Third-party logistics providers in the drug supply chain

Since November 27, 2014, every facility run by a third-party logistics provider that handles prescription drugs has had to report to the Food and Drug Administration once a year, under section 584 of the Federal Food, Drug, and Cosmetic Act¹. The same section told FDA to write national licensing standards for these warehouses by November 2015. Those standards still do not exist. FDA proposed them in February 2022², and its August 2026 regulatory agenda³ lists a final rule for June 2028.

Third-party logistics providers, usually called 3PLs, store and ship drugs for other companies without ever owning them. They are a large and mostly invisible part of the system that moves medicine from the factory to the pharmacy. Even the federal government relies on them. ASPR's fiscal 2027 budget justification⁴ says the Strategic National Stockpile depends on "storage and inventory management services provided by commercial third-party logistics providers."

In 2013 the Drug Supply Chain Security Act (DSCSA) made 3PLs a separate legal category, with their own license, their own reporting duty and a lighter set of tracing obligations than wholesalers. This explainer covers what the law counts as a 3PL, how that differs from wholesale distribution, and what the licensing gap means in practice.

What the law counts as a 3PL

The definition sits in section 581(22), codified at 21 U.S.C. 360eee⁵. A third-party logistics provider is "an entity that provides or coordinates warehousing, or other logistics services of a product in interstate commerce on behalf of a manufacturer, wholesale distributor, or dispenser of a product, but does not take ownership of the product, nor have responsibility to direct the sale or disposition of the product."

FDA's 2022 revised draft guidance on identifying trading partners⁶ reduces that to one test. "The key distinction between wholesale distributors and 3PLs is that, unlike a wholesale distributor, a 3PL does not take ownership of the product, and does not direct the sale or disposition of the product." FDA reads "other logistics services" to mean services by an entity that accepts or transfers direct possession of products from its own facility in the US on behalf of a manufacturer, repackager, wholesaler or dispenser. A facility counts if the 3PL owns, rents or leases it.

FDA applies the test to edge cases. A salvager that takes possession of products on another company's behalf to determine whether they can be sold, without taking ownership, is generally providing "other logistic services." A salvager that takes ownership falls under the wholesale rules instead. The guidance also assigns categories to private-label distributors and to returns processors.

Possession is what makes a 3PL a trading partner. Under section 581(23)(B), a 3PL is a trading partner when a manufacturer, repackager, wholesaler or dispenser hands it or takes from it "direct possession of a product." Those businesses may deal only with authorized trading partners, so every 3PL they use must also be authorized, as FDA's licensure check page⁷ points out.

How 3PLs differ from wholesalers under the DSCSA

Wholesalers and 3PLs share an annual FDA report and a reliance on state licenses. Most other rules differ.

In day-to-day terms, tracing is the largest difference. Because a 3PL never owns the product, it does not issue the transaction records that follow each sale. FDA restated the point in an August 2026 exemption notice⁸: although 3PLs "are also considered trading partners," they "are not subject to the product tracing requirements of section 582." GxRadar's DSCSA overview explains those records.

Congress also walled 3PLs off from wholesale rules at the state level. Section 585(b)(2), at 21 U.S.C. 360eee-4⁹, says "No State shall regulate third-party logistics providers as wholesale distributors." A state that does not set up its own 3PL licensing program is barred from charging 3PLs a licensing fee.

The rules a licensed 3PL would have to meet

Section 584 sets the minimum content of the licensing regulations. They must require storage practices that include:

• warehouse space of suitable size, with an area to quarantine suspect product, and adequate security;
• written procedures for receipt, storage, inventory, shipment and distribution, and for correcting inventory errors;
• procedures to identify, record and report confirmed losses or thefts in the US;
• support for manufacturer recalls and the ability to trace receipt and outbound distribution;
• plans for foreseeable crises "such as a strike, fire, or flood";
• segregation of expired product for return or destruction, and quarantine or destruction of suspect product when directed.

Section 584 also requires background checks of facility managers and designated representatives, bars anyone convicted of certain felony violations of the FD&C Act or of the federal product-tampering law from those jobs, and requires a 3PL to give its licensing authority, on request, a list of the manufacturers, wholesalers and dispensers it serves at each facility.

FDA's 2022 proposal would require a physical inspection of each 3PL facility before its first license and "routinely once every 3 years thereafter." The law lets FDA approve outside accreditation programs to review 3PL applications. In a February 2026 notice¹⁰, FDA said such an approved organization would review documents, inspect the facility and send FDA a report within seven days, after which FDA would decide whether to issue the license. For its paperwork estimates, the proposed rule assumed 459 3PL facilities would become subject to the new reporting requirements.

Licensed in the meantime

With no federal standards in force, the law fills the gap with a presumption. Section 582(a)(7) says that until the 3PL licensing regulations take effect, a 3PL "shall be considered 'licensed'" unless FDA finds that it "does not utilize good handling and distribution practices and publishes notice thereof."

FDA reads that broadly. In its trading partner guidance, the agency says a 3PL is fully licensed for DSCSA purposes until the federal rules take effect, "notwithstanding a situation where a State requires licensure of the 3PL during this period and the 3PL does not hold such State licensure." FDA added that this "should not be construed to impact the ability of States to require licensure of 3PLs under State law." A 3PL can therefore count as authorized under federal law while still being out of compliance with a state's own licensing statute.

The annual report

Each yearly filing is short. Each 3PL facility reports the state that licenses it and the license number, plus the facility's name, address and trade names. FDA's draft question-and-answer guidance¹¹ says facilities should report "even if there is no State licensing requirement for 3PLs," and asks for filings between January 1 and March 31 of each year.

The reports feed FDA's public reporting database¹², which also lists wholesalers and is updated every business day. FDA cautions that a listing "does not mean the facility is licensed or approved by FDA." Companies choosing a 3PL are told to check the relevant state license as well.

Storage rules carry the most weight for products that must be kept cold, covered in our piece on cold-chain medicines. For the parallel rules on wholesalers, see wholesale distributor licensing under the DSCSA. The 3PL standards will take effect one year after FDA issues a final rule, which FDA's implementation tracker¹³ still shows at the proposed stage.