Both federal and state governments have an interest in regulating the distribution of drugs due to the dangers associated with counterfeit drugs, distribution of outdated or expired drugs, and limiting fraudulent or corrupt activity on the part of wholesale distributors.
What are the federal and state licensing requirements for a wholesale distributor?
Regulations are administered federally by the Drug Enforcement Administration (DEA) and the Food & Drug Administration. At the state level, licenses are issued by the Boards of Pharmacy in each state. You must first obtain all required licenses before engaging in any wholesale drug distribution activity within your domestic state. (This applies in all 50 states and the District of Columbia.)
Once the necessary licenses are obtained for the domestic state, the business may obtain “non-resident” licenses in each additional state they wish to operate.
The licensure process is different within each state. Unfortunately, the more information a state requires, the longer the process can take. As a rule, most states require background checks, the submission of facility floor plans, proof of insurance, disclosure of operating officers, and surety bonds for liability purposes. Some states also require fingerprinting.
A handful of states require businesses to become National Association of Boards of Pharmacy (NABP) certified as a prerequisite to licensure.
Once a license is obtained, you must remain in compliance and file renewals as often as each year.
How long does it take to get a wholesale drug distributor license?
Depending on the state, approval times for a wholesale drug distributor license can range from weeks to months. Typically you must first obtain a license in your resident or domestic state.
In Alaska, this process is relatively straightforward, and a license can be issued in two to three weeks. In California, the process is more tedious and requires basic licensing information as well as approval by both the Food and Drug Administration (FDA) and the DEA.
For the states that require VAWD certification by the National Association of Boards of Pharmacies or a similar entity, weeks and months can be added to the application process.
If you choose to expand into another state, you must complete the licensure process in that state which can add to the processing time.
How will the Drug Supply Chain Security Act (DSCSA) updates affect licensing?
The Drug Supply Chain Security Act of 2013 was designed to establish a system for tracking and tracing prescription drugs in the United States. The law has evolved over time to include new requirements for a uniform licensure standard that would address the patchwork system of requirements for wholesale drug distributors across state lines.
The proposed rule (National Standards for the Licensure of Wholesale Drug Distributors and Third-Party Logistics Providers) was announced by the FDA in February 2022. It is intended to provide clarity and consistency for wholesale distributors and third-party logistics providers who seek licensure.
Once finalized, every U.S. wholesale drug distributor and third-party logistics facility will be held to these standards. Only those licensed according to the proposed national standards will be able to engage in transactions related to the sale and distribution of certain prescription drugs with other members of the supply chain. Where a state does not have a licensing program in accordance with the regulation, the FDA would be the licensing authority.
The comment period for the proposed rule was extended to September 6, 2022. This will allow interested stakeholders additional time to submit comments.
What are the penalties for operating without a license?
Operating a wholesale drug distribution business without a license or with an expired license can result in harsh fines and criminal prosecution at the state and federal levels, especially if controlled substances are involved.
Managing compliance obligations, particularly license renewals, amidst ever-changing regulations should occupy an important part of your company’s day-to-day operations. Keeping track of renewal dates, fees, and necessary documents can be complicated and time-consuming.
CT Corporation can help you navigate the wholesale drug distributor’s uniquely complex regulatory and licensing challenges.
To learn more about how CT Corporation can help you manage your business license needs, contact a CT Corporation Service Representative or call (844) 878-1800.