201 KAR 2:105. Licensing and drug distribution requirements for wholesale distributors

Link to law: http://www.lrc.ky.gov/kar/201/002/105.htm
Published: 2015

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      201 KAR 2:105. Licensing and drug distribution requirements

for wholesale distributors.


      RELATES TO: KRS 315.010, 315.402, 315.406

      STATUTORY AUTHORITY: KRS 315.010, 315.191(1),

315.402, 315.406


and 315.406 authorizes the board to promulgate administrative regulations to

regulate wholesale distributors of drugs. This administrative regulation

establishes the requirements for the regulation of wholesale distributors.


      Section 1. Definition. "Drug sample"

means unit of a prescription drug that is not intended to be sold and is

intended to promote the sale of the drug.


      Section 2. Requirements. (1) A wholesale

distributor engaged in wholesale distribution in the Commonwealth shall apply

for a license from the board in accordance with KRS 315.402, 315.406, and this

administrative regulation.

      (2) A separate license shall be required

for each wholesale distributor's facility that distributes within the

Commonwealth regardless of whether joint ownership or control exists.

      (3) An agent or employee of a licensee

shall not be required to obtain a license under this section when the agent or

employee is acting in the usual course of business or employment.

      (4) A license shall not be issued or

renewed unless the applicant demonstrates or continues to demonstrate

acceptable operational procedures, including:

      (a) Adequate maintenance and storage

conditions to ensure proper lighting, ventilation, temperature and humidity

control, sanitation, space, and security as per label requirements or official

United States Pharmacopoeia (USP) compendium requirements. Appropriate manual,

electromechanical or electronic temperature and humidity recording equipment,

devices, or logs shall be utilized to document proper storage of prescription


      (b) Physical separation and quarantine of

deteriorated, damaged, outdated, misbranded, adulterated or otherwise recalled

merchandise until they are destroyed or returned;

      (c) Providing accurate and precise

records of all goods shipped or received including source or recipient, date,

quantity, itemized description, and any other information pertinent to the

transaction; and

      (d) Providing proof of registration with

the state controlled substance authority, and with the U.S. Drug Enforcement

Administration and shall comply with all DEA regulations.


      Section 3. Qualifications for License.

(1) The minimum qualifications shall include:

      (a) The Kentucky Board of Pharmacy shall

consider, at a minimum, the following factors in reviewing the qualifications

of persons who engage in wholesale distribution of prescription drugs within

the Commonwealth:

      1. Any convictions of the applicant under

any federal, state, or local laws relating to drug samples and wholesale or

retail drug distribution of controlled substances;

      2. Any felony convictions of the

applicant under federal, state, or local laws;

      3. The applicant's past experience in the

wholesale distribution of prescription drugs, including controlled substances;

      4. The furnishing by the applicant of

false or fraudulent material in any application made in connection with wholesale


      5. Suspension or revocation by federal,

state, or local government of any license or permit currently or previously

held by the applicant for wholesale distribution of any drugs, including

controlled substances;

      6. Compliance with the requirements under

any previously granted license or permit, if any; and

      7. Compliance with requirements to

maintain or make available to the Kentucky Board of Pharmacy or to federal,

state, or local law enforcement officials those records required under this


      (b) The Kentucky Board of Pharmacy shall

have the right to deny a license to an applicant if it determines that the

granting of that license would not be in the public interest based on health

and safety considerations.

      (2) A license shall not be issued

pursuant to this administrative regulation unless the applicant has furnished

proof satisfactory to the Board of Pharmacy:

      (a) That the applicant is in compliance

with all applicable federal and state laws and regulations relating to drugs;


      (b) That the applicant is equipped as to

land, buildings, and security to properly carry on the business described in

his application.

      (3) A license issued pursuant to this

administrative regulation may be suspended or revoked for failure to comply

with the provisions of KRS 315.400, 315.402, 315.404, 315.406, 315.408,

315.410, 315.412, or this administrative regulation.


      Section 4. Application, Fees, Renewals.

(1) An application for a license shall be submitted to the Board of Pharmacy on

"Application for a License to Operate as a Wholesale Distributor (KBP W


      (2) An application shall be accompanied

by the annual fee set forth in 201 KAR 2:050.

      (3) An application shall include:

      (a) The name, full business address, and

telephone number of the licensee;

      (b) All trade or business name used by

the licensee;

      (c) Addresses, telephone numbers, and the

names of contract persons for all facilities used by the licensee for the

storage, handling, and distribution of prescription drugs;

      (d) The type of ownership or operation

(i.e. partnership, corporation, or sole proprietorship);

      (e) The name(s) of the owner and operator

of the licensee, including;

      1. If a person, the name and Social Security

number of the person;

      2. If a partnership, the name and Social

Security number of each partner, and the name of the partnership;

      3. If a corporation, the name, Social Security

number and title of each corporate officer and director, the corporate names,

and the name of the state of incorporation; and

      4. If a sole proprietorship, the full

name and Social Security number of the sole proprietor and the name of the

business entity; and

      (f) A list of all licenses and permits

issued to the applicant by any other state that authorizes the applicant to

purchase or possess prescription drugs.

      (4) All licenses shall:

      (a) Expire on September 30 following date

of issuance; and

      (b) Be renewable annually thereafter upon

renewal application accompanied by the renewal fee set forth in 201 KAR 2:050

and shall be nontransferable.


      Section 5. Standards. (1) Facilities.

      (a) All buildings in which legend drugs

are held for wholesale distribution, repackaged, stored, held, sold, offered

for sale, exposed for sale, or kept for sale shall be of suitable size,

construction, and location to facilitate cleaning, maintenance, and proper operations.

      (b) Buildings shall meet all applicable

federal, state, and local standards. The facility shall have a quarantine area

for storage of prescription drugs that are outdated, damaged, deteriorated, misbranded,

or adulterated, or that are in immediate or sealed secondary containers that

have been opened.

      (c) A facility shall not be located in a


      (2) Security.

      (a) A wholesale distributor shall be

equipped with an alarm system to detect entry after hours.

      (b) A wholesale distributor shall ensure

that access from outside their premises is well-controlled and reduced to a

minimum. This includes the installation of adequate lighting at the outside perimeter

of the premises.

      (c) Internal security policies shall be

developed to provide reasonable protection against theft and diversion by

limiting access to areas where legend drugs are held to authorized personnel.

These policies shall provide protection against tampering with computers or

electronic records.

      (d) A licensee shall employ adequate

personnel with the education and experience necessary to safely and lawfully

engage in the wholesale distribution of prescription drugs.

      (3) Recordkeeping.

      (a) Inventories and other records of

transactions regarding the receipt and disposition of legend drugs shall be

maintained and readily available for inspection or photocopying by authorized

law enforcement officials for a period of two (2) years following disposition

of the drugs. These records shall include:

      1. The source of the drugs, including the

name and principal address of the seller or transferor, and the address of the

location from which the drugs were shipped;

      2. The identity and quantity of the drugs

received and distributed or disposed of; and

      3. The dates of receipt and distribution

or other distribution of the drugs.

      (b) Records described in this section

that are kept at the inspection site or that can be immediately retrieved by

computer or other electronic means shall be readily available for authorized

inspection during the retention period. Records kept at a central location

apart from the inspection site and not electronically retrievable shall be made

available for inspection within two (2) working days of a request by an

authorized official of a federal, state, or local law enforcement agency.

      (4) Written policies and procedures.

      (a) A Wholesaler Distributor distributors

shall establish, maintain, and adhere to written policies and procedures, which

shall be followed for the receipt, security, storage, inventory, and

distribution of prescription drugs, including policies and procedures for

identifying, recording, and reporting losses or thefts and to assure that the

wholesale distributor prepares for, protects against, and handles crisis

situations that affect the security or operation of the facility. These crises

shall include fires, floods, or other natural disasters, and situations of local,

state, or national emergency.

      (b) There shall be written policies and

procedures for managing and correcting all errors or inaccuracies in


      (c) There shall be written policies and

procedures to assure that any outdated stock or any stock with an expiration

date that, in the wholesale distributor's view, does not allow sufficient time

for repacking or resale shall be segregated from other stock and shall be prepared

for return to the manufacturer or otherwise destroyed, and this shall be documented.

      (d) There shall be written policies and

procedures by which the wholesale distributor exercises control over the shipping

and receiving of all stock within the operation.

      (5) Returned, damaged, and outdated

prescription drugs. A wholesale distributor shall maintain and follow a written

procedure to assure the proper handling and disposal of returned goods if

conditions under which a prescription drug has been returned cast doubt on the

drug's safety, identity, strength, quality, or purity, then the drug shall be destroyed,

or returned, unless examination, testing, or other investigation proves that

the drug meets appropriate standards of safety, identity, strength, quality,

and purity. In determining whether the conditions under which a drug has been

returned cast doubt on the drug's safety, identity, strength, quality, or

purity, the wholesale distributor shall consider, among other things, the

conditions under which the drug has been held, stored, or shipped before or

during its return and the condition of the drug and its container, carton, or

labeling, as a result of storage or shipping.

      (6) Handling recalls. A wholesale distributor

shall maintain and follow written policy for handling recalls and withdrawals

of products. The policy shall cover all recalls and withdrawals of drug

products due to:

      (a) Any voluntary action on the part of

the manufacturer;

      (b) The direction of the Food and Drug

Administration, or any other federal, state, or local government agency; and

      (c) Replacement of existing merchandise

with an improved product or new package design.

      (7)(a) A visual examination of all

materials received or shipped shall be made to guarantee product identity and

to reasonably guard against acceptance or delivery of damaged, contaminated,

tampered, or otherwise unfit stock.

      (b) Procedures for distribution of

approved stock shall provide for a rotation whereby the oldest inventory is

distributed first.

      (c) A wholesale distributor shall be

subject to the provisions of any applicable federal, state, or local laws or

regulations that relate to prescription drug product salvaging or reprocessing.


      Section 6. Pedigree. (1) Effective July

1, 2009 and in accordance with KRS 315.406, each person or entity engaged in

the wholesale distribution of prescription drugs that leave or that have ever

left the normal distribution channel shall, prior to the distribution of the prescription

drug, provide a pedigree to the person receiving the prescription drug.

      (2) The pedigree shall include the

following information concerning the prescription drug:

      (a) The proprietary and established name

of the prescription drug;

      (b) The dosage;

      (c) The size of the container;

      (d) The number of containers;

      (e) The lot number of control number of

the prescription drug;

      (f) The business name and address of all

parties to each prior transaction involving the drug, starting with the

manufacturer; and

      (g) The date of each previous


      (3) Pedigree records shall be maintained

and readily be available for inspections or photocopying by authorized law

enforcement officials for a period of two (2) years.


      Section 7. Violations. (1) A wholesale

distributor shall not distribute legend drugs directly to a consumer or a

patient or operate in a manner that endangers the public health.

      (2) Violation of any of these provisions

shall be grounds for the suspension or revocation of the license.


      Section 8. Incorporation by Reference.

(1) "Application for a License to Operate as a Wholesale Distributor"

(KBP W 9:08) is incorporated by reference.

      (2) This material may be inspected,

copied, or obtained, subject to applicable copyright law, at the Kentucky Board

of Pharmacy, Spindletop Administration Building Suite 302, 2624 Research Park

Drive, Lexington, Kentucky 40511, Monday through Friday, 8 a.m. to 4:30 p.m. (9 Ky.R. 77; eff. 8-11-1982; Am. 11 Ky.R. 1616;

eff. 6-4-85; 16 Ky.R. 1597; eff. 4-12-90; 18 Ky.R. 2348; 2832; 2917; eff.

3-25-92; 19 Ky.R. 445; eff. 10-8-92; 28 Ky.R. 2406; 29 Ky.R. 98; eff. 7-15-2002;

35 Ky.R. 982; 1826; 1740; eff. 2-18-2009.)