SB 3896 — WHOLESALE DRUG DISTRIBUTORS

SB3896 EngrossedEnrolled LRB104 20398 AAS 33859 b AN ACT concerning regulation.

An ongoing relationship is deemed to exist between a wholesale distributor or virtual wholesale distributor and a SB3896 EngrossedEnrolled - 2 - LRB104 20398 AAS 33859 b manufacturer when the wholesale distributor or virtual wholesale distributor, including any affiliated group of the wholesale distributor or virtual wholesale distributor, as defined in Section 1504 of the Internal Revenue Code, complies with the following:

SB3896 EngrossedEnrolled - 3 - LRB104 20398 AAS 33859 b "Co-licensed partner or product" means an instance where one or more parties have the right to engage in the manufacturing or marketing of a prescription drug, consistent with the FDA's implementation of the Prescription Drug Marketing Act.

"Drop shipment" means the sale of a prescription drug to a wholesale distributor or virtual wholesale distributor by the manufacturer of the prescription drug or that manufacturer's co-licensed product partner, that manufacturer's third-party logistics provider, or that manufacturer's exclusive distributor or by an authorized distributor of record that purchased the product directly from the manufacturer or one of these entities whereby the wholesale distributor, virtual wholesale distributor, or chain pharmacy warehouse takes title but not physical possession of such prescription drug and the wholesale distributor or virtual wholesale distributor invoices the pharmacy, chain pharmacy warehouse, or other person authorized by law to dispense or administer such drug to a patient and the pharmacy, chain pharmacy warehouse, or other authorized person receives delivery of the prescription drug directly from the manufacturer, that manufacturer's third-party logistics provider, or that manufacturer's exclusive distributor or from an authorized distributor of record that purchased the product directly from the SB3896 EngrossedEnrolled - 4 - LRB104 20398 AAS 33859 b manufacturer or one of these entities.

"Manufacturer's exclusive distributor" means anyone who contracts with a manufacturer to provide or coordinate warehousing, distribution, or other services on behalf of a manufacturer and who takes title to that manufacturer's SB3896 EngrossedEnrolled - 5 - LRB104 20398 AAS 33859 b prescription drug, but who does not have general responsibility to direct the sale or disposition of the manufacturer's prescription drug.

SB3896 EngrossedEnrolled - 6 - LRB104 20398 AAS 33859 b (4) a chain pharmacy warehouse to the chain pharmacy warehouse's intracompany pharmacy or other designated persons authorized by law to dispense or administer the drug to the patient;

SB3896 EngrossedEnrolled - 7 - LRB104 20398 AAS 33859 b "Prescription drug" means any human 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 or regulation to be dispensed only by a prescription, including finished dosage forms and bulk drug substances subject to Section 503 of the Federal Food, Drug and Cosmetic Act.

SB3896 EngrossedEnrolled - 8 - LRB104 20398 AAS 33859 b "Wholesale distribution" means the distribution of prescription drugs to persons other than a consumer or patient, but does not include any of the following:

(7) The sale, transfer, merger, or consolidation of all or part of the business of a pharmacy or pharmacies SB3896 EngrossedEnrolled - 9 - LRB104 20398 AAS 33859 b from or with another pharmacy or pharmacies, whether accomplished as a purchase and sale of stock or business assets.

SB3896 EngrossedEnrolled - 10 - LRB104 20398 AAS 33859 b "Wholesale drug distributor" means anyone engaged in the wholesale distribution of prescription drugs into, out of, or within the State, including, without limitation, manufacturers;

(a) Every virtual wholesale distributor that engages in virtual drug distribution of prescription drugs shall be SB3896 EngrossedEnrolled - 11 - LRB104 20398 AAS 33859 b licensed by the Department.

(C) if the applicant is a corporation, the name and title of each person who owns 5% or more of its SB3896 EngrossedEnrolled - 12 - LRB104 20398 AAS 33859 b stock and each corporate officer and director and the name of the state of incorporation;

and (9) any additional information required by the SB3896 EngrossedEnrolled - 13 - LRB104 20398 AAS 33859 b Department.

(a) Any person who practices, offers to practice, attempts SB3896 EngrossedEnrolled - 14 - LRB104 20398 AAS 33859 b to practice, or holds oneself out to practice as a wholesale drug distributor, pharmacy distributor, virtual wholesale distributor, or third-party logistics provider without being licensed to ship into, out of, or within the State under this Act shall, in addition to any other penalty provided by law, pay a civil penalty to the Department in an amount not to exceed $10,000 for each offense as determined by the Department.

(b) Any licensee who shall engage in the practice for SB3896 EngrossedEnrolled - 15 - LRB104 20398 AAS 33859 b which the license was issued while the license is expired or on inactive status shall be considered to be practicing without a license which shall be grounds for discipline under this Act.

In case of conflict between any rule or regulation adopted by the Department and any FDA wholesale drug SB3896 EngrossedEnrolled - 16 - LRB104 20398 AAS 33859 b distributor, virtual wholesale distributor, or third-party logistics provider guideline, the FDA guideline shall control.

(b) With the exception of the most recent 12 months of records that must be kept on the premises where the drugs are stored, wholesale drug distributors, virtual wholesale distributors, and third-party logistics providers may keep records regarding purchase and sales transactions SB3896 EngrossedEnrolled - 17 - LRB104 20398 AAS 33859 b electronically at a central location apart from the principal office of the wholesale drug distributor or the location at which the drugs were stored and from which they were shipped, provided that the records shall be made readily available for inspection within 2 working days of a request by the Department.

Returns or exchanges of prescription drugs, saleable or otherwise, SB3896 EngrossedEnrolled - 18 - LRB104 20398 AAS 33859 b including any redistribution by a receiving wholesaler, shall not be subject to the pedigree requirements of Section 57 of this Act, so long as they are exempt from the pedigree requirement of the FDA's currently applicable Prescription Drug Marketing Act guidance.

(c) Prescription drugs furnished by a manufacturer, or wholesale distributor, virtual wholesale distributor, or third-party logistics provider licensed under this Act may be delivered only to the premises listed on the license, provided that the manufacturer or licensee wholesale distributor may furnish prescription drugs to an authorized person or agent of SB3896 EngrossedEnrolled - 19 - LRB104 20398 AAS 33859 b that person at the premises of the manufacturer or licensee wholesale distributor if:

Any account established for the purchase of prescription drugs must bear the name of the SB3896 EngrossedEnrolled - 20 - LRB104 20398 AAS 33859 b licensee.

Once a complaint has been filed by the Department against a wholesale drug distributor, virtual wholesale distributor, or third-party logistics provider distributorship the Department may refuse to issue a license to establish a new licensed wholesale drug distributor, virtual wholesale distributor, or third-party logistics provider distributorship, until such time as the Department issues a decision on the complaint if an owner of the new wholesale drug distributor, virtual wholesale SB3896 EngrossedEnrolled - 21 - LRB104 20398 AAS 33859 b distributor, or third-party logistics provider distributorship was also an owner of a wholesale drug distributor, virtual wholesale distributor, or third-party logistics provider distributorship against which the complaint was filed.

If the conduct for which the complaint was originally filed would have been sufficient to result in a revocation of a license to operate a licensed wholesale drug distributor, virtual wholesale distributor, or third-party logistics provider distributorship, then the SB3896 EngrossedEnrolled - 22 - LRB104 20398 AAS 33859 b conduct shall constitute sufficient grounds for denial of an application for a license.

(b) Whoever knowingly conducts business as a wholesale drug distributor, virtual wholesale distributor, or third-party logistics provider in this State without being appropriately licensed under this Act shall be guilty of a Class A misdemeanor for a first violation and for each SB3896 EngrossedEnrolled - 23 - LRB104 20398 AAS 33859 b subsequent conviction shall be guilty of a Class 4 felony.

In the event that the Secretary temporarily suspends a license or certificate without a hearing, a hearing by the Department must be held within 10 SB3896 EngrossedEnrolled - 24 - LRB104 20398 AAS 33859 b days after the suspension has occurred and be concluded without appreciable delay.

SB3896 EngrossedEnrolled - 25 - LRB104 20398 AAS 33859 b (b) Any person engaged in the wholesale distribution of a drug in shortage in this State must be licensed by the Department.

Reports made SB3896 EngrossedEnrolled - 26 - LRB104 20398 AAS 33859 b through this system shall be referred to the Office of the Attorney General and the appropriate State's Attorney's office for further investigation and prosecution.