined the integrity of the trace record and contradicted the transaction statement’s assurance of lawful, non‑counterfeit sourcing.

• Ignored customer complaints about wrong contents and compromised packaging should have triggered quarantine, investigation, and, if warranted, rapid notification.

• Moving product anyway kept unsafe drugs in commerce.

• Inadequate procedures and missing investigation files meant there was no credible documentary evidence of quarantine or dispositioning.

Each of these breakdowns was a DSCSA violation on its own terms, and together they provided the proof of knowledge, intent, and execution that supported the criminal counts.

The timing underscores an important compliance reality. The FDA’s 2023 Warning Letter identified DSCSA gaps and required remediation. The FDA’s subsequent acknowledgment in 2025 that the cited deficiencies appeared addressed reduced prospective regulatory risk but did not erase liability for prior misconduct. DSCSA compliance is continuous and forward‑looking, while criminal exposure turns on past acts and intent. Firms cannot remediate their way out of past falsifications, unauthorized sourcing, or the distribution of adulterated and misbranded drugs.

The enforcement implications extend beyond this one case. Prosecutors and regulators now have a clear playbook: The presence or absence of DSCSA artifacts as evidence. Transaction documentation, authorized trading partner confirmations, suspect‑product investigation files, verification logs, and quarantine and disposition records are all probative of either compliance or fraud. As enhanced, electronic, package‑level traceability moves into active enforcement this year, the evidentiary trail has become richer. Serialized data exchange and receipt reconciliation make it harder to fabricate DSCSA documentation and easier to spot discontinuities between physical product identifiers and electronic records. State boards of pharmacy, attorneys general, and payers are likely to lean on the same DSCSA records and controls to police diversion schemes, counterfeit risks, and reimbursement fraud. The signal from this case is that the DSCSA is not mere paperwork; it is an enforceable security system whose violation can carry felony consequences.

The bottom line for executives and compliance leaders is that the DSCSA now sits at the junction of patient safety and criminal law. Complying with its controls protects patients, stabilizes operations, and limits regulatory friction. Subverting or ignoring those controls invites a converging response from the FDA, civil litigants, and criminal authorities. The Safe Chain matter should be read as a warning shot and a roadmap. The same DSCSA records that demonstrate compliance may also be used to prove wrongdoing. Firms that invest in robust DSCSA execution will be positioned on the right side.