Bill Text: PA SB555 | 2009-2010 | Regular Session | Introduced

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Bill Title: Requiring the licensing of secondary wholesalers and a written pedigree for use in tracking drugs through the supply chain and in identifying counterfeit prescription drugs; imposing duties and responsibilities upon the Department of Health and the State Board of Pharmacy; and prescribing penalties.

Spectrum: Slight Partisan Bill (Republican 7-3)

Status: (Introduced - Dead) 2009-03-02 - Referred to PUBLIC HEALTH AND WELFARE [SB555 Detail]

Download: Pennsylvania-2009-SB555-Introduced.html

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PRINTER'S NO. 562
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 555 Session of2009
INTRODUCED BY RAFFERTY, BROWNE, WASHINGTON, ERICKSON, ORIE, YAW, KITCHEN, WONDERLING, M. WHITE AND BOSCOLA, MARCH 2, 2009
REFERRED TO PUBLIC HEALTH AND WELFARE, MARCH 2, 2009
AN ACT
Requiring the licensing of secondary wholesalers and a written
pedigree for use in tracking drugs through the supply chain
and in identifying counterfeit prescription drugs; imposing
duties and responsibilities upon the Department of Health and
the State Board of Pharmacy; and prescribing penalties.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Wholesale and
Prescription Medication Integrity Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Authentication." Affirmative verification, before any
wholesale distribution of a prescription drug, that each
transaction listed on the pedigree has occurred.
"Authorized distributor of record." A wholesale distributor
with whom a manufacturer has established an ongoing relationship
to distribute the manufacturer's prescription drug. An ongoing
relationship is deemed to exist between such wholesale
distributor and a manufacturer when the wholesale distributor,
including any affiliated group of the wholesale distributor, as
defined in section 1504 of the Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C § 1 et seq.), complies with the
following:
(1) the wholesale distributor has a written agreement
currently in effect with the manufacturer evidencing such
ongoing relationship; and
(2) the wholesale distributor is listed on the
manufacturer's current list of authorized distributors of
record, which is updated by the manufacturer on no less than
a monthly basis.
"Chain pharmacy warehouse." A physical location for
prescription drugs that acts as a central warehouse and performs
intracompany sales or transfers of the drugs to a group of chain
pharmacies having the same common ownership and control.
"Colicensed partner or product." A situation in which two or
more parties have the right to engage in the manufacturing or
marketing, or both, of a prescription drug, consistent with
United States Food and Drug Administration's implementation of
the Prescription Drug Marketing Act of 1987 (Public Law 100-293,
102 Stat. 95).
"Drop shipment." The sale of a prescription drug to a
wholesale distributor by the manufacturer of the prescription
drug, the manufacturer's colicensed product partner, the
manufacturer's third-party logistics provider or the
manufacturer's exclusive distributor, whereby the wholesale
distributor or chain pharmacy warehouse takes title but not
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physical possession of such prescription drug and the wholesale
distributor invoices the pharmacy or chain pharmacy warehouse or
another person authorized by law to dispense or administer such
drug to a patient, and the pharmacy or chain pharmacy warehouse
or other authorized person receives delivery of the prescription
drug directly from the manufacturer, the manufacturer's third-
party logistics provider or the manufacturer's exclusive
distributor.
"Facility." A facility of a wholesale distributor where
prescription drugs are stored, handled, repackaged or offered
for sale.
"FDA." The United States Food and Drug Administration.
"Manufacturer." A person licensed or approved by the United
States Food and Drug Administration to engage in the manufacture
of drugs or devices, consistent with its definition of
"manufacturer" under its regulations and guidances implementing
the Prescription Drug Marketing Act of 1987 (Public Law 100-293,
102 Stat. 95).
"Manufacturer's exclusive distributor." Anyone who contracts
with a manufacturer to provide or coordinate warehousing,
distribution or other services on behalf of a manufacturer and
who takes title to that manufacturer's prescription drug but
does not have general responsibility to direct the sale or
disposition of the prescription drug. The manufacturer's
exclusive distributor must be licensed as a wholesale
distributor under this act, and to be considered part of the
normal distribution channel must also be an authorized
distributor of record.
"Normal distribution channel." A chain of custody for a
prescription drug that goes, directly or by drop shipment, from
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a manufacturer of the prescription drug, from that manufacturer
to the manufacturer's colicensed partner, from that manufacturer
to the manufacturer's third-party logistics provider or from
that manufacturer to the manufacturer's exclusive distributor to
any of the following:
(1) a pharmacy, then to a patient or other designated
persons authorized by law to dispense or administer the drug
to a patient;
(2) a wholesale distributor, then to a pharmacy, then to
a patient or other designated persons authorized by law to
dispense or administer the drug to a patient;
(3) a wholesale distributor, then to a chain pharmacy
warehouse, then to that chain pharmacy warehouse's
intracompany pharmacy, then to a patient or other designated
persons authorized by law to dispense or administer such drug
to a patient; or
(4) a chain pharmacy warehouse, then to the chain
pharmacy warehouse's intracompany pharmacy, then to a patient
or other designated persons authorized by law to dispense or
administer such drug to a patient.
"Pedigree." A document or electronic file containing
information that records each distribution of any given
prescription drug.
"Prescription drug." Any drug, including any biological
product, except blood and blood components intended for
transfusion or biological products that are also medical
devices, required by Federal law or regulation to be dispensed
only by a prescription, including finished dosage forms and bulk
drug substances subject to section 503(b) of the Federal Food,
Drug, and Cosmetic Act (52 Stat. 1040, 21 U.S.C. § 353(b)).
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"Repackage." Repackaging or otherwise changing the
container, wrapper or labeling to further the distribution of a
prescription drug, excluding that completed by the pharmacists
responsible for dispensing product to the patient.
"Repackager." A person who repackages.
"State licensing authority." The Department of Health.
"Wholesale distribution." The term does not include:
(1) Intracompany sales of prescription drugs, meaning
any transaction or transfer between any division, subsidiary,
parent or affiliated or related company under common
ownership and control of a corporate entity, or any
transaction or transfer between colicensees of a colicensed
product.
(2) The sale, purchase, distribution, trade or transfer
of a prescription drug or offer to sell, purchase,
distribute, trade or transfer a prescription drug for
emergency medical reasons.
(3) The distribution of prescription drug samples by
manufacturers' representatives.
(4) Drug returns, when conducted by a hospital, health
care entity or charitable institution in accordance with 21
C.F.R. § 203.23 (relating to returns).
(5) The sale of minimal quantities of prescription drugs
by retail pharmacies to licensed practitioners for office
use.
(6) The sale, purchase or trade of a drug, an offer to
sell, purchase or trade a drug or the dispensing of a drug
pursuant to a prescription.
(7) The sale, transfer, merger or consolidation of all
or part of the business of a pharmacy or pharmacies from or
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with another pharmacy or pharmacies, whether accomplished as
a purchase and sale of stock or business assets.
(8) The sale, purchase, distribution, trade or transfer
of a prescription drug from one authorized distributor of
record to one additional authorized distributor of record
that the manufacturer has stated in writing to the receiving
authorized distributor of record that the manufacturer is
unable to supply such prescription drug and the supplying
authorized distributor of record states in writing that the
prescription drug being supplied had until that time been
exclusively in the normal distribution channel.
(9) The delivery of, or offer to deliver, a prescription
drug by a common carrier solely in the common carrier's usual
course of business of transporting prescription drugs, and
such common carrier does not store, warehouse or take legal
ownership of the prescription drug.
(10) The sale or transfer from a retail pharmacy or
chain pharmacy warehouse of expired, damaged, returned or
recalled prescription drugs to the original manufacturer or
to a third-party returns processor.
"Wholesale distributor." Anyone engaged in the wholesale
distribution of prescription drugs, including, but not limited
to, manufacturers; repackagers; own-label distributors; private-
label distributors; jobbers; brokers; warehouses, including
manufacturers' and distributors' warehouses, and drug
wholesalers or distributors; independent wholesale drug traders;
retail pharmacies that conduct wholesale distribution; and chain
pharmacy warehouses that conduct wholesale distribution. To be
considered part of the normal distribution channel the wholesale
distributor must also be an authorized distributor of record.
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Section 3. Wholesale drug distributor licensing requirements.
(a) Licensed required.--Every wholesale distributor who
engages in the wholesale distribution of prescription drugs must
be licensed by the State licensing authority in this
Commonwealth, and every nonresident wholesale distributor must
be licensed in this Commonwealth if it ships prescription drugs
into this Commonwealth, in accordance with this act before
engaging in wholesale distributions of wholesale prescription
drugs. The State licensing authority shall exempt manufacturers
distributing their own FDA-approved drugs and devices from any
licensing and other requirements, to the extent not required by
Federal law or regulation, unless particular requirements are
deemed necessary and appropriate following rulemaking.
(b) Requirements.--The State licensing authority shall
require the following minimum information from each wholesale
distributor applying for a license under subsection (a):
(1) The name, full business address and telephone number
of the licensee.
(2) All trade or business names used by the licensee.
(3) Addresses, telephone numbers and the names of
contact persons for all facilities used by the licensee for
the storage, handling and distribution of prescription drugs.
(4) The type of ownership or operation, such as a
partnership, corporation or sole proprietorship.
(5) The name of the owner or operator of the licensee,
including:
(i) If a person, the name of the person.
(ii) If a partnership, the name of each partner and
the name of the partnership.
(iii) If a corporation, the name and title of each
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corporate officer and director, the corporate names and
the name of the state of incorporation.
(iv) If a sole proprietorship, the full name of the
sole proprietor and the name of the business entity.
(6) A list of all licenses and permits issued to the
applicant by any other state that authorizes the applicant to
purchase or possess prescription drugs.
(7) The name of the applicant's designated
representative for the facility, together with the personal
information statement and fingerprints required pursuant to
paragraph (8) for such person.
(8) Each person required by paragraph (7) to provide a
personal information statement and fingerprints shall provide
the following information:
(i) The person's places of residence for the past
seven years.
(ii) The person's date and place of birth.
(iii) The person's occupations, positions of
employment and offices held during the past seven years.
(iv) The principal business and address of any
business, corporation or other organization in which each
such office of the person was held or in which each such
occupation or position of employment was carried on.
(v) Whether the person has been, during the past
seven years, the subject of any proceeding for the
revocation of any license and, if so, the nature of the
proceeding and the disposition of the proceeding.
(vi) Whether, during the past seven years, the
person has been enjoined, either temporarily or
permanently, by a court of competent jurisdiction from
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violating any Federal or State law regulating the
possession, control or distribution of prescription
drugs, together with details concerning any such event.
(vii) A description of any involvement by the person
with any business, including any investments, other than
the ownership of stock in a publicly traded company or
mutual fund during the past seven years, which
manufactured, administered, prescribed, distributed or
stored pharmaceutical products and any lawsuits in which
such businesses were named as a party.
(viii) A description of any felony criminal offense
of which the person, as an adult, was found guilty,
regardless of whether adjudication of guilt was withheld
or whether the person pled guilty or nolo contendere. If
the person indicates that a criminal conviction is under
appeal and submits a copy of the notice of appeal of that
criminal offense, the applicant must, within 15 days
after the disposition of the appeal, submit to the State
a copy of the final written order of disposition.
(ix) A photograph of the person taken in the
previous 30 days.
(c) Oath.--The information required pursuant to subsection
(b) shall be provided under oath.
(d) Prohibitions.--The State licensing authority shall not
issue a wholesale distributor license to an applicant unless the
State licensing authority:
(1) Conducts a physical inspection of the facility at
the required address provided by the applicant under
subsection (b)(1).
(2) Determines that the designated representative meets
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the following qualifications:
(i) Is 21 years of age or older.
(ii) Has been employed full time for at least three
years in a pharmacy or with a wholesale distributor in a
capacity related to the dispensing and distribution of
and recordkeeping relating to prescription drugs.
(iii) Is employed by the applicant full time in a
managerial level position.
(iv) Is actively involved in and aware of the actual
daily operation of the wholesale distributor.
(v) Is physically present at the facility of the
applicant during regular business hours, except when the
absence of the designated representative is authorized,
including, but not limited to, sick leave and vacation
leave.
(vi) Is serving in the capacity of a designated
representative for only one applicant at a time, except
where more than one licensed wholesale distributor is
colocated in the same facility and such wholesale
distributors are members of an affiliated group, as
defined in section 1504 of the Internal Revenue Code of
1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).
(vii) Does not have any convictions under any
Federal, State or local laws relating to wholesale or
retail prescription drug distribution or distribution of
controlled substances.
(viii) Does not have any felony convictions under
Federal, State or local laws.
(e) Fingerprints.--The State licensing authority shall
submit the fingerprints provided by a person with a license
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application for a Statewide criminal record check and for
forwarding to the Federal Bureau of Investigation for a national
criminal record check of the person.
(f) Bond.--The State licensing authority shall require every
wholesale distributor applying for a license to submit a bond of
at least $100,000, or other equivalent acceptable means of
security, such as an irrevocable letter of credit or a deposit
in a trust account or financial institution, payable to the
restricted account established pursuant to subsection (g). Chain
pharmacy warehouses that are engaged only in intracompany
transfers are exempt from the bond requirement. The purpose of
the bond is to secure payment of any fines or penalties and fees
and costs incurred regarding that license, which are authorized
by law and which the licensee fails to pay 30 days after the
fines, penalties or costs become final. The Commonwealth may
make a claim against such bond or security until one year after
the licensee's license ceases to be valid. The bond shall cover
all facilities operated by the applicant.
(g) Restricted account.--There is established within the
Department of Health a restricted account, separate from other
accounts, in which to deposit the wholesale distributor bonds
required by subsection (f).
(h) Multiple facilities.--If a wholesale distributor
distributes prescription drugs from more than one facility, the
wholesale distributor shall obtain a license for each facility.
(i) Corrections.--Every calendar year, the State licensing
authority shall send to each wholesale distributor licensed
under this act a form setting forth the information that the
wholesale distributor provided pursuant to this section. Within
30 days of receiving the form, the wholesale distributor shall
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identify and state under oath all changes or corrections to the
information that was provided. Changes and corrections shall be
submitted as required. The State licensing authority may suspend
or revoke the license of a wholesale distributor if the
wholesale distributor no longer qualifies for a license.
(j) Designated representative.--The designated
representative identified pursuant to subsection (b)(7) shall
complete continuing education programs as required by the State
licensing authority regarding Federal and State laws governing
wholesale distribution of prescription drugs.
(k) Nondisclosure.--Information provided under this section
shall not be disclosed to any person or entity other than the
State licensing authority, a government board or a government
agency.
Section 4. Restrictions on transactions.
(a) Purchases and receipts from pharmacies.--A wholesale
distributor shall receive prescription drug returns or exchanges
from a pharmacy or chain pharmacy warehouse pursuant to the
terms and conditions of the agreement between the wholesale
distributor and the pharmacy or chain pharmacy warehouse,
including the returns of expired, damaged and recalled
pharmaceutical product to either the original manufacturer or a
third-party returns processor, and such returns or exchanges
shall not be subject to the pedigree requirement of this act so
long as they are exempt from pedigree under FDA's currently
applicable Prescription Drug Marketing Act of 1987 (Public Law
100-293, 102 Stat. 95) guidance. Wholesale distributors and
pharmacies shall be held accountable for administering their
returns process and ensuring that their operations are secure
and do not permit entry of adulterated or counterfeit products.
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(b) Sale, distribution or transfer to an unlicensed
person.--A manufacturer or wholesale distributor shall furnish
prescription drugs only to a person licensed by the State
licensing authority. Before furnishing prescription drugs to a
person not known to the manufacturer or wholesale distributor,
the manufacturer or wholesale distributor shall affirmatively
verify that the person is legally authorized to receive the
prescription drugs by contacting the State licensing authority.
(c) Delivery.--Prescription drugs furnished by a
manufacturer or wholesale distributor shall be delivered only to
the premises listed on the license, except that the manufacturer
or wholesale distributor may furnish prescription drugs to an
authorized person or agent of that person at the premises of the
manufacturer or wholesale distributor if:
(1) The identity and authorization of the recipient is
properly established.
(2) This method of receipt is employed only to meet the
immediate needs of a particular patient of the authorized
person.
(d) Hospital pharmacy.--Prescription drugs may be furnished
to a hospital pharmacy receiving area, except that a pharmacist
or authorized receiving personnel shall sign, at the time of
delivery, a receipt showing the type and quantity of the
prescription drug so received. Any discrepancy between the
receipt and the type and quantity of the prescription drug
actually received shall be reported to the delivering
manufacturer or wholesale distributor by the next business day
after the delivery to the pharmacy receiving area.
(e) Credit.--A manufacturer or wholesale distributor shall
not accept payment for or allow the use of a person's or
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entity's credit to establish an account for the purchase of
prescription drugs from any person other than the owner of
record, the chief executive officer or the chief financial
officer listed on the license of a person or entity legally
authorized to receive prescription drugs. Any account
established for the purchase of prescription drugs shall bear
the name of the licensee.
Section 5. Pedigree.
(a) General rule.--Each person, including repackagers but
excluding the original manufacturer of the finished form of the
prescription drug, who is engaged in wholesale distribution of
prescription drugs that leave or have ever left the normal
distribution channel shall, before each wholesale distribution
of such drug, provide a pedigree to the person who receives such
drug. The following shall apply:
(1) A retail pharmacy or chain pharmacy warehouse shall
comply with the requirements of this section only if the
pharmacy or chain pharmacy warehouse engages in wholesale
distribution of prescription drugs.
(2) The State licensing authority shall conduct a study
to be completed within one year after the effective date of
this section. The report shall include consultation with
manufacturers, distributors and pharmacies responsible for
the sale and distribution of prescription drug products in
this Commonwealth. Based on the results of the study the
State licensing authority shall determine a mandated
implementation date for electronic pedigrees. The
implementation date for the mandated electronic pedigree
shall be no sooner than December 31, 2010, and may be
extended by the State Board of Pharmacy in one year
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increments if it appears the technology is not universally
available across the entire prescription pharmaceutical
supply chain.
(b) Authentication.--Each person who is engaged in the
wholesale distribution of a prescription drug, including
repackagers, but excluding the original manufacturer of the
finished form of the prescription drug, and who is in possession
of a pedigree for a prescription drug and attempts to further
distribute that prescription drug shall affirmatively verify
before any distribution of a prescription drug occurs that each
transaction listed on the pedigree has occurred.
(c) Contents.--The pedigree shall:
(1) Include all necessary identifying information
concerning each sale in the chain of distribution of the
product from the manufacturer or from the manufacturer's
third-party logistics provider, colicensed product partner or
exclusive distributor through acquisition and sale by any
wholesale distributor or repackager until final sale, to a
pharmacy or other person dispensing or administering the
drug. At minimum, the necessary chain of distribution
information shall include:
(i) Name, address, telephone number and, if
available, the e-mail address of each owner of the
prescription drug and each wholesale distributor of the
prescription drug.
(ii) Name and address of each location from which
the product was shipped, if different from the owner's.
(iii) Transaction dates.
(iv) Certification that each recipient has
authenticated the pedigree.
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(2) At minimum, the:
(i) Name of the prescription drug.
(ii) Dosage form and strength of the prescription
drug.
(iii) Size of the container.
(iv) Number of containers.
(v) Lot number of the prescription drug.
(vi) Name of the manufacturer of the finished dosage
form.
(d) Maintenance provisions.--Each pedigree or electronic
file shall be:
(1) Maintained by the purchaser and the wholesale
distributor for three years from the date of sale or
transfer.
(2) Available for inspection or use upon a request of an
authorized officer of the law.
(e) Implementation.--The State licensing authority shall
adopt rules, regulations and a form relating to the requirements
of this section no later than 90 days after the effective date
of this section.
Section 6. Enforcement; order to cease distribution of drug.
(a) Order to cease distribution of a prescription drug.--The
State licensing authority shall issue an order requiring the
appropriate person, including manufacturers, distributors or
retailers of a drug, to immediately cease distribution of the
drug if there is a reasonable probability that:
(1) A wholesale distributor other than a manufacturer
has:
(i) violated a provision of this act; or
(ii) falsified a pedigree or sold, distributed,
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transferred, manufactured, repackaged, handled or held a
counterfeit prescription drug intended for human use.
(2) The prescription drug at issue in paragraph (1)
could cause serious, adverse health consequences or death.
(3) Other procedures would result in unreasonable delay.
(b) Informal hearing.--An order under subsection (a) shall
provide the person subject to the order with an opportunity for
an informal hearing, to be held not later than ten days after
the date of the issuance of the order. If after providing an
opportunity for such a hearing the State licensing authority
determines that inadequate grounds exist to support the actions
required by the order, the order shall be vacated.
Section 7. Prohibited acts.
(a) General rule.--It is unlawful for a person to perform or
cause the performance of or aid and abet any of the following
acts in this Commonwealth:
(1) Failure to obtain a license in accordance with this
act or operating without a valid license when a license is
required by this act.
(2) Purchasing or otherwise receiving a prescription
drug from a pharmacy, unless the requirements of this act are
met.
(3) Sale, distribution or transfer of a prescription
drug to a person that is not authorized under the law of the
jurisdiction in which the person receives the prescription
drug to receive the prescription drug in violation of this
act.
(4) Failure to deliver prescription drugs to specified
premises as required by this act.
(5) Accepting payment or credit for the sale of
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prescription drugs in violation of this act.
(6) Failure to maintain or provide pedigrees as required
by this act.
(7) Failure to obtain, pass or authenticate a pedigree
as required by this act.
(8) Providing the State licensing authority or any of
its representatives or any Federal official with false or
fraudulent records or making false or fraudulent statements
regarding any matter within the provisions of this act.
(9) Obtaining or attempting to obtain a prescription
drug by fraud, deceit, misrepresentation or engaging in
misrepresentation or fraud in the distribution of a
prescription drug.
(10) Except for the wholesale distribution by
manufacturers of a prescription drug that has been delivered
into commerce pursuant to an application approved by the FDA,
the manufacture, repackaging, sale, transfer, delivery,
holding or offering for sale any prescription drug that is
adulterated, misbranded, counterfeit, suspected of being
counterfeit or has otherwise been rendered unfit for
distribution.
(11) Except for the wholesale distribution by
manufacturers of a prescription drug that has been delivered
into commerce pursuant to an application approved by the FDA,
the adulteration, misbranding or counterfeiting of any
prescription drug.
(12) The receipt of any prescription drug that is
adulterated, misbranded, stolen, obtained by fraud or deceit,
counterfeit or suspected of being counterfeit, and the
delivery or proffered delivery of such drug for pay or
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otherwise.
(13) The alteration, mutilation, destruction,
obliteration or removal of the whole or any part of the
labeling of a prescription drug or the commission of any
other act with respect to a prescription drug that results in
the prescription drug being misbranded.
(b) Testing.--Subsection (a) does not apply to a
prescription drug manufacturer, or agent of a prescription drug
manufacturer, obtaining or attempting to obtain a prescription
drug for the sole purpose of testing the prescription drug for
authenticity.
Section 8. Penalties.
(a) General violations.--A person who engages in the
wholesale distribution of prescription drugs in violation of
this act commits a felony of the second degree and shall, upon
conviction, be sentenced to pay a fine of not more than $50,000
or to imprisonment for not more than ten years, or both.
(b) Knowing violations.--A person who knowingly engages in
wholesale distribution of prescription drugs in violation of
this act commits a felony of the first degree and shall, upon
conviction, be sentenced to pay a fine of not more than $500,000
or to imprisonment for not more than 20 years, or both.
Section 9. Effective date.
This act shall take effect immediately.
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