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:
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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
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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
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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].
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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.
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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
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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
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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.
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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
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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
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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:
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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.
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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.
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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).
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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
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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.
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