South Carolina General Assembly
116th Session, 2005-2006

Download This Bill in Microsoft Word format

Indicates Matter Stricken
Indicates New Matter

H. 4277

STATUS INFORMATION

General Bill
Sponsors: Rep. Harrison
Document Path: l:\council\bills\nbd\11891ac05.doc

Introduced in the House on June 2, 2005
Currently residing in the House Committee on Medical, Military, Public and Municipal Affairs

Summary: Wholesale Licensure and Prescription Medication Integrity Act

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
    6/2/2005  House   Introduced and read first time HJ-63
    6/2/2005  House   Referred to Committee on Medical, Military, Public and 
                        Municipal Affairs HJ-64

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

6/2/2005

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A BILL

TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 3 TO CHAPTER 43, TITLE 40 TO ENACT THE "WHOLESALE LICENSURE AND PRESCRIPTION MEDICATION INTEGRITY ACT" SO AS TO PROVIDE FOR THE LICENSURE AND REGULATION OF RESIDENT AND NONRESIDENT WHOLESALE DISTRIBUTORS OF PRESCRIPTION DRUGS IN THIS STATE; TO PROVIDE CRITERIA FOR LICENSURE, INCLUDING CRIMINAL RECORD CHECKS AND A ONE HUNDRED THOUSAND DOLLAR BOND; TO ESTABLISH PROCEDURES FOR DISTRIBUTING PRESCRIPTION DRUGS, FOR RECEIVING RETURNS AND EXCHANGES, AND FOR MAINTAINING INFORMATION ON EACH SALE IN THE CHAIN OF DISTRIBUTION OF THE DRUG; AND TO PROVIDE CRIMINAL PENALTIES FOR VIOLATIONS; AND TO DIRECT THE STATE BOARD OF PHARMACY TO CONDUCT A STUDY TO DETERMINE AN IMPLEMENTATION DATE FOR REQUIRING ELECTRONIC FILES ON SALES IN THE CHAIN OF DISTRIBUTION OF DRUGS; AND TO DESIGNATE SECTIONS 40-43-10 THROUGH 40-43-170 AS ARTICLE 1 OF CHAPTER 43, TITLE 40, ENTITLED "PHARMACY PRACTICE ACT".

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Chapter 43, Title 40 of the 1976 Code is amended by adding:

"Article 3

Licensure and Regulation of Wholesale Distributors

of Prescription Medication

Section 40-43-310.    This article may be cited as the 'Wholesale Licensure and Prescription Medication Integrity Act'.

Section 40-43-320.    As used in this article:

(1)    'Authentication' means to affirmatively verify before any distribution of a prescription drug occurs that each transaction listed on the pedigree has occurred.

(2)    'Board' means the State Board of Pharmacy.

(3)    'Chain pharmacy warehouse' means a physical location for drugs and/or devices that acts as a central warehouse and performs intracompany sales or transfers of the drugs or devices to a group of chain pharmacies that have the same common ownership and control.

(4)    'Facility' means a facility of a wholesale distributor where prescription drugs are stored, handled, repackaged, or offered for sale.

(5)    'Normal distribution channel' means a chain of custody for a medication that goes from a manufacturer to a wholesale distributor to a pharmacy or a chain pharmacy warehouse to a patient.

(6)    'Pedigree' means a document or electronic file containing information that records each distribution of any given prescription drug within the distribution channel.

(7)    'Prescription drug' means any drug, including any biological product, except for blood and blood components intended for transfusion or biological products that are also medical devices, required by Federal law, including Federal 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.

(8)    'Repackage' means 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.

(9)    'Repackager' means a person who repackages.

(10)    'Wholesale distributor' means anyone engaged in the wholesale distribution of prescription drugs, including, but not limited to, repackagers, own-label distributors, private-label distributors, jobbers, brokers, warehouses, including manufacturers' and distributors' warehouses, and drug wholesalers or distributors, independent wholesale drug traders, and retail pharmacies that conduct wholesale distribution, and chain pharmacy warehouses that conduct wholesale distribution.

(11)    'Wholesale distribution' does not include:

(a)    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;

(b)    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;

(c)    the distribution of prescription drug samples by manufacturers' representatives;

(d)    drug returns, when conducted by a hospital, health care entity, retail pharmacy or charitable institution in accordance with 21 C.F.R. Section 203.23;

(e)    the sale of minimal quantities of prescription drugs by retail pharmacies to licensed practitioners for office use;

(f)    retail pharmacies' delivery of prescription drugs to a patient or patient's agent pursuant to the lawful order of a licensed practitioner; or

(g)    the sale, transfer, merger or consolidation of all or part of the business of a pharmacy or pharmacies from or with another pharmacy or pharmacies, whether accomplished as a purchase and sale of stock or business assets;

(12)    'Wholesaler' means a person engaged in the wholesale distribution of prescription drugs.

Section    40-43-330.    (A)    Every resident wholesale distributor in this State who engages in the wholesale distribution of prescription drugs must be licensed by the State Board of Pharmacy, and every nonresident wholesale distributor that ships prescription drugs into this State must be licensed in accordance with this article before engaging in wholesale distributions of wholesale prescription drugs. The board shall exempt manufacturers from any licensing and other requirements of this section, to the extent not required by federal law or regulation, unless particular requirements are considered necessary and appropriate following the promulgation of regulations.

(B)    The board 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 including, but not limited to, a partnership, corporation, or sole proprietorship;

(5)    the names of the owners and operators of the licensee, or both, including:

(a)    if a person, the name of the person;

(b)    if a partnership, the name of each partner and the name of the partnership;

(c)    if a corporation, the name and title of each corporate officer and director, the corporate names, and the name of the state of incorporation; and

(d)    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 which 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 item (8) for such person;

(8)    each person required by item (7) to provide a personal information statement and fingerprints shall provide the following information to the State:

(a)    the person's places of residence for the past seven years;

(b)    the person's date and place of birth;

(c)    the person's occupations, positions of employment, and offices held during the past seven years;

(d)    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;

(e)    whether the person has been, during the past seven years, the subject of any proceeding for the revocation of any license or any criminal violation and, if so, the nature of the proceeding and the disposition of the proceeding;

(f)    whether, during the past seven years, the person has been enjoined, either temporarily or permanently, by a court of competent jurisdiction from violating any federal or state law regulating the possession, control, or distribution of prescription drugs or criminal violations, together with details concerning any such event;

(g)    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;

(h)    a description of any misdemeanor or felony criminal offense of which the person, as an adult, was found guilty, regardless of whether the person was convicted or 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 shall, within fifteen days after the disposition of the appeal, submit to the board a copy of the final written order of disposition; and

(i)     a photograph of the person taken in the previous thirty days.

(C)    The information required pursuant to subsection (B) must be provided under oath.

(D)    The board must not issue a wholesale distributor license to an applicant, unless the board:

(1)    conducts a physical inspection of the facility at the address provided by the applicant as required in subsection (B)(1); and

(2)    determines that the designated representative meets the following qualifications:

(a)    is at least twenty one years of age;

(b)    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;

(c)    has received a score of seventy-five percent or more on an examination given by the board regarding federal and state laws governing wholesale distribution of prescription drugs;

(d)    is employed by the applicant full time in a managerial level position;

(e)    is actively involved in and aware of the actual daily operation of the wholesale distributor;

(f)    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;

(g)    is serving in the capacity of a designated representative for only one applicant at a time;

(h)    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; and

(i)     does not have any felony convictions under federal, state, or local laws.

(E)    The board shall submit the fingerprints provided by a person with a license application to the State Law Enforcement Division 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)(1)    The board shall require every wholesale distributor applying for a license to submit a bond of at least one hundred thousand dollars, or other equivalent means of security acceptable to the board which may include, but is not limited to, an irrevocable letter of credit or a deposit in a trust account or financial institution, payable to a fund established pursuant to subsection (F)(2). The purpose of the bond is to secure payment of any fines or penalties imposed by the board and any fees and costs incurred by the State regarding the license, which are authorized under State law and which the licensee fails to pay thirty days after the fines, penalties, or costs become final. The board 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 in the State.

(2)    There is established a fund in the Office of the Treasurer, separate and distinct from the general fund, into which must be deposited wholesale distributor bonds required to be paid pursuant to subsection (F).

(G)    If a wholesale distributor distributes prescription drugs from more than one facility, the wholesale distributor shall obtain a license for each facility.

(H)    Every calendar year, the board shall send to each wholesale distributor licensed under this section a form setting forth the information that the wholesale distributor provided pursuant to subsection (B). Within thirty days of receiving the form, the wholesale distributor shall identify and state under oath to the board all changes or corrections to the information that was provided pursuant to subsection (B). Changes in, or corrections to, any information in subsection (B) must be submitted to the board as required by the board. The board may suspend or revoke the license of a wholesale distributor if the board determines that the wholesale distributor no longer qualifies for the license issued under this section.

(I)    The designated representative identified pursuant to subsection (B)(7) must complete continuing education programs as required by the board regarding federal and state laws governing wholesale distribution of prescription drugs.

(J)    Information provided pursuant to this section must not be disclosed to any person or entity other than the board

Section    40-43-340.    (A)    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, or both, and these returns or exchanges are not subject to the pedigree requirement of Section 40-43-350. Wholesale distributors must be held accountable for policing their returns process and ensuring that their operations are secure and do not permit the entry of adulterated and counterfeit product.

(B)    A manufacturer or wholesale distributor shall furnish prescription drugs only to a person licensed by the appropriate state licensing authorities. 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 appropriate state licensing authority.

(C)    Prescription drugs furnished by a manufacturer or wholesale distributor must be delivered only to the premises listed on the license; however 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; and

(2)    this method of receipt is employed only to meet the immediate needs of a particular patient of the authorized person.

(D)    Prescription drugs may be furnished to a hospital pharmacy receiving area if a pharmacist or authorized receiving personnel signs, at the time of delivery, a receipt showing the type and quantity of the prescription drug received. Any discrepancy between receipt and the type and quantity of the prescription drug actually received must be reported to the delivering manufacturer or wholesale distributor by the next business day after the delivery to the pharmacy receiving area.

(E)    A manufacturer or wholesale distributor may not accept payment for, or allow the use of, a person or 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 must bear the name of the licensee.

Section 40-43-350.    (A)    A person who is engaged in wholesale distribution of prescription drugs shall establish and maintain inventories and records of all transactions regarding the receipt and distribution or other disposition of the prescription drugs. These records shall include pedigrees for all prescription drugs that leave the normal distribution channel.

(B)    A 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, 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)    The pedigree must:

(1)    Include all necessary identifying information concerning each sale in the chain of distribution of the product from the manufacturer, 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 a minimum, the necessary chain of distribution information must include:

(a)    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;

(b)    name and address of each location from which the product was shipped, if different from the owner's;

(c)    transaction dates; and

(d)    certification that each recipient has authenticated the pedigree.

(2)    At minimum, the pedigree also must include the:

(a)    name of the prescription drug;

(b)    dosage form and strength of the prescription drug;

(c)    size of the container;

(d)    number of containers;

(e)    lot number of the prescription drug; and

(f)    name of the manufacturer of the finished dosage form.

(D)    Each pedigree or electronic file must 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 within two business days upon a request of an authorized officer of the law.

(E)    The board shall promulgate regulations and develop and a form relating to the requirements of this section no later than ninety days after the effective date of this article.

(F)    The requirements of this section apply to retail pharmacies and chain pharmacy warehouses only if the pharmacy or chain pharmacy warehouse engages in wholesale distribution of prescription drugs.

Section 40-43-360.    (A)    If the Board of Pharmacy finds that there is a reasonable probability that a wholesale distributor has violated a provision of this article or falsified a pedigree or sold, distributed, transferred, manufactured, repackaged, handled, or held a counterfeit prescription drug intended for human use, and the prescription drug could cause serious, adverse health consequences or death, and other procedures would result in unreasonable delay, the board shall issue an order requiring the appropriate person, including the distributors or retailers of the drug, to immediately cease distribution of the drug.

(B)    An order under subsection (A) must provide the person subject to the order with an opportunity for an informal hearing, to be held no later than ten days after the date of the issuance of the order, on the actions required by the order. If, after providing an opportunity for such a hearing, the board determines that inadequate grounds exist to support the actions required by the order, the board shall vacate the order.

Section 40-43-370.    (A)    It is unlawful for a person to perform or cause the performance of or aid and abet any of the following acts:

(1)    failure to obtain a license in accordance with this article or operating without a valid license when a license is required by this article;

(2)    purchasing or otherwise receiving a prescription drug from a pharmacy, unless the requirements in Section 40-43-340(A) are satisfied;

(3)    the 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 Section 40-43-340(B);

(4)    failure to deliver prescription drugs to specified premises, as required by Section 40-43-340(D);

(5)    accepting payment or credit for the sale of prescription drugs in violation of Section 40-43-340(E);

(6)    failure to maintain or provide pedigrees as required by this article;

(7)    failure to obtain, pass, or authenticate a pedigree, as required by this article;

(8)    providing the board or any representatives of the board or any other representatives of the State or any federal official with false or fraudulent records or making false or fraudulent statements regarding any matter within the provisions of this article;

(9)    obtaining or attempting to obtain a prescription drug by fraud, deceit, misrepresentation, or engaging in fraud, deceit, or misrepresentation 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 under federal law by the United States Food and Drug Administration, the manufacture, repacking, 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 under federal law by the United States Food and Drug Administration, 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 otherwise; or

(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)    The acts prohibited by subsection (A) do not include 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 40-43-380.(A)    If a person engages in the wholesale distribution of prescription drugs in violation of this article, the person, upon conviction, may be imprisoned for not more than fifteen years or fined not more than fifty thousand dollars, or both.

(B)    If a person knowingly engages in wholesale distribution of prescription drugs in violation of this article, the person must be imprisoned as determined by the court or fined not more than five hundred thousand dollars, or both."

SECTION    2.    The State Board of Pharmacy shall conduct a study to be completed by January 1, 2007, that must include consultation with manufacturers, distributors, and pharmacies responsible for the sale and distribution of prescription drug products in the State. Based on the results of the study the board shall determine a mandated implementation date for electronic pedigrees, as defined in Section 40-43-320 of the 1976 Code, as added by Section 1 of this act. The implementation date for the mandated electronic pedigree must be no sooner than December 31, 2007.

SECTION    3.    Sections 40-43-10 through 40-43-180 of the 1976 Code are designated as Article 1 of Chapter 43, Title 40, entitled "Pharmacy Practice Act".

SECTION    4.    This act takes effect January 1, 2007.

----XX----

This web page was last updated on Friday, December 4, 2009 at 3:48 P.M.