PRINTER'S NO. 4182
No. 2784 Session of 2002
INTRODUCED BY EACHUS, YUDICHAK, WALKO, STURLA, GRUCELA, DeWEESE, COY, FREEMAN, BELARDI, BELFANTI, CALTAGIRONE, CAPPELLI, CAWLEY, CORRIGAN, COSTA, DeLUCA, GEORGE, GRUITZA, HALUSKA, HANNA, HARHAI, HORSEY, JAMES, LAUGHLIN, LESCOVITZ, LUCYK, MANDERINO, MARKOSEK, McCALL, MELIO, MICHLOVIC, MUNDY, OLIVER, PALLONE, PISTELLA, READSHAW, ROBINSON, ROONEY, SAINATO, SHANER, STABACK, STEELMAN, SURRA, TANGRETTI, THOMAS, TIGUE, TRAVAGLIO, WANSACZ, WASHINGTON, WATERS, J. WILLIAMS, G. WRIGHT AND YOUNGBLOOD, JUNE 28, 2002
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES, JUNE 28, 2002
AN ACT 1 Amending the act of December 14, 1992 (P.L.1116, No.145), 2 entitled "An act providing minimum standards, terms and 3 conditions for the licensing of persons who engage in 4 wholesale distributions in interstate commerce of 5 prescription drugs; and making a repeal," further providing 6 for legislative intent, for definitions, for license and 7 renewal requirements, for license application, for storage, 8 handling and record keeping and for additional requirements; 9 and further providing for persons without license and current 10 renewal, for refusal, revocation, suspension or limitation of 11 license, for injunction against unlawful practice, for 12 penalties for unlicensed practice, for disciplinary 13 proceedings, for right to enter and inspect and for rules and 14 regulations. 15 The General Assembly of the Commonwealth of Pennsylvania 16 hereby enacts as follows: 17 Section 1. Section 2 of the act of December 14, 1992 18 (P.L.1116, No.145), known as the Wholesale Prescription Drug 19 Distributors License Act, is amended to read: 20 Section 2. Legislative intent.
1 (a) Findings.--The General Assembly finds and declares as 2 follows: 3 (1) The economic interests of this Commonwealth and of 4 its wholesale prescription drug industry will be promoted by 5 requiring the licensure of persons who engage in the 6 wholesale distribution of prescription drugs in interstate 7 commerce under the Federal Prescription Drug Marketing Act of 8 1987 (Public Law 100-293, 102 Stat. 95). 9 (2) Pennsylvania consumers of prescription drugs will be 10 able to make better informed choices regarding prescription 11 drugs through the publication of an annual report on 12 prescription drugs and their prices. Consumers will also be 13 better assured of safe and effective prescription drug 14 products if the Commonwealth joins with other jurisdictions 15 to require the licensure of all persons who operate 16 facilities from which they engage in the wholesale 17 distribution of prescription drugs. 18 (b) Intent.--It is the intent of the General Assembly that 19 this act satisfy the requirements of the Federal Prescription 20 Drug Marketing Act of 1987. It is the further intent of the 21 General Assembly to promote the safety and effectiveness of 22 prescription drug products by requiring all persons who [operate 23 facilities within this Commonwealth from which they] engage in 24 the wholesale distribution of prescription drugs within this 25 Commonwealth to secure a license and meet minimum quality 26 assurance and operational standards as required by this act. 27 Section 2. The definitions of "department" and "wholesale 28 distributor of prescription drugs" in section 3 of the act are 29 amended and the section is amended by adding definitions to 30 read: 20020H2784B4182 - 2 -
1 Section 3. Definitions. 2 The following words and phrases when used in this act shall 3 have the meanings given to them in this section unless the 4 context clearly indicates otherwise: 5 "Average wholesale price" or "AWP." The cost of a dispensed 6 drug based upon the price published in a national drug pricing 7 system in current use by the Department of Aging as the average 8 wholesale cost of a prescription drug in the most common package 9 size. 10 * * * 11 "Board." The State Board of Pharmacy. 12 * * * 13 ["Department." The Department of Health of the 14 Commonwealth.] 15 * * * 16 "Wholesale distributor of prescription drugs." A person who 17 [operates a facility from which a person] engages in the 18 wholesale distribution of prescription drugs, including, but not 19 limited to, manufacturers, repackers, own-label distributors, 20 private-label distributors or jobbers, warehouses, including 21 manufacturers' and distributors' warehouses, chain drug 22 warehouses and wholesale drug warehouses, independent wholesale 23 drug traders and retail pharmacies that conduct wholesale 24 distributions. 25 Section 3. Sections 4, 5, 6 and 7 of the act are amended to 26 read: 27 Section 4. License and renewal requirements. 28 (a) License.--After September 14, 1992, a person may not 29 operate a facility within this Commonwealth from which a person 30 engages in the wholesale distribution of prescription drugs nor 20020H2784B4182 - 3 -
1 sell, offer for sale nor solicit the purchase of prescription 2 drugs for sale or resale without having secured from the 3 [department] board a license and a current renewal of that 4 license. A person shall obtain a separate license to operate 5 each facility. 6 (a.1) Facilities under same management.--Separate licenses 7 are required for each facility maintained on separate premises, 8 even though they are operated under the same management. 9 Separate licenses are not required for separate buildings on the 10 same grounds. 11 (a.2) Assignment.--A license under this act shall be valid 12 only while in the possession of the individual, firm, 13 partnership, association or corporation to whom it is issued. At 14 no time shall any license granted under this act be subject to 15 sale, assignment or other transfer, voluntary or involuntary, 16 nor shall a license granted under this act be valid for any 17 premises other than that for which it was originally issued. 18 (b) License renewal.--A licensee shall renew its license at 19 the same time it is required to renew the registration issued to 20 it under the act of April 14, 1972 (P.L.233, No.64), known as 21 The Controlled Substance, Drug, Device and Cosmetic Act, or as 22 otherwise required by the [department] board, but in no case 23 shall the period for renewing the license be longer than two 24 years. A form for the license renewal shall be mailed to each 25 licensee on or before the first day of the month in which the 26 current renewal expires. If a completed license renewal is 27 neither postmarked nor received by the [department] board before 28 the first day of the following month, the license shall become 29 invalid. Failure of the licensee to receive the form by mail 30 shall not serve as an excuse for failing to timely renew the 20020H2784B4182 - 4 -
1 license. 2 (c) Fees.--Each person who applies for a license shall 3 submit a fee of $10 with the license application. The license 4 renewal fee shall be $100, unless changed by regulation, and 5 shall be submitted with the completed license renewal form. The 6 late submission of a completed license renewal form shall be 7 accompanied by a late payment fee of $25 for each month or 8 portion thereof that expired after the license renewal was due. 9 The late payment fee shall be in addition to any administrative, 10 civil or criminal penalty that may be imposed against a licensee 11 for continuing to engage in the wholesale distribution of 12 prescription drugs without a current license. Fees under this 13 section may be amended by regulation of the [department] board. 14 Section 5. License application. 15 (a) Information on application.--An applicant for a license 16 shall provide the following information on a license application 17 form approved by the [department] board: 18 [(1) The name, full business address and telephone 19 number of the facility for which the applicant is seeking a 20 license to operate.] 21 (2) The name, full business address and telephone number 22 of the applicant. 23 (3) All trade or business names used by the applicant. 24 (4) Addresses, telephone numbers and the names of 25 contact persons for all facilities used by the [facility for 26 which the license is being sought] applicant for the storage, 27 handling and distribution of prescription drugs. 28 (5) The type of ownership or operation, that is, 29 partnership, corporation or sole proprietorship[, of the 30 facility]. 20020H2784B4182 - 5 -
1 (6) The name of the owner and operator of the [facility] 2 applicant as follows: 3 (i) If a sole proprietorship, the full name of the 4 sole proprietor and the name of the business entity. 5 (ii) If a partnership, the name of each partner and 6 the name of the partnership. 7 (iii) If a corporation, the name and title of each 8 corporate officer and director, the corporate name and 9 the name of the state of incorporation. 10 (iv) If a person other than a sole proprietorship, 11 partnership or corporation, the name of the person and of 12 the individual in charge of that person. 13 (7) Any other information required by the [department] 14 board, including information bearing upon whether there are 15 grounds for refusing to grant the license under section 9. 16 (b) Changes in information.--A change in any information 17 provided in the application shall be submitted to the 18 [department] board within 30 days after the change or as 19 otherwise required by the [department] board. 20 Section 6. Storage, handling and recordkeeping. 21 (a) Minimum requirements.--Licensees and their officers, 22 agents, representatives and employees shall satisfy the minimum 23 requirements of this section for the storage and handling of 24 prescription drugs and for the establishment and maintenance of 25 prescription drug distribution records. 26 (b) [Facility.--The facility] Facilities.--All facilities 27 at which wholesale prescription drugs are stored, warehoused, 28 handled, held, offered, marketed or displayed shall: 29 (1) Be of suitable size and construction to facilitate 30 cleaning, maintenance and proper operations. 20020H2784B4182 - 6 -
1 (2) Have storage areas designed to provide adequate 2 lighting, ventilation, temperature, sanitation, humidity, 3 space, equipment and security conditions. 4 (3) Have a quarantine area for storage of prescription 5 drugs that are outdated, damaged, deteriorated, misbranded or 6 adulterated or that are in immediate or sealed secondary 7 containers that have been opened. 8 (4) Be maintained in a clean and orderly condition. 9 (5) Be free from infestation by insects, rodents, birds 10 or vermin of any kind. 11 (c) Security.--[The facility] Facilities used for wholesale 12 drug distribution shall be secure from unauthorized entry as 13 follows: 14 (1) Access from outside the premises shall be kept to a 15 minimum and be well controlled. 16 (2) The outside perimeter of the premises shall be well 17 lighted. 18 (3) Entry into areas where prescription drugs are held 19 shall be limited to authorized personnel. 20 (4) The facility shall be equipped with an alarm system 21 to detect entry after hours. 22 (5) The facility shall be equipped with a security 23 system that will provide suitable protection against theft 24 and diversion. When appropriate, the security system shall 25 provide protection against theft or diversion that is 26 facilitated or hidden by tampering with computers or 27 electronic records. 28 (d) Storage.--All prescription drugs shall be stored at 29 appropriate temperatures and under appropriate conditions in 30 accordance with requirements, if any, in the labeling of such 20020H2784B4182 - 7 -
1 drugs or with requirements in the current edition of the United 2 States Pharmacopeia/National Formulary (USP/NF). If no storage 3 requirements are established for a prescription drug, the drug 4 may be held at controlled room temperature, as defined in the 5 USP/NF, to help ensure that its identity, strength, quality and 6 purity are not adversely affected. Appropriate manual, 7 electromechanical or electronic temperature and humidity 8 recording equipment, devices or logs shall be utilized to 9 document proper storage of prescription drugs. The recordkeeping 10 requirements under subsection (g) shall be followed for all 11 stored drugs. 12 (e) Examination of materials.--Upon receipt, each outside 13 shipping container shall be visually examined for identity and 14 to prevent the acceptance of contaminated prescription drugs or 15 prescription drugs that are otherwise unfit for distribution. 16 This examination shall be adequate to reveal container damage 17 that would suggest possible contamination or other damage to the 18 contents. Each outgoing shipment shall be carefully inspected 19 for identity of the prescription drug products and to ensure 20 that there is no delivery of prescription drugs that have been 21 damaged in storage or held under improper conditions. The 22 recordkeeping requirements in subsection (g) shall be followed 23 for all incoming and outgoing prescription drugs. 24 (f) Returned, damaged and outdated prescription drugs.-- 25 Prescription drugs that are outdated, damaged, deteriorated, 26 misbranded or adulterated shall be quarantined and physically 27 separated from other prescription drugs until they are destroyed 28 or returned to their supplier. Any prescription drugs whose 29 immediate or sealed outer or sealed secondary containers have 30 been opened or used shall be identified as such and shall be 20020H2784B4182 - 8 -
1 quarantined and physically separated from other prescription 2 drugs until they are either destroyed or returned to the 3 supplier. If the conditions under which a prescription drug has 4 been returned cast doubt on the drug's safety, identity, 5 strength, quality or purity, the drug shall be destroyed or 6 returned to the supplier unless examination, testing or other 7 investigation proves that the drug meets appropriate standards 8 of safety, identity, strength, quality or purity. In determining 9 whether the conditions under which a drug has been returned cast 10 doubt on the drug's safety, identity, strength, quality or 11 purity, the licensee shall consider, among other things, the 12 conditions under which the drug has been held, stored or shipped 13 before or during its return and the condition of the drug and 14 its container, carton or labeling as a result of storage or 15 shipping. The recordkeeping requirements under subsection (g) 16 shall be followed for all outdated, damaged, deteriorated, 17 misbranded or adulterated prescription drugs. 18 (g) Recordkeeping.-- 19 (1) The licensee shall establish and maintain 20 inventories and records of all transactions regarding the 21 receipt and distribution or other disposition of prescription 22 drugs. These records shall include the following information: 23 (i) The source of the drugs, including the name and 24 principal address of the seller or transferor, and the 25 address of the location from which the drugs were 26 shipped. 27 (ii) The identity and quantity of the drugs received 28 and distributed or disposed. 29 (iii) The dates of receipt and distribution or other 30 disposition of the drugs. 20020H2784B4182 - 9 -
1 (2) Inventories and records shall be made available for 2 inspection and photocopying by authorized Federal, State or 3 local law enforcement agency officials for a period of two 4 years following disposition of the drugs. 5 (3) Records described in this section that are kept at 6 the [facility] inspection site or that can be immediately 7 retrieved by computer or other electronic means shall be 8 readily available for authorized inspection during the 9 retention period. Records kept at a central location apart 10 from the [facility] inspection site and not electronically 11 retrievable shall be made available for inspection within two 12 working days of an authorized request by an authorized 13 official of a Federal, State or local law enforcement agency. 14 (h) Written policies and procedures.--The licensee shall 15 establish, maintain and adhere to written policies and 16 procedures, which shall be followed for the receipt, security, 17 storage, inventory and distribution of prescription drugs, 18 including policies and procedures for identifying, recording and 19 reporting losses or thefts and for correcting all errors and 20 inaccuracies in inventories. The licensee shall include in its 21 written policies and procedures the following: 22 (1) A procedure whereby the oldest approved stock of a 23 prescription drug product is distributed first. The procedure 24 may permit deviation from this requirement if the deviation 25 is temporary and appropriate. 26 (2) A procedure to be followed for handling recalls and 27 withdrawals of prescription drugs. The procedure shall be 28 adequate to deal with recalls and withdrawals due to any of 29 the following: 30 (i) Any action initiated at the request of the 20020H2784B4182 - 10 -
1 [department] board, the United States Food and Drug
2 Administration or other Federal, State or local law
3 enforcement or other government agency.
4 (ii) Any voluntary action by the manufacturer to
5 remove defective or potentially defective drugs from the
6 market.
7 (iii) Any action undertaken to promote public health
8 and safety by replacing existing merchandise with an
9 improved product or new package design.
10 (3) A procedure to ensure that the licensee prepares
11 for, protects against and handles any crisis that affects
12 security or operation of the facility in the event of strike,
13 fire, flood or other natural disaster or other situations of
14 national, State or local emergency.
15 (4) A procedure to ensure that any outdated prescription
16 drugs shall be segregated from other drugs and either
17 returned to the manufacturer or destroyed. This procedure
18 shall provide for written documentation of the disposition of
19 outdated prescription drugs. This documentation shall be
20 maintained for two years after disposition of the outdated
21 drugs.
22 (i) Responsible persons.--The licensee shall:
23 (1) Establish and maintain lists of officers, directors,
24 managers and other persons in charge of wholesale drug
25 distribution, storage and handling, including a description
26 of their duties and a summary of their qualifications.
27 (2) Ensure that all personnel involved in the wholesale
28 distribution of prescription drugs have an adequate
29 combination of education, training and experience to perform
30 their duties in a manner that ensures compliance with this
20020H2784B4182 - 11 -
1 act and applicable regulations. 2 (j) Salvaging and reprocessing.--The licensee shall comply 3 with any applicable Federal, State or local law or regulation 4 that relates to prescription drug salvaging or reprocessing. 5 (k) Compliance with Federal, State and local law.--The 6 licensee shall operate in compliance with applicable Federal, 7 State and local laws and regulations. The licensee shall permit 8 the [department] board and authorized Federal, State and local 9 law enforcement officials to enter and inspect its premises and 10 delivery vehicles and to audit its records and written operating 11 procedures, at reasonable times and in a reasonable manner, to 12 the extent authorized by law. The licensee that deals in 13 controlled substances shall register with the Drug Enforcement 14 Administration (DEA) and shall comply with all applicable DEA, 15 State and local regulations. 16 Section 7. Additional requirements. 17 The [department] board may, by regulation, establish 18 additional requirements for the distribution, storage and 19 handling of prescription drugs and for the establishment and 20 maintenance of prescription drug distribution records. The 21 [department] board may also, by regulation, modify the standards 22 in section 6 if modification of those standards is necessary to 23 satisfy minimum requirements contained in the United States 24 Department of Health and Human Services regulations setting 25 forth guidelines for state licensing of persons who engage in 26 the wholesale distribution of prescription drugs. 27 Section 4. The act is amended by adding a section to read: 28 Section 7.1. Annual report. 29 Licensees must submit an annual report to the board that 30 includes, but is not limited to, the following information: 20020H2784B4182 - 12 -
1 (1) All the prescription drugs purchased by the 2 licensee. 3 (2) The sellers for each purchased prescription drug. 4 (3) The AWP for each prescription drug purchased by the 5 licensee. 6 (4) The price paid by the licensee for each of the 7 prescription drugs. 8 (5) The purchase price paid for the prescription drugs 9 by each purchaser. 10 Section 5. Sections 8, 9, 10, 11, 12, 13 and 14 of the act 11 are amended to read: 12 Section 8. Persons without license and current renewal. 13 Any person who does not have a license and current renewal 14 and who [operates a facility in this Commonwealth through which 15 it] engages in the wholesale distribution of prescription drugs 16 in this Commonwealth shall comply with the requirements of 17 sections 6 and 7, notwithstanding the person's failure to secure 18 a license or a current renewal. 19 Section 9. Refusal, revocation, suspension or limitation of 20 license. 21 (a) Reasons for discipline.--The [department] board may 22 refuse to issue or may suspend, revoke or limit any and all 23 licenses held by a licensee or fine a licensee for any of the 24 following reasons: 25 (1) Failing to demonstrate the qualifications for a 26 license. 27 (2) Violating any provision of this act. 28 (3) Being convicted of a felony or of a crime relating 29 to drug samples, wholesale or retail drug distribution or any 30 other law relating to the handling of drugs. 20020H2784B4182 - 13 -
1 (4) Making misleading, deceptive, untrue or fraudulent 2 representations in obtaining or seeking to obtain a license 3 or registration. 4 (5) Having a license or equivalent authorization 5 currently or previously held for the manufacture or 6 distribution of any drugs denied, suspended, revoked, 7 restricted or subjected to any other sanction for 8 disciplinary reasons by a Federal, State or local government 9 agency. 10 (6) Violating a regulation promulgated by the 11 [department] board or violating a lawful order of the 12 [department] board entered in a disciplinary proceeding. 13 (7) Engaging in conduct which is harmful to the public 14 health, safety or welfare. 15 (b) Notice of deficiencies.--Whenever the [department] board 16 shall, upon inspection, investigation or complaint, 17 preliminarily find a violation of this act or the regulations 18 promulgated thereunder, it may, in lieu of proceeding with 19 disciplinary action, issue a written notice to the licensee 20 specifying the violation and directing that the violation be 21 corrected and that a written plan of correction be filed with it 22 by a specified date. The licensee shall respond as directed and 23 shall either deny the alleged violation or provide a plan of 24 correction by the date specified in the notice. If the plan of 25 correction is accepted by the [department] board, the licensee 26 shall implement it as directed by the [department] board. 27 (c) Reinstatement.--A person whose license has been revoked 28 may not apply for reinstatement until five years have expired 29 during which the license was revoked. 30 Section 10. Injunction against unlawful practice. 20020H2784B4182 - 14 -
1 The [department] board may maintain an action for an 2 injunction to restrain a person from [operating a facility 3 within this Commonwealth through which it engages] engaging in 4 the wholesale distribution of prescription drugs when that 5 person does not have a license and a current renewal of that 6 license as required by this act. To secure an injunction, it 7 shall not be necessary to show that any person has been injured 8 by the actions complained of. The remedy of injunction is an 9 addition to any other administrative, civil or criminal remedy 10 authorized. 11 Section 11. Penalties for unlicensed practice. 12 (a) Civil penalty.--The [department] board shall have 13 authority to assess a civil penalty of up to [$500] $1,000 for 14 each day that a person engages in the wholesale distribution of 15 prescription drugs without a license as required by this act. 16 (b) Criminal penalty.--A person who engages in the wholesale 17 distribution of prescription drugs without a license as required 18 by this act commits a misdemeanor of the third degree and shall, 19 upon conviction, be sentenced to pay a fine of not more than 20 $2,000 and to imprisonment for not more than [six] 12 months, or 21 both, for the first violation. On the second and each subsequent 22 conviction, the person shall be sentenced to pay a fine of not 23 less than $5,000 nor more than $20,000 or to imprisonment for 24 not less than six months nor more than one year, or both. 25 Section 12. Disciplinary proceedings. 26 All actions of the [department] board taken under sections 27 9(a) and 11(a) shall be subject to the right of notice, hearing 28 and adjudication and the right of appeal therefrom in accordance 29 with the provisions of 2 Pa.C.S. (relating to administrative law 30 and procedure). 20020H2784B4182 - 15 -
1 Section 13. Right to enter and inspect. 2 For the purpose of determining the suitability of an 3 applicant for licensure and for the purpose of determining 4 compliance with the provisions of this act and applicable 5 regulations of any person licensed or requiring a license under 6 this act, the [department] board by its authorized agent may 7 enter, visit and inspect the building, grounds and equipment and 8 supplies of any facility in this Commonwealth engaging or 9 appearing to engage in the wholesale distribution of 10 prescription drugs, shall have full and free access to the 11 records of the facility and to the employees therein and their 12 records and shall have full opportunity to interview employees 13 and inspect such premises and records of the facility. Upon 14 entering the facility, the authorized agents shall properly 15 identify themselves to the individual on the premises then in 16 charge of the facility. 17 Section 14. Rules and regulations. 18 The [department] board may promulgate rules and regulations 19 to administer and enforce this act. 20 Section 6. Rules and regulations of the Department of Health 21 under the act in effect on the effective date of this act shall 22 remain in effect thereafter until repealed or amended by the 23 State Board of Pharmacy, provided that the board shall 24 immediately initiate the repeal or amendment of any rule or 25 regulation which is inconsistent with the provisions of this 26 act. Fees of the Department of Health under the act and in 27 effect on the effective date of this act shall remain in effect 28 thereafter until repealed or amended by the State Board of 29 Pharmacy. 30 Section 7. Any person who holds a valid license issued by 20020H2784B4182 - 16 -
1 the Department of Health under the act prior to the effective 2 date of this act shall, on and after the effective date of this 3 act, be deemed licensed by the State Board of Pharmacy. 4 Section 8. All records, papers and other documents in 5 possession, custody and control of the Department of Health in 6 connection with the functions of the department transferred by 7 this act shall be transferred and delivered to the possession, 8 custody and control of the State Board of Pharmacy. 9 Section 9. This act shall take effect in 60 days. B25L35BIL/20020H2784B4182 - 17 -