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Definitive Guide to State Regulation of the Pharmaceutical Supply Chain A comprehensive strategy guide to help your company achieve State-level compliance for transacting business in the pharmaceutical industry

Sumeet Singh, President & Lead Consultant

Samuel M. Smith, Esq., In-House Counsel & Regulatory Consultant

Helping the pharmaceutical industry navigate with confidence.

Table of Contents

Survey of States .......................................................................

Business Model ........................................................................

State Licensing Services ..........................................................

About Our Company .................................................................

Regulations ...............................................................................

Requirements ...........................................................................

Table of Contents .....................................................................

3

5

2

6

9

10

Index - WDD Verification .......................................................... 11

7

State Regulation of the Pharmaceutical Supply Chain pg 2

Regulations

State Regulation Overview

Every state has an organization that implements the laws & regulations which govern the

manufacturing, distribution and dispensing of pharmaceuticals. The most common

governance practices may include (1) licensing, (2) reporting and (3) registration ;

however, sometimes, there are no requirements to do business in a state.

The requirements for licensure vary widely. For example, states may or may not require a

company to: (1) undergo background checks for owners and designated representatives,

(2) obtain a surety bond, (3) register with the Secretary of State, and much more; this is

further covered in "Requirements."

State Regulation Challenges

There are many challenges in navigating the "patchwork" of state regulations,

requirements, and processing standards.

Identifying the appropriate agency for your specific business model. For example:

In Florida, the DBPR regulates wholesale drug distributors and manufacturers, whereas

the Board of Pharmacy is responsible for the regulation of 503B facilities &

dispensing. However, in California, the Board of Pharmacy regulates all of those

business models.

Ownership vs. Possession. Many of our clients consistently have trouble with how

each state interprets this aspect of regulation, especially Virtual Manufacturers, reverse

distributors, exporters and, of course, 3PLs. Some states only require a license for the

company that sells (holds title / "directs the sale" / payee) the product because they

have not implemented 3PL requirements; and some states require a license only for the

company physically shipping the product into the state. However, many states would

require a license for both companies.

Communication with the Board. Getting in touch with the Board can be difficult: some

states take up to 45 days just to open and process mail sent to them. Similar

challenges can include lost/misplaced materials and unresponsiveness to emails and

phone calls.


Regulations

Finding the applicable type of license. This challenge is usually more specific to

companies with nuanced and/or uncommon business models. For example: a virtual

repackager directs the repackaging of a product, but does not physically repackage the

product. To sell into North Carolina, they would be required to have a Manufacturer

license, in Texas they would apply for a Manufacturer/Distributor license and in Illinois,

they would need to have a Wholesale Drug Distributor license.

Administrative & Logistics. States can be very particular with what they ask for and

how those materials should look. For example: a copy of an applicant's resident license

cannot be substituted for an online print-out of a license verification from the Board. This

seems counter-intuitive because a website verification will always provide the most up-

to-date information on a license and is often times the primary verification of a license

(e.g. New Jersey). A second example is that states many times ask for more than what

was originally asked for in the application/instructions and then present it as a

deficiency.

Change of Location. Although not a "new" license, many states essentially regard a

Change of Location as a new license; adequate strategy planning is required to

limit interruption of business!


State Regulation Challenges Cont.

Cost of Non-Compliance: Disciplinary Actions & Consent Order

Keeping in compliance with state regulations can be a massive challenge for any

company. However, it is crucial to do so: if there is a disciplinary action or consent

order handed down, it will cause continuing issues in the future. When a company

admits wrongdoing in a state (after the charge, investigation and "judgement," they are

required to notify their home state (if different) as well as most other state during the

application or renewal phase; this is where the issues start. In some states, if there are

any disciplinary actions on the company's record, they are "preliminarily denied." If

denied, they have to retain legal counsel in the state to challenge the denial and get

approved. If the denial goes through, the company would additionally have to report

the denial, as well as the initial disciplinary action to each state agency. If a disciplinary

action is reported to a state where a company is currently licensed and doing business,

the company may be subject to a fee between $5,000 and $10,000, alongside another

consent order.

Requirements Fingerprint & Background Requirements

Surety Bonds

VAWD® Accreditation

License Verification

CDR Licenses - CA & FL

FDA Reporting

Background checks have the biggest effect on processing times for a license. Usually

only the Designated Representatives and the owners are required to undergo

background checks; the reasoning behind requiring the background checks is to

ensure individuals with a criminal history are not trusted to obtain licensure.

Often times, states are contracted with a provider (e.g. IdentoGO for TN, 3M for MO)

to process background checks so that information is processed quicker than sending

it directly to the FBI (12 to 14 weeks).

Surety Bonds guarantee to the state agency that they will be able to collect fees

assessed for any activities going against their regulations. At this time, there are about

10 states that require a Surety Bond. Surety Bonds can be obtained from a dedicated

provider as well as from most insurance companies.

Verified-Accredited Wholesale Distributors (VAWD) is an accreditation program

designed and implemented by the National Association of Boards of Pharmacy . It is

required for non-resident companies that want to do business in Indiana, North Dakota

and Wyoming as well as Maryland, in some cases.

Two states require a separate license for Designated Representatives - California and

Florida. The prerequisite in California is an online training class whereas Florida

requires an in-person test, organized through Pearson. Additionally, each state requires

an application, experience and satisfactory background check.

As states implement the federally mandated DSCSA, some states are also requiring

proof of FDA reporting.

Many states require a certified/sealed License Verification from the home state of the

applicant. Recently, some states have stopped offering hard copy license verification

and instead have companies use the "public lookup" on the state agency website.


Survey of States

More Difficult - CA, FL, NC, TN, MO, MI, MD

Less Difficult - CT, WV, AR, KS, LA, PA

Most Difficult States?

Regular State Expiration Dates

January 31st - FL, NJ May 31st - MN June 30th - CT, KS, MI, NH, OH, WV, WY, ID, GA July 1st - NE July 31st - VT September 30th - DE, KY, OK, OR, PA, RI, WA, TN, UT October 31st - CO, DC, NV, AZ, MO November 30th - MT December 31st - IA, MS, AL, AR, IL, LA, NC, SD, NM

Timeline

The timeline for processing a state license application varies from state-to-state:

some states are extremely efficient and others have more arduous processes.

Below are the states that are outliers of the average 3 to 4 months of processing

time

Above-Average Processing Times - CA, FL, ME, NC, NV, TN, SC

Below-Average Processing Times - AR, CT, WV

Cost Per State

The cost for processing a state license application varies from state-to-state. Below

are the states that are outliers of the average cost of $500 to $750.

Total Cost Above $750 - FL, TX, MD, CA

Total Cost Under $500 - MI, AL, PA


Business Model

States that have Separate 3PL Licensing

Alabama

California

Delaware, 06/11/2018

Florida

Kentucky

New Mexico

North Dakota

Ohio

Oklahoma

Oregon

South Carolina

Utah

West Virginia

The DSCSA specifically provides that a third-party logistic provider (3PL) must not

fall under the definition of a wholesale distributor and that licensing must be separate

for state regulation. As a result, a company that performs both 3PL and distribution

activities may be required to hold two separate licenses in some states.

The DSCSA & 3PLs

Manufacturers

Manufacturers typically have the least difficulty in obtaining licensure because of the

federal government's extensive reach and oversight of operations. However,

manufacturers should stay on top of requirements. An often over-looked consideration is

that some states require licensure for a manufacturer if their product is used by a patient in

the state, regardless if they directly do business in that state.

Virtual Manufacturers & Distributors

Things can get complicated for virtual companies. They benefit from the fact that about 20

states do not require a virtual company to have a license to transact business in the state

(see "Ownership vs Possession" section above). However, there are still challenges,

including the fact that some states require an actual license from the resident state (an

issue that is specifically prevalent for Pennsylvania-based companies) or that some

require an inspection; that virtuals may not be able to obtain. When considering which

state to open a virtual company, the following should be considered: (1) time to obtain a

license (2) "difficulty" & requirements and (3) whether an inspection report is provided.


Business Model

While generally less regulated on a state-by-state basis, device distributors often

have a greater challenge in determining their license requirements. Much of the

complexity resides in how a state interprets a "device" and how devices are

regulated. For example: Minnesota does not license wholesale device distributors;

however, they would require a license if the device contained a prescription drug.

Although relatively straightforward, a company must also consider: what if the device

itself is a prescription device? Or, what if the product is a syringe that was pre-filled

with an orthopedic fluid, which is not prescription drug but is required to be

administered by a physician? Specifically, the challenge with device distributors is

identifying the exact product portfolio and customer base and then identifying what is

required to be compliant with a state's requirement.

Prescription Device Wholesalers

Closed-Door and Long Term Care (LTC) Pharmacies

The main challenge with "mail-order" pharmacies is when their customers request

"stock" transactions: drugs not shipped "pursuant to a prescription." Over 80% of

states (as well as the federal government) regard drugs not shipped "pursuant to a

prescription" as wholesale drug distribution, not the practice of pharmacy or the

"dispensing" of pharmaceuticals. However, the Big three wholesalers often have an

issue with these pharmacies obtaining wholesale drug distributor licenses; it is

therefore important for mail-order pharmacies to maintain a strong relationship with

their wholesaler.

Formalized into existence in 2013, 503A and 503B compounding pharmacies are

starting to gain traction in the market. "Outsourcing facilities" are part compounding

pharmacy, part manufacturer, which creates a lot of potential for this type of new

business model. Fortunately, many states have kept up to date on their regulations

and, appropriately, often recognize 503B facilities as wholesale drug distributors

rather than pharmacies.

503A versus 503B Compounding


State Licensing Services

Our Assessment follows a proprietary "three-part" assessment. Companies that

utilize this service include those with nuanced and/or uncommon business models

(e.g. virtual repackagers, 503B, LTC pharmacies) and those with "standard"

business models (e.g. wholesale distributors, manufacturers, etc.)

Our "three-part" assessment includes:

Our New License services centers on the "full process management" of state

licensing. It is a three phase project which ensures your company is efficiently

licensed in the required states.

Five Rivers RX can effectively maintain your license portfolio while staying on top of

regulation changes that may affect your company.

Board Contact: Over the years, Five Rivers RX has amassed direct contacts and

relationships with members of the state agencies. We rely on these individuals to

provide guidance on how the state agency implements their specific regulations.

Legal Research: Our staff is experienced in identifying regulations and

interpreting their meaning across multiple business models and product portfolios.

NOTE: Five Rivers RX is not a law firm and cannot provide legal advice.

External Resources: We stay in the loop across all of the state agencies. The last

"part" of our assessment encompasses our use of agency FAQ's, Board

notifications, paid-subscription materials, applications and more so that we can

paint a robust picture of requirements.

Assessing Requirements

Onboarding

State Consolidation

Process Application with State agency follow up

Obtaining New Licenses

Process Renewals as Required

State Specific Materials Request

Complete & Process Application

Maintaining License Portfolio


About Our Company

P & F: (800) 962-8760

E: [email protected]

A: King of Prussia, PA 19406

Since inception, Five Rivers RX has assisted over 175 companies across 14 different

business models with a wide-variety of business objectives, complex challenges and

expansion projects.

Our company helps clients respond to industry changes and reach their compliance

and commercialization objectives. We offer a wide range of strategy and consulting

services for the pharmaceutical supply chain industry. Our clients range from

international drug manufacturers with $10+ billion in annual revenue to independent,

family-owned pharmacies.

About Five Rivers

Sumeet Singh is the Founder & President of Five Rivers RX. Drawing on the

relationships and knowledge he cultivated at the helm of a distribution company and

a pharmaceutical distribution start-up, Sumeet is able to bring a unique "boots on the

ground" understanding of the industry.

Samuel M. Smith, Esq. serves as In-House Counsel and Consultant for Five Rivers

RX. Sam is a barred attorney in the Commonwealth of Pennsylvania and he received

his J.D at the University of Kentucky. His expertise focuses on the federal, state and

private regulation of pharmaceutical distribution.

Authors


WDD License Verification Alabama

https://igovsolution.net/albop_online/Lookups/Business_Lookup.aspx

Arizona https://azbop.igovsolution.com/online/Lookups/AZBusiness_Lookup.aspx

Arkansas

http://www.ark.org/asbp/roster/index.php?q=search/results

California

http://www.pharmacy.ca.gov/online/verify_lic.shtml

Colorado

https://www.colorado.gov/dora/licensing/Lookup/LicenseLookup.aspx

Connecticut https://www.elicense.ct.gov/Lookup/LicenseLookup.aspx

Delaware https://dpronline.delaware.gov/mylicense%20weblookup/Search.aspx?facility=Y

DC

https://app.hpla.doh.dc.gov/Weblookup/Search.aspx?facility=Y

Florida

https://www.myfloridalicense.com/wl11.asp?mode=2&search=Name&SID=&brd=&typ=

Georgia

https://gadch.mylicense.com/verification/Search.aspx?facility=Y

Idaho https://idbop.glsuite.us/glsuiteweb/Clients/IDBOP/Public/Verification/Search.aspx

Illinois

https://ilesonline.idfpr.illinois.gov/Lookup/LicenseLookup.aspx

Iowa

https://pharmacy.iowa.gov/document/drug-wholesalers-registration-files

Kansas

https://ksbop.elicensesoftware.com/portal.aspx

Kentucky

https://secure.kentucky.gov/pharmacy/licenselookup/Default.aspx

Louisiana

http://www.lsbwdd.org/wholesaler-license-lookup/


License Verification Maine

http://www.pfr.maine.gov/almsonline/almsquery/SearchCompany.aspx

Maryland

https://egovpharmacy.dhmh.maryland.gov/verification/

Michigan https://w2.lara.state.mi.us/VAL/License/Search

Minnesota https://bopgl.hlb.state.mn.us/glsuiteweb/clients/mnbopharm/public/licenseesearch.aspx

Mississippi https://elicense.mbp.state.ms.us/portal.aspx

Missouri https://renew.pr.mo.gov/pharmacy-licensee-search.asp

Montana

https://ebiz.mt.gov/pol/

Nebraska

https://www.nebraska.gov/LISSearch/search.cgi?new=1&stype=E

Nevada

https://pharmacy.bop.nv.gov/datamart/searchByName.do

New Hampshire

http://www.nh.gov/pharmacy/licensing/documents/manufacturers-wholesalers.pdf

New Jersey http://web.doh.state.nj.us/apps2/FoodDrugLicense/fdSetSearch.aspx

New Mexico http://verification.rld.state.nm.us/Search.aspx?facility=Y

New York

http://www.op.nysed.gov/opsearches.htm

North Carolina

http://www.ncagr.gov/aspzine/fd/fdpd/NameSearch.asp

North Dakota

https://www.nodakpharmacy.com/verify.asp

Ohio

https://license.ohio.gov/lookup/default.asp


WDD License Verification

License Verification

Oklahoma

http://lv.pharmacy.ok.gov/osbpinquire/FacilityDetail.asp?CountyTypeLic=88-W-4361

Oregon

https://obop.oregon.gov/LicenseeLookup/

Pennsylvania

https://apps.health.pa.gov/ddc/DDCPublicLookup.asp

Rhode Island

http://209.222.157.144/RIDOH_Verification/Search.aspx?facility=Y&SubmitComplaint=Y

South Dakota

https://doh.sd.gov/boards/pharmacy/assets/DistributorVerification.pdf

Tennessee

https://apps.health.tn.gov/facilityListings/

Texas

https://vo.ras.dshs.state.tx.us/datamart/login.do

Utah

https://secure.utah.gov/llv/search/index.html

Vermont https://secure.vtprofessionals.org/Lookup/LicenseLookup.aspx

Virginia

https://dhp.virginiainteractive.org/Lookup/Index

Washington https://fortress.wa.gov/doh/facilitysearch/Default.aspx

West Virginia

http://www.wvbop.com/index.php?option=com_wrapper&view=wrapper&Itemid=97

Wisconsin

https://app.wi.gov/LicenseSearch/OrganizationLicens/SearchResultsSummary?

chid=790493

Wyoming

https://wybop.glsuite.us/glsuiteweb/Clients/WYBOP/Public/Verification/Search.aspx

FDA https://www.accessdata.fda.gov/scripts/cder/wdd3plreporting/index.cfm


WDD License Verification

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