You asked whether any states have acted to prevent the sale of counterfeit pharmaceuticals.

SUMMARY

States are acting on two tracks to prevent the sale of counterfeit drugs. Some are strengthening laws governing wholesale pharmaceutical distributors, the middlemen between drug manufacturers and consumers. Other states are addressing pharmaceutical sales over the Internet, which is viewed as a growing source of counterfeit drugs.

Florida and Nevada are in the forefront of tightening drug-wholesaling laws, particularly by requiring background checks of distributors and establishing a “pedigree” or transaction record for all drug sales. A recent report by the U. S. Food and Drug Administration, Combating Counterfeit Drugs (February 2004), which calls on states to strengthen their wholesale pharmaceutical distributor licensing and oversight laws, cites Florida’s stringent requirements and penalties. The National Association of Boards of Pharmacy (NABP) recently revised its model rules for wholesale distributor licensing based on Florida and Nevada’s laws (Wholesaler Model Rules).

The NABP’s revised model, which is part of its Model State Pharmacy Act, includes background checks and extensive disclosure requirements for distributors’ personnel and inspection and due diligence procedures before transactions. NABP is working with state pharmacy boards and the wholesale drug industry to adopt and implement these rules. It has also released a list of drugs that are susceptible to counterfeiting so that states do not have to develop their own lists and is creating a wholesale distributor clearinghouse that lists the distributors it accredits. It says the clearinghouse, in conjunction with its model rule, will create “the means for establishing uniform licensing requirements that will prevent illicit operators from locating in a state with less stringent requirements. ”

Bills were introduced in several state legislatures in 2004 to regulate Internet pharmaceutical sales, but none passed. For example, New Jersey’s proposal required Internet pharmacies to register with the state Pharmacy Board; show proof of licensure as pharmacies by the state in which they are located; and provide the names, addresses, and registrations of their pharmacists. Iowa’s proposal prohibited the sale of pharmaceuticals or medical devices through the Internet unless the seller was licensed in Iowa. Both proposals carried significant penalties for violations.

TIGHTENING DRUG WHOLESALER REQUIREMENTS

Florida

Florida’s law, the Prescription Drug Protection Act (codified at Fl. Stat. 499. 012), took effect on January 1, 2004. Among numerous provisions, it requires drug wholesale permit applicants to provide extensive background information, including a criminal history record check, and specifies factors the Health Department must consider in reviewing applicants’ qualifications. It eliminates reciprocity for wholesalers licensed in other states, thus requiring anyone who wants to do business in Florida to undergo its more stringent oversight.

The act revises record keeping requirements to create a “pedigree” for each wholesale drug initially sold by a drug manufacturer’s authorized distributor of record (ADR). It requires anyone other than the ADR who is engaged in the wholesale distribution of a drug to provide each subsequent wholesale distributor, before the sale is made, a written statement under oath identifying each previous sale of the drug back to the ADR, the drug’s lot number, and the number of the invoice evidencing the sale. Anyone who violates these pedigree requirements or who traffics in contraband pharmaceuticals is subject to imprisonment for up to five years, a fine up to $ 5,000, or both.

Nevada

Nevada’s law, enacted in 2003 (SB 425, ch. 392), allows drug wholesalers to buy pharmaceuticals only from a drug’s manufacturer or another licensed wholesaler and permits them to sell drugs only to another licensed wholesaler, a pharmacist, or medical practitioner. For all sales in this chain the purchasing wholesaler must (1) have purchased the drug directly from its manufacturer or reasonably believe that it was originally purchased from the manufacturer; (2) visually examine the drug to make sure it is not counterfeit, adulterated, mislabeled, or otherwise compromised; (3) receive it directly from the selling wholesaler; and (4) maintain the shipping company’s documentation in its records. The law allows the Board of Pharmacy to copy and remove a drug wholesaler’s records and penalize those who do not permit this.

INTERNET SALES RESTRICTIONS

New Jersey

A bill to subject Internet pharmacies to state regulation was introduced in the 2004 legislative session but was never reported out of committee. It required Internet pharmacies to register with the state Pharmacy Board before they could dispense or deliver prescription drugs in the state. Such pharmacies had to provide (1) certification that they were licensed in the state where they were located and (2) the names, addresses, and state registrations of the pharmacists who filled prescriptions sent to New Jersey.

Before an Internet pharmacy could deliver drugs to a New Jersey patient, the bill required its pharmacists to determine that the prescription was legal and valid and written by a practitioner with a professional relationship with the patient. If a pharmacist questioned a prescription’s validity, he had to verify it with the practitioner. Failure to do this could result in a $ 25,000 civil penalty to the pharmacy and a $ 5,000 civil penalty for the pharmacist. Violating any of the bill’s other provisions was grounds for not registering a pharmacy or revoking its registration (SB 1231).

Iowa

House Study Bill 620 prohibited anyone to sell, distribute, or offer to sell or distribute to an Iowa resident over the Internet any prescription drug or prescription medical device unless he held a valid Iowa pharmacy or nonresident pharmacy license. The prohibition also applied to offers to help people purchase drugs or devices over the Internet. Violators committed a class D felony. The bill also allowed the Pharmacy Board to seek a restraining order against a violator and a civil penalty up to $ 40,000 per transaction and $ 120 million in the aggregate. Violating a restraining order could result in an additional $ 100,000 per day civil penalty. And violators could be subject to forfeiture of any assets or proceeds they acquired as a result of the violation. The bill was not reported out of committee.

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