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),
NECESSITY, FUNCTION, AND CONFORMITY: KRS 315.402
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
(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deteriorated, damaged, outdated, misbranded, adulterated or otherwise recalled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
(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
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
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
(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
(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
(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
(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.
(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
(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
(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
(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.)