STATEMENT OF EMERGENCY

201 KAR 2:390E

 

      During the 2017 Regular Session, the General Assembly passed House Bill 364, which created new sections of KRS Chapter 315, the statutory scheme that governs pharmacies and pharmacists. House Bill 364 became effective June 29, 2017, and its provisions were codified as KRS 315.4102 - 315.4110. House Bill 364 created new license types, and requirements for third-party logistics providers that were previously licensed in the Commonwealth as wholesale distributors. These new requirements are based on the lapsing of a grace period under the federal Drug Supply Chain Security Act of 2013 which prohibits states from licensing third-party logistics providers as wholesale drug distributors. Effective October 1, 2017, the grace period will expire and many third-party logistics providers will be unlicensed and therefore unable to lawfully operate, thereby leaving patients without necessary medications. The ordinary administrative regulation timeline for implementation will take until at least November 2017, leaving a gap in the ability of patients to receive necessary medications. An emergency administrative regulation avoids a lapse in pharmaceutical services. Therefore, this emergency administrative regulation is needed pursuant to KRS 13A.190(1)(a)(1), (3), and (4) to meet an imminent threat to public health, safety, or welfare, meet a deadline for the promulgation of an administrative regulation, and protect human health. This emergency administrative regulation shall be replaced by an ordinary administrative regulation to be concurrently filed with the Regulations Compiler. The ordinary administrative regulation is identical to this emergency administrative regulation.

 

MATTHEW G. BEVIN, Governor

SCOTT GREENWELL, Board President

 

GENERAL GOVERNMENT CABINET

Board of Pharmacy

(New Emergency Administrative Regulation)

 

      201 KAR 2:390E. Third-party logistics provider.

 

      RELATES TO: KRS 315.002, 315.005, 315.191(1)(a), 315.400(18), 315.4102, 315.4104, 315.4106, 315.4108, 315.4110

      STATUTORY AUTHORITY: KRS 315.400(18), 315.4102, 315.4104, 315.4108, 315.4108, 315.4110

      EFFECTIVE: August 15, 2017

      NECESSITY, FUNCTION AND CONFORMITY: KRS 315.400(18) defines a third-party logistics provider. KRS 315.4102 requires a third-party logistics provider to be licensed. KRS 315.4104 requires an application and accompanying information. KRS 315.4106 establishes eligibility factors for licensure and renewal. KRS 315.4108 identifies persons disqualified as owners and designated representatives of third-party logistics providers. KRS 315.4110 establishes criteria for lawfully conducting business as a third-party logistics provider in the Commonwealth of Kentucky. This administrative regulation establishes requirements for third-party logistics providers to become licensed and operate.

 

      Section 1. Application Requirements for Licensure Applica-tion and Renewal. (1) An applicant for initial licensure or renewal as a third party logistics provider shall submit a non-refundable fee of $200 and a complete "Application to Operate as a Third-Party Logistics Facility" as referenced and incorporated herein. With each application for an initial license or renewal, the applicant shall provide the following information:

      (a) The state of incorporation or organization if the owner is a corporation;

      (b) A list of all manufacturers, wholesale distributors, and dispensers for whom the third-party logistics provider pro-vides services;

      (c) Information pertaining to any violation of federal, or state laws by the applicant, officer, partner, director, or pharmacist-in-charge;

      (d) Information pertaining to suspension, revocation, or any sanction against a license currently or previously held by the applicant, officer, owner, partner, director, member, or pharmacist-in-charge; and

      (e) Documentation of licensure as a third-party logistics provider from either the state in which the provider ships or the United States Food and Drug Administration.

      (2) Licenses expire on June 30 following date of issuance, unless earlier suspended or revoked. There shall be a delinquent renewal fee of $200 for failure to renew by June 30 of each year.

      (3) Licenses shall be issued only for the name, ownership, and location listed on the license application. Changes of name, ownership, or location shall require a new license.

 

      Section 2. General Requirements. A third-party logistics provider shall:

      (1) Immediately provide, upon written request of the board or its agents, and maintain for board inspection, a list of all manufacturers, wholesale distributors, and dispensers for whom the third-party logistics provider provides services;

      (2) Immediately provide, upon written request of the board or its agents, and maintain for board inspection, a list of each partner, limited liability company member, and corporate officer or director, including a description of the duties and qualifications of each;

      (3) Maintain, and make available for board inspection, records of providing third-party logistics services involving prescription drugs, and if such records are not maintained, submit an explanation why it has no records of providing third-party logistics services involving prescription drugs; and

      (4) Follow closure procedures as stated in 201 KAR 2:106, Section 2.

 

      Section 3. Incorporation by Reference. (1) "Application to Operate as a Third-Party Logistics Facility", July 2017, is incorporated by reference.

      (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Board of Pharmacy, State Office Building Annex, Suite 300, 125 Holmes Street, Frankfort, Kentucky 40601-8024, Monday through Friday, 8:00 a.m. to 4:30 p.m.

 

SCOTT GREENWELL, R.Ph., President

      APPROVED BY AGENCY: August 14, 2017

      FILED WITH LRC: August 15, 2017 at 10 a.m.

      CONTACT PERSON: Steve Hart, Executive Director, Kentucky Board of Pharmacy, State Office Building Annex, Suite 300, 125 Holmes Street, Frankfort, Kentucky 40601, phone (502) 564-7910, fax (502) 696-3806, email Steve.Hart@ky.gov.

 

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

 

Contact person: Steve Hart

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: This administrative regulation establishes requirements for third-party logistics providers.

      (b) The necessity of this administrative regulation: This regulation establishes requirements as authorized by KRS 315.4102-315.4110.

      (c) How this administrative regulation conforms to the con-tent of the authorizing statues: This administrative regulation establishes application requirements for initial application and renewal, qualifications for a license, and other general requirements as authorized by KRS 315.4102-4110.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: Third-party logistics providers will know how to obtain a license and conduct business in the Commonwealth of Kentucky.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: N/A

      (b) The necessity of the amendment to this administrative regulation: N/A

      (c) How the amendment conforms to the content of the authorizing statutes: N/A

      (d) How the amendment will assist in the effective administration of the statutes: N/A

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: The board anticipates approximately 250 entities will be affected by this regulation.

      (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

      (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: An applicant will submit an application, pay a fee, and conduct business pursuant to the authorizing statutes and regulation.

      (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): The board will charge $200 for the initial application and each renewal.

      (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The board will issue a permit to operate an outsourcing facility if qualifications for a license are sufficient.

      (5) Provide an estimate of how much it will cost to implement this administrative

regulation:

      (a) It costs approximately $200 per licensee to license, inspect, and enforce applicable laws and regulations that pertain to outsourcing facilities.

      (b) On a continuing basis: The board will incur costs of approximately $200 per licensee annually on a continuing basis.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: Enforcement of this regulation shall be accomplished through license fees. The Board of Pharmacy generates its own revenues without contribution from the General Fund.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No increase in fees or funding will be required to implement this new administrative regulation.

      (8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees: This administrative regulation establishes a fee authorized by KRS 315.4104.

      (9) TIERING: Is tiering applied? Tiering was not applied as the regulation is applied to all applicants equally.

 

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

 

      1. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Kentucky Board of Pharmacy will be impacted by this administrative regulation.

      2. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 315.4102-4110 authorize the board to promulgate administrative regulations to regulate and control third-party logistics providers.

      3. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? The board anticipates $50,000 in revenue that will be generated in fees the first year.

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? The board anticipates $50,000 in revenue that will be generated in fees for subsequent years.

      (c) How much will it cost to administer this program for the first year? The board anticipates it will spend $50,000 to li-cense, inspect, and enforce the laws and regulations that gov-ern third-party logistics providers for the first year.

      (d) How much will it cost to administer this program for subsequent years? The board anticipates it will spend $50,000 to license, inspect, and enforce the laws and regulations that govern third-party logistics providers for subsequent years.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation. N/A

      Revenues (+/-):

      Expenditures (+/-):

      Other Explanation: