Pharmaspective

Monthly Controlled Substances Reporting for Wholesale Distributors and Manufacturers Licensed in Florida

Effective July 2011, Florida House Bill 7095 requires resident and non-resident distributors/manufacturers engaged in wholesale distribution of controlled substances to submit monthly reports.  The reports must include information on receipts and distributions of controlled substances listed in Schedules II-V.  Companies must submit reports to the Florida Department of Business and Professional Regulations ("Department").  

 

According to the Department, the reporting requirement applies to the following wholesale distributor permit types issued in the state:

 

- Prescription Drug Wholesale Distributor;

- Out-of-State Prescription Drug Wholesale Distributor;

- Retail Pharmacy Drug Wholesale Distributor;

- Prescription Drug Manufacturer;

- Non-resident Prescription Drug Manufacturer;

- Third Party Logistics Providers - operating on behalf of a drug manufacturer; and

- Prescription Drug Repackagers.

 

Applicable companies must submit such reports electronically by the 20th day of each month, listing receipts and distributions made in the previous month.  Resident companies must report transactions involving controlled substances, while non-resident companies must report all controlled substances distributed to entities in Florida. The Department began accepting reports in October 2011.

 

For more information, please click on the following link: https://www.myfloridalicense.com/CSR/login.aspx

 

Maryland Device Manufacturer Licensing – Form Over Substance

“The way to get started is to quit talking and begin doing.” - Walt Disney

 There are certain fundamental truths within state regulatory frameworks.  One such truth is that some statutes or regulatory requirements are inexplicable.  These requirements leave you scratching your head muttering to yourself “what were they thinking?”  The answer to that rhetorical question is that sometimes they weren’t thinking.  State legislative bodies make mistakes.  A statute or regulation generally makes sense to those who sponsor and support it.  It often isn’t until companies attempt to comply that the error or omission comes to light.

 It is my humble opinion that the Maryland legislature has made an honest error that will have a profound impact on the device industry.  Maryland has two different applications for distribution licenses.  As authorized by state law, FDA licensed manufacturers can use the abbreviated form.  Wholesalers, on the other hand, are required to use the long form which adds the extra requirements of fingerprinting, the posting of a surety bond or other form of security, and depending on the state of residence, obtaining certification from the National Association of Boards of Pharmacy ("NABP") as a Verified Accredited Wholesale Distributor (“VAWD”), a lengthy and costly process.

 So where is the error you ask?  A device manufacturer, unlike a drug manufacturer,  must file the long form application, post surety and may be required to obtain VAWD certification before they can be properly licensed to distribute prescription medical devices into the State of Maryland.  How can this be?  I believe that it is merely an oversight by the drafters of the Maryland statute.  The Maryland Statute provides that “the information and qualification requirements for obtaining a permit under this subtitle, beyond that required by federal law, do not apply to a manufacturer who distributes its own prescription drugs.”  Md. Code Ann., tit. 10, subtit. 34, 22 § 12-6c-03.   As prescription devices are a separately defined term, the State Board of Pharmacy has determined that it can apply the relaxed requirements only to prescription drug manufacturers and not to prescription device manufacturers.

 There is no legitimate legislative or public policy purpose in holding an FDA registered device manufacturer to a higher standard than the manufacturer of prescription drugs.  As the state licensing laws are in place to ensure the integrity of the drug supply and prevent diversion and abuse, less stringent requirements are often imposed on device manufacturers.

 When confronted with such an apparent injustice there are two paths you can follow.  The first is to begrudgingly comply and lament the injustice that has befallen you.  The second is to try to right the wrong.  If you have a governmental affairs department, call them.  If you are a member of AdvaMed, call them.  If you work with outside lobbyists, call them.  If you have access to none of those resources, then call the Maryland Governor’s office.  The fix is simple.  The addition of three simple words “or prescription devices” will bring the statute in line with its obvious intent.  Take action.

Frank Fazio

Stealth Drugs; The Necessity of Drug Distribution Permits for Devices.

 
It is generally known that a prescription drug manufacturer must obtain state licenses in order to legally distribute product.  The number of licenses required varies depending upon the method of distribution - a facility that physically ships product requires licenses in more jurisdictions than a manufacturer that uses a third-party logistics provider (“3PL”) to ship its products.  But what about devices?  What device companies are beginning to realize is that they too have licensing requirements in numerous states.  The state statutes and regulations do not, however, always make this clear and several jurisdictions have stealth requirements for device manufacturers that can elude even a well trained eye. 

Kentucky is one such stealth device jurisdiction.  A cursory reading of the Kentucky statute would give device manufacturers reason for celebration – “A wholesale distributor shall be licensed by the board under this section prior to engaging in the wholesale distribution of prescription drugs in the Commonwealth.”  Clearly the device company can skip over Kentucky and move on to the next state.  Or can it?  Let’s turn next to the definition of “wholesale distributor.”  Surely this will provide some additional assurances.  Kentucky defines a wholesale distributor as “an entity engaged in the wholesale distribution of prescription drugs.”  “Even better” you might think.  Surely the term “prescription drug” is clear and unambiguous.  Everyone knows that a device is not a drug.

Let’s check and see where that leads us.  The definition of drug includes “Articles, other than food, intended to affect the structure or function of the body of man or other animals.”  Looking further, we do not see the familiar language that it excludes devices.  The breadth of this definition might raise some concern for a device company.  But wait, the wholesaler licensing requirements specifically pertain to prescription drugs.  Under Kentucky law a “prescription drug” is any “drug” required by federal law to be labeled “Caution, federal law prohibits dispensing without a prescription.”  It also includes any “drug” required to be labeled “Rx Only” or “Rx” or which is “to be dispensed only pursuant to a prescription drug order or is restricted to use by practitioners.”

Looking back at a prescription device, it is an “article intended to affect the structure or function of the body of man” and it is labeled either Rx Only or is restricted to dispensing pursuant to prescription to use by a practitioner, right?  The Kentucky Board of Pharmacy has, in fact, interpreted the above provisions in determining that a device manufacturer or distributor does require a license notwithstanding the fact that the word “device” is not used in any of the applicable statutes or regulations that support that determination. 

Other states have similar requirements.  A device manufacturer  or distributor that ships its own product requires just under 20 state licenses whereas a device manufacturer that utilizes a 3PL requires just under 15 state licenses.  As prosecutors and regulators turn their attention to the device industry, state licensing is just one of many areas that device companies may need to address.

Maryland Board of Pharmacy Stages a Limited Retreat From Its Definition of “Manufacturer” For Licensing Purposes

  
 By: Frank Fazio

Any manufacturer or private label distributor that utilizes a contract manufacturing organization (CMO) can share horror stories about the year-end renewal of the Maryland distribution license.   Prior to the December 31, 2010 renewal deadline, the board determined that only facilities that physically manufactured product and had an FDA Establishment Registration could utilize the abbreviated form for manufacturers.  Any entity that utilized a CMO would now have to complete the more onerous wholesaler application.  Suddenly, NDA/ANDA holders and private label distributors had to scramble to obtain fingerprints and background checks of senior corporate officers while attempting to secure surety bonds.  If they were not located in one of a handful of specified states they were told they needed VAWD certification from the National Association of Boards of Pharmacy (“NABP”), notwithstanding the fact that the NABP will not certify the corporate offices of a company that does not store or warehouse drugs.

 We had numerous communications with the board over the past six months in an effort to reconcile the inconsistencies in their position.  The board’s FAQs attempted to explain who could file the manufacturer application and defined manufacturer  to include preparing, propagating and labeling.  Contrary to its adoption of the customary definition, they then restricted use of the short form to only those entities that physically manufacture.

Virtual manufacturers, whether private label, or the NDA/ANDA holder whose name and NDC number are on the product label are both the labeler and propagator of those products.  Although Maryland does not define propagate, Florida, which arguably has the most stringent licensing requirements, defines propagation to specifically include private label distributors.

In a communication from the board dated June 21, 2011, the Maryland board relented and potentially loosened the requirements for companies utilizing a CMO.  The board noted that virtual, own-label, and private label manufacturers may again qualify for the short form manufacturer application.  A company without an FDA establishment registration should be prepared to provide both proof that it owns the NDC number for the products  and a copy of the CMO contract.  It appears that decisions will be made by the board on a case-by-case basis.

Although Maryland’s new position is qualified, we believe that many of the companies that had to obtain surety and fingerprints for this renewal period will likely return to the prior short form application for the next renewal period.  Those tasked with managing renewals can breathe a sigh of relief knowing that they won’t have to haul  the company president down to his local law enforcement agency for fingerprints in the middle of the Holiday season and will not have to renew surety bonds or letters of credit.  We expect that the Maryland board will either revise their regulations to capture the change, or post clarifying information on their web site.

Will the “New Normal” Affect the Life Sciences Industry?

The recent economic downturn impacted everyone from Wall Street to Main Street, including your local, state, and federal government.  It’s in the news on a daily basis – every level of government has budget concerns.  Elected officials are trying to close billion dollar budget gaps without raising taxes by making painful cuts.  This week, New Jersey Governor Chris Christie described the result of this process as the “new normal.”  How could this “new normal” affect the life sciences industry across the country?

One would assume that public officials are looking not only at cuts that can be made, but also at new ways to generate revenue.  This might allow them to save jobs, boost their approval ratings – and help improve their budgets’ bottom lines.  As members of a deep-pocketed industry, life sciences companies should be prepared to subsidize these efforts – or, perhaps more accurately put, continue to subsidize these efforts.

The government’s regulation and oversight of the life sciences industry generates a lot of money for governments.  Investigations and lawsuits often result in very high settlements.  Just over the past two years, Pfizer settled a suit for $2.3 billion; Eli Lilly received a $1.4 billion fine; Allergan settled a suit for $600 million; AstraZeneca received a penalty of $520 million; Novartis settled a suit for $422.5 million; Glaxo was ordered to pay $400 million; Forest Labs settled a suit for $313 million; Elan settled for approximately $203.5 million; and Johnson & Johnson received a penalty of $81 million, and the list goes on.  Additionally, PDUFA fees can run in the millions.  Licensing requirements force companies to pay annual fees.  Companies face possible penalties for failing to report or under-reporting their aggregate spend data in various states.  Violations of countless other laws and regulations at the national, state and even local level also trigger potential monetary penalties.

If there is continued pressure to balance budgets without raising taxes, how will government bridge the gap?  Will government decide to raise these fees and monetary penalties?  Will there be more inspections at the state and federal level?  Will there be more vigilant oversight of companies’ advertising and promotional activities?  Stay tuned.