Code of Virginia

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Code of Virginia
Title 54.1. Professions and Occupations
Chapter 34. Drug Control Act
9/17/2021

Article 3. Wholesale Distributors and Medical Equipment Suppliers.

§ 54.1-3435. License to act as wholesale distributor; renewal; fee.

A. It shall be unlawful for any person to engage in the wholesale distribution of prescription drugs in the Commonwealth without a valid unrevoked license issued by the Board. The applicant for licensure as a wholesale distributor, as defined in § 54.1-3401, in the Commonwealth shall apply to the Board for a license, using such forms as the Board may furnish; renew such license using such forms as the Board may furnish, if granted, annually on a date determined by the Board in regulation; notify the Board within 30 days of any substantive change in the information reported on the application form previously submitted to the Board; and remit a fee as determined by the Board.

B. A wholesale distributor that ceases distribution of Schedule II through V drugs to a pharmacy, licensed physician dispenser, or licensed physician dispensing facility located in the Commonwealth due to suspicious orders of controlled substances shall notify the Board within five days of the cessation. For the purposes of this section, "suspicious orders of controlled substances" means, relative to the pharmacy's, licensed physician dispenser's, or licensed physician dispensing facility's order history and the order history of similarly situated pharmacies, licensed physician dispensers, or licensed physician dispensing facilities, (i) orders of unusual size, (ii) orders deviating substantially from a normal pattern, and (iii) orders of unusual frequency.

C. A wholesale distributor shall be immune from civil liability for giving notice in accordance with subsection B unless the notice was given in bad faith or with malicious intent.

D. The Board shall not impose any disciplinary or enforcement action against any licensee or permit holder solely on the basis of a notice received from a wholesale distributor pursuant to subsection B.

E. The Board may promulgate such regulations relating to the storage, handling, and distribution of prescription drugs by wholesale distributors as it deems necessary to implement this section, to prevent diversion of prescription drugs, and to protect the public.

F. Every wholesale distributor shall comply with federal requirements for an electronic, interoperable system to identify, trace, and verify prescription drugs as they are distributed.

1970, c. 650, § 54-524.44; 1976, c. 614; 1980, c. 288; 1988, c. 765; 1992, c. 737; 2008, c. 320; 2015, c. 299; 2016, c. 221.

§ 54.1-3435.01. Registration of nonresident wholesale distributors; renewal; fee.

A. Any person located outside the Commonwealth who engages in the wholesale distribution of prescription drugs into the Commonwealth shall be registered with the Board. The applicant for registration as a nonresident wholesale distributor shall apply to the Board using such forms as the Board may furnish; renew such registration, if granted, using such forms as the Board may furnish, annually on a date determined by the Board in regulation; notify the Board within 30 days of any substantive change in the information previously submitted to the Board; and remit a fee, which shall be the fee specified for wholesale distributors located within the Commonwealth.

B. The nonresident wholesale distributor shall at all times maintain a valid, unexpired license, permit, or registration in the state in which it is located and shall furnish proof of such upon application and at each renewal.

C. Records of prescription drugs distributed into the Commonwealth shall be maintained in such a manner that they are readily retrievable from records of distributions into other jurisdictions and shall be provided to the Board, its authorized agent, or any agent designated by the Superintendent of State Police upon request within seven days of receipt of such request.

D. A nonresident wholesale distributor that ceases distribution of Schedule II through V drugs to a pharmacy, licensed physician dispenser, or licensed physician dispensing facility located in the Commonwealth due to suspicious orders of controlled substances shall notify the Board within five days of the cessation. For the purposes of this section, "suspicious orders of controlled substances" means, relative to the pharmacy's, licensed physician dispenser's, or licensed physician dispensing facility's order history and the order history of similarly situated pharmacies, licensed physician dispensers, or licensed physician dispensing facilities, (i) orders of unusual size, (ii) orders deviating substantially from a normal pattern, and (iii) orders of unusual frequency.

E. A nonresident wholesale distributor shall be immune from civil liability for giving notice in accordance with subsection D unless the notice was given in bad faith or with malicious intent.

F. The Board shall not impose any disciplinary or enforcement action against any licensee or permit holder solely on the basis of a notice received from a nonresident wholesale distributor pursuant to subsection D.

G. This section shall not apply to persons who distribute prescription drugs directly to a licensed wholesale distributor located within the Commonwealth.

H. Every nonresident wholesale distributor shall comply with federal requirements for an electronic, interoperable system to identify, trace, and verify prescription drugs as they are distributed.

1994, c. 300; 2008, c. 320; 2015, c. 299; 2016, c. 221.

§ 54.1-3435.02. Certain permitted pharmacies and medical equipment suppliers exempted.

A. A permitted pharmacy may engage in wholesale distributions of small quantities of prescription drugs without being licensed as wholesale distributors when such wholesale distributions are in compliance with federal law as follows: such wholesale distributions of controlled substances do not exceed five percent of the gross annual sales of prescription drugs by the relevant permitted pharmacy or such wholesale distributions of Schedules II through V controlled substances do not exceed five percent of the total dosage units of the Schedule II through V controlled substances dispensed annually by the relevant permitted pharmacy.

B. A permitted medical equipment supplier may engage in wholesale distributions of small quantities of oxygen without being licensed as a wholesale distributor when such wholesale distributions are in compliance with federal law and such distributions do not exceed five percent of the gross annual sales of oxygen by the relevant permitted medical equipment supplier.

2003, c. 509; 2004, c. 854.

§ 54.1-3435.1. Denial, revocation, and suspension of license, permit, or registration of certain entities.

A. The Board may deny, revoke, suspend, or take other disciplinary actions against a wholesale distributor license, nonresident wholesale distributor registration, third-party logistics provider permit, nonresident third-party logistics provider registration, manufacturer permit, nonresident manufacturer permit, or nonresident warehouser registration as provided for in § 54.1-3316 or the following:

1. Any conviction of the applicant, licensee, or registrant under federal or state laws relating to controlled substances, including, but not limited to, drug samples and wholesale or retail prescription drug distribution;

2. Violations of licensing requirements under previously held licenses;

3. Failure to maintain and make available to the Board or to federal regulatory officials those records required to be maintained by wholesale distributors of prescription drugs; or

4. Violations of the minimum requirements for qualifications, personnel, storage, and handling of prescription drugs and maintenance of prescription drug records as set forth in the federal Drug Supply Chain Security Act of 2013, Title II of P. L. 113-54, and the requirements of Chapter 21 of the Code of Federal Regulations.

B. Wholesale drug distributors, nonresident wholesale drug distributors, third-party logistics providers, nonresident third-party logistics providers, manufacturers, nonresident manufacturers, and nonresident warehousers shall allow the Board or its authorized agents to enter and inspect, at reasonable times and in a reasonable manner, their premises and delivery vehicles, and to audit their records and written operating procedures. Such agents shall be required to show appropriate identification prior to being permitted access to wholesale drug distributors' premises and delivery vehicles.

1992, c. 737; 1994, c. 300; 2007, c. 662; 2016, c. 221; 2018, c. 96.

§ 54.1-3435.2. Permit to act as medical equipment supplier; storage; limitation; regulations.

A. Unless otherwise authorized by this chapter or Chapter 33 (§ 54.1-3300 et seq.) of this title, it shall be unlawful for any person to act as a medical equipment supplier, as defined in § 54.1-3401, in this Commonwealth without a valid unrevoked permit issued by the Board. The applicant for a permit to act as a medical equipment supplier in this Commonwealth shall apply to the Board for a permit, using such form as the Board may furnish; renew such permit, if granted, annually on a date determined by the Board in regulation; and remit a fee as determined by the Board.

B. Prescription drugs received, stored, and distributed by authority of this section shall be limited to those Schedule VI controlled substances with no medicinal properties which are used for the operation and cleaning of medical equipment, solutions for peritoneal dialysis, and sterile water and saline for irrigation.

C. Distribution of any Schedule VI drug or device or of any hypodermic needle or syringe, or medicinal oxygen by authority of this section is limited to delivery to the ultimate user upon lawful order by a prescriber authorized to prescribe such drugs and devices.

D. The Board may promulgate such regulations relating to the storage, handling, and distribution of prescription drugs, devices and controlled paraphernalia by medical equipment suppliers as it deems necessary to implement this section, to prevent diversion of prescription drugs and devices and controlled paraphernalia, and to protect the public.

1992, c. 737; 1996, c. 408; 1997, c. 677; 2008, c. 320; 2013, c. 504.

§ 54.1-3435.3. Inspection and audit.

Medical equipment suppliers shall allow the Board or its authorized agents to enter and inspect, at reasonable times and in a reasonable manner, their premises and delivery vehicles, and to audit their records and written operating procedures.

1992, c. 737; 2007, c. 662.

§ 54.1-3435.3:1. Registration of nonresident medical equipment suppliers; renewal; fee.

A. Any person located outside the Commonwealth other than a nonresident pharmacy registered pursuant to § 54.1-3434.1 that ships, mails, or delivers to a consumer in the Commonwealth any hypodermic syringes or needles, medicinal oxygen, Schedule VI controlled device, those Schedule VI controlled substances with no medicinal properties that are used for the operation and cleaning of medical equipment, sterile water and saline for irrigation, or solutions for peritoneal dialysis pursuant to a lawful order of a prescriber shall be registered with the Board as a nonresident medical equipment supplier. Registration as a nonresident medical equipment supplier shall be renewed by March 1 of each year. Applicants for registration or renewal of a registration shall submit a fee specified by the Board in regulations at the time of registration or renewal. A nonresident medical equipment supplier registered in accordance with this section shall notify the Board within 30 days of any substantive change in the information previously submitted to the Board.

B. The nonresident medical equipment supplier shall at all times maintain a valid, unexpired license, permit, or registration in the state in which it is located, if required by the resident state, and shall furnish proof of such license, permit, or registration upon application for registration or renewal. If the resident state does not require a license, permit, or registration to engage in direct consumer supply of the medical equipment described in subsection A, the applicant shall furnish proof that it meets the minimum statutory and regulatory requirements for medical equipment suppliers in the Commonwealth.

C. Records of distribution of medical equipment described in subsection A into the Commonwealth shall be maintained in such a manner that they are readily retrievable from records of distribution into other jurisdictions and shall be provided to the Board, its authorized agent, or any agent designated by the Superintendent of State Police upon request within seven days of receipt of such request.

2016, c. 88.

§ 54.1-3435.4. Permit to act as warehouser; regulations.

A. Unless otherwise authorized by this chapter or Chapter 33 (§ 54.1-3300 et seq.) of this title, it shall be unlawful for any person to act as a warehouser, as defined in § 54.1-3401, in this Commonwealth without a valid unrevoked permit issued by the Board. The applicant for a permit to act as a warehouser in this Commonwealth shall apply to the Board for a permit, using such form as the Board may furnish; renew such permit, if granted, annually on a date determined by the Board in regulation; and remit a fee as determined by the Board.

B. The Board may promulgate such regulations relating to the storage, handling, and distribution of prescription drugs and devices by warehousers as it deems necessary to implement this section, to prevent diversion of prescription drugs and devices, and to protect the public.

C. Warehousers shall allow the Board or its authorized agents to enter and inspect, at reasonable times and in a reasonable manner, their premises and delivery vehicles, and to audit their records and written operating procedures. Such agents shall be required to show appropriate identification prior to being permitted access to warehousers' premises and delivery vehicles.

1992, c. 737; 2008, c. 320.

§ 54.1-3435.4:01. Registration to act as a nonresident warehouser; regulations.

A. Any warehouser located outside the Commonwealth that ships prescription drugs or devices into the Commonwealth shall be registered with the Board. Such nonresident warehouser shall renew such registration annually on a date determined by the Board and shall notify the Board within 30 days of any substantive change in the information previously submitted.

B. The Board may promulgate such regulations relating to the storage, handling, and distribution of prescription drugs and devices by nonresident warehousers as it deems necessary to implement this section, to prevent diversion of prescription drugs and devices, and to protect the public.

C. The nonresident warehouser shall at all times maintain a valid, unexpired license, permit, or registration in the state in which it is located that authorizes the possession and distribution of such prescription drugs and devices and shall furnish proof of such upon application and at each renewal.

D. Records of prescription drugs and devices distributed into the Commonwealth shall be maintained in such a manner that they are readily retrievable from records of distributions into other jurisdictions and shall be provided to the Board, its authorized agent, or any agent designated by the Superintendent of State Police upon request within seven days of receipt of such request.

2018, c. 96.

§ 54.1-3435.4:1. Permitting of third-party logistics provider; renewal.

A. It shall be unlawful for any person to operate as a third-party logistics provider in the Commonwealth without a valid, unrevoked permit issued by the Board. The third-party logistics provider shall renew such permit annually on a date determined by the Board in regulation and shall notify the Board within 30 days of any substantive change in the information reported on the application form previously submitted.

B. The Board shall adopt such regulations relating to the requirements to operate as a third-party logistics provider, including the storage, handling, and distribution of prescription drugs by third-party logistics providers, as it deems necessary to prevent diversion of prescription drugs and to protect the public.

2016, c. 221.

§ 54.1-3435.4:2. Registration of nonresident third-party logistics provider; renewal.

A. Any third-party logistics provider located outside the Commonwealth that ships prescription drugs or devices into the Commonwealth shall be registered with the Board. Such nonresident third-party logistics provider shall renew such registration annually on a date determined by the Board and shall notify the Board within 30 days of any substantive change in the information previously submitted.

B. The Board may promulgate such regulations relating to the storage, handling, and distribution of prescription drugs and devices by nonresident third-party logistics providers as it deems necessary to implement this section, to prevent diversion of prescription drugs and devices, and to protect the public.

C. The nonresident third-party logistics provider shall at all times maintain a valid, unexpired license, permit, or registration in the state in which it is located or current licensure as a third-party logistics provider with the FDA and shall furnish proof of such upon application and at each renewal.

D. Records of prescription drugs and devices distributed into the Commonwealth shall be maintained in such a manner that they are readily retrievable from records of distributions into other jurisdictions and shall be provided to the Board, its authorized agent, or any agent designated by the Superintendent of State Police upon request within seven days of receipt of such request.

2018, c. 96.

§ 54.1-3435.5. Repealed.

Repealed by Acts 2007, c. 662, cl. 2.

§ 54.1-3436. Repealed.

Repealed by Acts 1992, c. 737.

§ 54.1-3436.1. (Effective January 1, 2022) Prescription drug price transparency.

A. As used in this section:

"Brand-name drug" means a prescription drug approved under 21 U.S.C. § 355(b) or 42 U.S.C. § 262.

"Generic drug" means a prescription drug approved under 21 U.S.C. § 355(j).

"Nonprofit data services organization" has the same meaning as set forth in § 32.1-23.4.

"Pharmacy benefits manager" has the same meaning as set forth in § 38.2-3407.15:4.

"Wholesale acquisition cost" has the same meaning as set forth in 42 U.S.C. § 1395w-3a(c)(6)(B).

B. To ensure data that is useful, relevant, and not duplicative, the Department of Health may request wholesale distributors to report to the nonprofit organization with which the Department of Health has entered into a contract or agreement pursuant to § 32.1-23.4 the following information on the 25 costliest drugs in the Commonwealth upon a determination by the Department of Health that data received from health carriers, pharmacy benefits managers, and manufacturers is insufficient:

1. The wholesale acquisition cost that the wholesale distributor has negotiated directly with the manufacturer in the last calendar year, related to the 25 costliest drugs dispensed in the Commonwealth;

2. The wholesale acquisition cost that the wholesale distributor has negotiated directly with the manufacturer in the current calendar year for the 25 costliest drugs dispensed in the Commonwealth;

3. Aggregate total rebates, discounts, and price concessions negotiated directly with the manufacturer for the 25 costliest drugs dispensed in the Commonwealth in the last calendar year, for business in the Commonwealth, in total; and

4. Aggregate total discounts, dispensing fees, and other fees negotiated in the last calendar year with pharmacies, for the 25 costliest drugs dispensed in the Commonwealth, in total.

C. A report submitted by a wholesale distributor pursuant to subsection B shall not disclose the identity of a specific wholesale distributor, the price charged for a specific prescription drug or class of prescription drugs, or the amount of any price concession, rebate, or fee provided for a specific prescription drug or class of prescription drugs.

2021, Sp. Sess. I, c. 304.