Pharmacy: third-party logistics providers.

(1) Under the Pharmacy Law, a violation of which is a crime, the California State Board of Pharmacy licenses and regulates the practice of pharmacy. Existing law restricts the purchase, trade, sale, or transfer of dangerous drugs or dangerous devices, as defined, to licensed wholesalers and other authorized persons. Under the Pharmacy Law, the board licenses and regulates entities, including third-party logistics providers, as wholesalers. The Pharmacy Law defines a "third-party logistics provider" or a "reverse third-party logistics provider" as an entity licensed as a wholesaler that contracts with a dangerous drug manufacturer to provide or coordinate warehousing, distribution, or other similar services on behalf of a manufacturer, but for which there is no change of ownership in the dangerous drugs. Existing law requires a wholesaler to have a pharmacist or designated representative on its premises and to be supervised or managed by a designated representative-in-charge. Existing law requires a separate license for each place of business owned or operated by a wholesaler. Existing law also requires a wholesaler to submit a surety bond of $100,000 payable to a specified fund of the board to secure payment of any administrative fine imposed by the board. Existing law, the federal Drug Supply Chain Security Act, prohibits a third-party logistics provider, as defined, from conducting any activities in a state unless each facility of the provider is licensed by the state from which drugs are distributed by the provider in accordance with regulations to be promulgated by the Secretary of the United States Department of Health and Human Services. This bill would revise the definition of the terms "third-party logistics provider" and "reverse third-party logistics provider" to conform to federal law, as specified, and would require a third-party logistics provider of a dangerous drug or dangerous device to be separately licensed by the board as a third-party logistics provider. The bill would require a third-party logistics provider to be supervised and managed by a responsible manager who would need to be licensed by the board as a designated representative-3PL. Under the bill, a designated representative-3PL and a responsible manager would be subject to similar requirements as those imposed on a designated representative and a designated representative-in-charge, respectively. The bill would limit a place of business to a single board-issued license, except for entities under common ownership that meet specified requirements, and would require that at least one designated representative, in the case of a wholesaler, or designated representative-3PL, in the case of a third-party logistics provider, be present during business hours for each licensed place of business. The bill would require a third-party logistics provider to submit a surety bond of $90,000 payable to a specified fund of the board to secure payment of any administrative fine imposed by the board. The bill would enact parallel requirements with respect to nonresident third-party logistics providers and would make related conforming changes and delete obsolete provisions. After specified federal regulations under the federal Drug Supply Chain Security Act are promulgated, the bill would require the board to act to identify any California laws governing interstate commerce in conflict with those regulations and act to remove the conflict. Existing law makes a wholesaler that uses the services of a carrier liable for the security and integrity of any dangerous drug or devices through that carrier until the drugs or devices are delivered to the transferee. This bill would extend that liability when the wholesaler uses the services of a third-party logistics provider and would require a third-party logistics provider that uses the services of a carrier to have in place and comply with specified written policies and procedures. (2) Existing law requires that all records of manufacture and of sale, acquisition, or disposition of dangerous drugs or dangerous devices be open to inspection by authorized officers of the law during business hours and be preserved for at least 3 years. This bill would make those requirements also applicable to records of receipt and shipment of dangerous drugs and dangerous devices. The bill would also require a manufacturer, wholesaler, third-party logistics provider, or pharmacy that has reasonable cause to believe that a dangerous drug or device that is or was in its possession, and has been sold or distributed in or through California, is counterfeit or the subject of a fraudulent transaction to notify the board within 72 hours of obtaining that knowledge. (3) Existing law sets the fees for the issuance and renewal of licenses for wholesalers and designated representatives at specified amounts and authorizes those fees to be increased to specified higher amounts. This bill would instead set the fees at the higher amounts. (4) Because a violation of the requirements described in paragraphs (1) and (2) above would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.