July 13, 2005
FLORIDA LEGISLATION ON PRESCRIPTION DRUG "PEDIGREES"
By: John Kasprak, Senior Attorney
You asked for information on recent Florida legislation on prescription drug wholesalers and drug “pedigrees.”
Last month, Florida Governor Bush signed prescription drug counterfeiting legislation that toughens the state's law on “pedigree paper” and other transactions for pharmaceutical wholesalers. Pedigree paper refers to a document, either in paper or electronic form, that contains information that records each distribution of any given prescription drug, from sale by a manufacturer, through acquisition and sale by any wholesaler or repackager, until final sale to a pharmacy or other person administering or dispensing the drug.
Prior Legislative Activity
Florida's Office of Program Policy Analysis and Government Accountability issued a report in early 2003 (No. 03-18), which highlighted the problems with counterfeit and diverted drugs in the state. The report found that million of dollars were lost due to the counterfeiting and diverting of drugs in Florida's prescription drug wholesale industry. It concluded that state law did not provide adequate controls over wholesale drug market practices, and that administrative and criminal penalties failed to provide an adequate deterrent.
In 2003, the Florida Legislature passed legislation (Chap. 2003-155, Laws of Florida) that revised the Florida Drug and Cosmetic Act to impose more stringent regulations on prescription drug wholesalers. The legislation created criminal offenses relating to illicit activities involving diverting prescription drugs from wholesale distribution. It revised record keeping requirements for prescription drug wholesalers that are authorized distributors of record (ADR) of a drug manufacturer. It requires anyone engaged in wholesale drug distribution that is not an ADR to provide to each wholesale distributor of such drug, before the sale is made, a written statement under oath identifying each previous sale of the drug back to the last ADR, the lot number of the drug, and the number of the invoice indicating the drug sale. The 2003 legislation provided for a phased-in implementation of the record keeping requirements for the wholesale distribution of drugs in Florida.
Florida Drug and Cosmetic Act
The Bureau of Statewide Pharmaceutical Services of the Florida Department of Health (DOH) is responsible for regulating the wholesale distribution of drugs intended for human consumption under the Florida Drug and Cosmetic Act. It defines “wholesale distribution” as distribution of prescription drugs to persons other than a consumer or patient, but exempts specified activities. These exempt activities are (1) purchases or acquisitions by a hospital or other health care entity for its own use from a group purchasing organization of which it is a member; (2) the sale, purchase or trade of a prescription drug or an offer to sell, purchase or trade by a charitable organization; (3) the sale, purchase, or trade of a drug or an offer to do so among hospitals or other health care entities that are under common control; and (4) the sale, purchase, trade, or other transfer of a drug from or for any state, federal, or local government agency or entity eligible to purchase drugs at public health service prices under federal law to a contract provider or its subcontractor for eligible patients under specified conditions.
The act requires prescription drug wholesalers to maintain records that provide a complete audit trail of prescription drugs from purchase to sale or other disposition. These records are known as “pedigree papers” and must include a written statement of all previous sales of the drug that is being sold in a wholesale market.
The Florida Legislature revised its prescription drug wholesale distribution law requirements in the 2005 session (SB 874, Chapter 2005-248). The 2005 act revises the definition of pedigree paper to (1) provide that it is a document in either paper or electronic form and (2) require additional information on a legend drug's pedigree paper such as an invoice number and a shipping document or other number “uniquely identifying” the transaction. If a manufacturer or repackager has uniquely serialized an individual legend drug unit, that identifier also must be included on the pedigree. Pedigree papers must also include a certification that the recipient wholesaler has authenticated the document.
The legislation also revises the definition of “wholesale distribution” to exempt the sale, purchase, or trade of a prescription drug between pharmacies as a result of a sale, transfer, merger, or consolidation of all or part of the business of the pharmacies from or with another pharmacy, whether accomplished as a purchase and sale of stock or of business assets.
It deletes an existing expiration date of July 1, 2006 for provisions relating to requirements for wholesale drug distributors to provide pedigree papers so that chain drug store warehouses and repackaging operations, including retail pharmacies within an affiliated group that distributes drugs only to members of their affiliated group, would continue to be exempt from passing the pedigree papers.
Finally, the legislation prohibits the state's Agency for Health Care Administration from reviewing or using certain violations relating to prescription drug recordkeeping to deny or withhold Medicaid payments to pharmacies or to audit their records.
A copy of the legislation and related information is attached.