Imagine taking medication to treat a chronic condition and end up in the hospital because the drug was counterfeit. Unfortunately, it happens. Popular and high priced drugs, like GLP-1s, are prime targets. In fact, the National Library of Medicine estimates that between 5% - 8% of drugs traded in the U.S. are counterfeit. The Drug Supply Chain Security Act (DSCSA) was passed to minimize this issue. It transforms how prescription drugs are tracked, verified, and dispensed in the United States. Passed in 2013, the law has rolled out in phases, requiring manufacturers, repackagers, distributors, and dispensers to implement serialization and electronic traceability.

November 2025 marks the final deadline for full compliance. At that point, every stakeholder in the supply chain, from drug manufacturers to hospitals and pharmacies, must verify serialized data before dispensing medications. This means every bottle, vial, or carton must carry accurate identifiers that match transaction histories in the digital record.

Although the checkpoints have resulted in identifying counterfeit drugs before they reach the patient, it creates another potential problem. What happens when the identifiers don’t match? The downstream impact of labeling errors in DSCSA compliance means that potentially life-saving medicines won’t reach patients.

Why?

A breakdown between the physical drug package and its digital data means the entire shipment gets delayed.

How Serialization and Labeling Errors Create DSCSA Exceptions

Serialization assigns each drug package a unique identifier. This is typically a barcode or 2D data matrix which is linked to a transaction history. This allows stakeholders to confirm authenticity and trace movement throughout the supply chain.

But serialization also introduces new vulnerabilities - labeling errors. If the printed identifier doesn’t align with digital records, the shipment triggers what’s known as an exception.

Examples of labeling errors include:

  • Barcode duplication across multiple packages
  • Misaligned or unreadable print
  • Missing or incomplete identifiers

Even a single error can create outsized consequences. For example, if one label in a shipment of 50 units contains a faulty barcode, the entire shipment may be flagged. Until the exception is resolved, none of the drugs in that shipment can be dispensed, delaying patient treatment and disrupting operations.

Downstream Effects on Pharmacies and Hospitals

While labeling errors may begin upstream, the biggest impact is downstream on hospitals and pharmacies.

  • Inability to dispense medication - Exceptions prevent pharmacies from dispensing flagged drugs, even when patients urgently need them.
  • Disruption to treatment timelines - Delays can force therapy interruptions or substitutions, impacting patient outcomes.
  • Operational burden - Pharmacy and inventory teams must devote extra resources to investigate and resolve exceptions.
  • Compliance risk - Ongoing exceptions may raise flags with Joint Commission, CMS, or state and local agencies. 

For the patient care team, the problem isn’t just administrative. It directly interferes with their ability to deliver safe, timely care.

Root Causes: Breakdowns at the Manufacturer and Distributor Level

Labeling exceptions rarely originate in the hospital or pharmacy. They typically occur upstream during high-volume production or distribution processes.

When a manufacturer or distributor labels medications, it occurs on high speed lines that print, apply and scan those labels at high speeds. When labeling challenges do occur, they manifest as:

  • Printers producing inconsistent quality such as smearing, blotchy graphics, or unreadable barcodes.
  • Automatic applicators misapplying or wrinkling labels.
  • Materials not designed or tested for specific application conditions can lead to physical failures.

These upstream breakdowns have ripple effects across the entire supply chain, underscoring the importance of quality assurance at the source.

Why Awareness Matters - Even if UAL Isn’t The Label Vendor

The downstream impact of DSCSA exceptions affects UAL’s healthcare customers every day. When shipments stall, pharmacies can’t dispense drugs, or when administrative efforts to uncover the problem tie up resources, providers feel the strain.

That’s why UAL prioritizes awareness and education. By sharing insights into serialization and exception handling, our goal is to help organizations stay aware of the risks and be proactive about the processes.

Best Practices and Safeguards

Although a provider can’t impact the labeling practices at the manufacturer or distributor, they can take proactive steps when DSCSA exceptions do occur.

1. Partner only with licensed, registered trading partners.

Verify that the manufacturers, repackagers, distributors, and third-party logistics providers you work with are properly authorized. The FDA maintains a searchable database of this information.

2. Require complete product tracing documentation.

Each shipment must include transaction information, history, and statements. If a shipment arrives without these records, contact the manufacturer or distributor immediately before dispensing any product.

3. Quarantine and report exceptions quickly.

If you receive a drug shipment with mismatched identifiers or incomplete documentation, immediately quarantine the affected products. Investigate, notify the manufacturer, and report suspected issues to the FDA and trading partners.

QC Labels are an effective way to segregate and prevent use of affected items.

4. Educate pharmacy and inventory staff.

Ensure frontline teams understand what DSCSA exceptions mean, how to identify labeling or documentation issues, and the correct escalation process.

By taking these steps, providers minimize disruptions in patient care and demonstrate strong compliance practices, even when problems originate upstream in the supply chain.

Proactive Labeling Elevates Patient Safety

In a serialized supply chain, small errors can cascade into major disruptions. One faulty barcode has the power to stall life-saving therapies, strain hospital operations, and jeopardize compliance.

By paying close attention to label accuracy and durability, stakeholders not only comply with DSCSA but also protect patients and preserve trust.

United Ad Label remains committed to supporting healthcare providers and championing best practices that strengthen both compliance and patient safety.