Key Takeaways
- FDA’s proposed rule would allow qualifying distributed manufacturing establishments (DMEs) to register as a single drug establishment under a new hub-and-spoke model, provided they operate under a single management structure, unified pharmaceutical quality system, and meet applicable preapproval inspection requirements.
- The proposed rule would require foreign active pharmaceutical ingredient (API) manufacturers whose products ultimately enter the U.S. supply chain to register and list, even if they distribute only to foreign finished-product manufacturers. Failure to comply could result in products being deemed misbranded.
- Companies using or planning distributed manufacturing should assess whether their operations meet the proposed DME eligibility requirements, while sponsors and importers should evaluate their foreign upstream suppliers’ registration and listing status.
- Comments on the proposed rule are due by September 11, 2026.
In the wake of the Food & Drug Administration’s (FDA) ambitious unified agenda, on July 13, 2026, the agency published a proposed rule aiming to align its regulatory frameworks with “how distributed manufacturing actually works.” The proposed rule would create a tailored drug establishment registration framework for certain distributed manufacturing establishments (DMEs) and clarify the registration and listing obligations applicable to certain foreign drug establishments. The proposed rule is intended to facilitate the adoption of advanced, decentralized drug manufacturing models and otherwise close existing oversight gaps over foreign drug manufacturing establishments whose products ultimately enter the U.S. supply chain.
Distributed Manufacturing: FDA’s Current Framework
FDA’s existing drug establishment registration regulations are premised on an increasingly antiquated manufacturing model in which an establishment operates under one management at one general physical location. Industry, however, is exploring new models, including distributed manufacturing (DM), a decentralized manufacturing strategy made possible by advanced manufacturing technologies.
How the DME Hub-and-Spoke Model Works Under FDA’s Proposed Rule
Under this so-called DME “hub-and-spoke” model, a DM “hub” oversees one or more distributed manufacturing units (DMUs) located separately from the hub that manufacture the same drug or drugs. The hub is the primary location of the quality unit responsible for implementing a unified pharmaceutical quality system (UPQS) to direct, monitor, and control manufacturing across the DME and to ensure that all DMUs remain equivalent (though not identical) in design and operation. The consequence of the current establishment registration framework for DMEs is that establishments operating through multiple locations could be required to submit separate registrations for each location.
Viewing the current establishment framework as burdensome, the proposed rule would revise 21 C.F.R. part 207 to allow a qualifying DME to register as a single drug manufacturing establishment. The proposal would update the definition of “establishment,” add DME-specific definitions, and create parallel registration and update requirements tailored to the hub-and-spoke model.
New Registration Timing and Preapproval Inspection Requirements for DMEs
In addition to these changes, the proposed rule would impose DME-specific registration timing and content requirements. Under this parallel pathway, a registrant would have to register a DME no later than five calendar days after the first domestic DM hub or unit begins manufacturing a drug for commercial distribution, or before a drug manufactured at any foreign DM hub or unit is imported or offered for import into the United States, whichever occurs first. For currently registered establishments, DME registration would be handled through an update to the existing establishment registration rather than a separate initial registration for the DME. Importantly, to qualify as a DME, the hub and DMUs must have been subject to a preapproval inspection in connection with an approved marketing application that describes the use of a DM strategy for at least one drug in each profile class manufactured by the DME.
The information required for registration would largely mirror the existing requirements for traditional establishments, but would also include DME-specific elements, including FDA-assigned unique identifiers to support traceability and data integrity. The proposed rule would also establish expedited update timelines for DMEs, including an advance notice requirement for relocations of mobile DMUs.
Which Companies Qualify as DMEs Under FDA’s Proposed Rule?
Importantly, the proposed pathway is narrow. A DME must operate under a single management structure, meaning that a single business entity must manage the DME in its entirety and have authority and responsibility for ensuring compliance through the UPQS. This concept notably excludes arrangements in which multiple unaffiliated contract manufacturing organizations each operate a unit to manufacture the same drug at multiple locations, and third-party relabelers, repackers, and salvagers that are not under the manufacturer’s ownership or control and do not operate under the same UPQS.
FDA’s New Foreign Drug Establishment Registration Requirements
Historically, the FDA’s registration framework did not directly address whether foreign manufacturers of drugs or components that are distributed solely outside the United States but later enter the U.S. supply chain through another foreign facility must register and list. Since 2016, the FDA asserted that the share of registered drug establishments located outside the United States has increased substantially, resulting in a growing cohort of unregistered foreign establishments whose products ultimately enter the U.S. market indirectly. FDA states that the lack of registration and listing by such entities has impaired its visibility into the drug supply chain and hindered oversight of this growing sector.
How the PREVENT Pandemics Act Affects Foreign API Manufacturer Registration
Section 2511 of the PREVENT Pandemics Act amended section 510 of the Federal Food, Drug & Cosmetic Act (21 U.S.C. §360(i)) to expressly require registration of foreign establishments engaged in manufacturing, preparing, propagating, compounding, or processing a drug that is imported or offered for import into the United States, regardless of whether the drug undergoes further manufacturing or processing at a separate foreign establishment before import. It also clarified that these foreign establishments must provide drug listing information.
While FDA considers these statutory provisions as self‑implementing, the proposed rule seeks to amend 21 C.F.R. §§ 207.17 and 207.41 to conform the existing regulatory text to the statutory language. If finalized, the amendments would clarify that a foreign API manufacturer that distributes an API only to foreign finished-product manufacturers must register if the finished product is ultimately imported or offered for import into the United States. The foreign API manufacturer would also need to list the API and the finished-product manufacturer would need to list the finished product. FDA further explains that if an upstream foreign establishment fails to register or list as required, any drug imported or offered for import that was manufactured, prepared, propagated, compounded, or processed at that establishment would be considered misbranded. Because FDA characterizes these amendments as clarifying existing, self‑implementing requirements, the proposed rule does not establish a separate phase‑in schedule for foreign establishment registration or listing beyond the effective date of any final rule.
What Should Companies Do Now to Prepare for FDA’s Distributed Manufacturing and Foreign Registration Rule?
Comments on the proposed rule are due by September 11, 2026. If finalized as proposed, the rule may provide a streamlined registration pathway for qualifying companies using or planning distributed manufacturing, but only where the manufacturing model satisfies FDA’s proposed DME definition and related requirements. Companies using or planning distributed manufacturing should map whether their operations involve one management structure, a single quality unit, a UPQS, equivalent DMUs, and any required preapproval inspection history.
Additionally, sponsors, importers, and finished-dose manufacturers should assess whether foreign upstream manufacturers whose drugs, APIs, or components ultimately enter the U.S. market are registered and have listed applicable drugs. Supplier qualification processes and quality agreements may need to be updated to require upstream foreign manufacturers to confirm registration and listing status where their products may ultimately be imported or offered for import into the United States.
If you have any questions about how the proposed rule may affect your business, please contact the authors.