STATEMENT OF EMERGENCY
201 KAR 2:400E
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 315.340 and KRS 315.342. House Bill 364 created new license types, and requirements for outsourcing facilities. These new requirements are based on the lapsing of a grace period under the federal Drug Supply Chain Security Act of 2013. Effective October 1, 2017, the grace period will expire and many facilities that currently outsource pharmaceuticals will be unlicensed and therefore unable to lawfully operate, thereby leaving patients without necessary medications. An 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. Without the emergency administrative regulation the Board will not be able to issue licenses between September 30th and the implementation date of the ordinary administrative regulation, which would cause patients to be denied 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
GENERAL GOVERNMENT CABINET
Kentucky Board of Pharmacy
(New Emergency Administrative Regulation)
201 KAR 2:400E. Outsourcing facility.
RELATES TO: KRS 315.002, 315.005, 315.010(16), 315.191(1)(a), 315.340, 315.342
STATUTORY AUTHORITY: KRS 315.010(16), 315.340, 315.342
EFFECTIVE: August 15, 2017
NECESSITY, FUNCTION AND CONFORMITY: KRS 315.340 establishes requirements for in-state outsourcing facilities doing business in Kentucky. KRS 315.342 establishes requirements for out-of-state outsourcing facilities doing business in Kentucky. This administrative regulation establishes further requirements for in-state and out-of-state outsourcing facilities.
Section 1. Application Requirements for Initial Licensure and Renewal. (1) An applicant for initial licensure or renewal as an outsourcing facility shall submit:
(a) A nonrefundable fee of $250;
(b) A complete "Application to Operate as an Outsourcer Facility";
(c) Unless previously provided, proof of registration as an outsourcing facility with the secretary of the U. S. Department of Health and Human Services, Food and Drug Administration; and
(d) Unless previously provided, a copy of the current inspection report conducted by the United States Food and Drug Administration pursuant to KRS 315.342(2)(a)(2) and (b)(1), if applicable. If a current inspection report is not available from the United States Food and Drug Administration, the applicant shall submit an inspection report by:
1. National Association of Boards of Pharmacy (NABP); or
2. The board’s authorized agent.
(2) A license shall expire on June 30 following date of issuance, unless earlier suspended or revoked. There shall be a delinquent renewal fee of $250 for failure to renew by June 30 of each year.
Section 2. Qualifications for License. (1) The board shall consider the following in determining whether to grant a license:
(a) A felony conviction related to:
1. The practice of pharmacy;
2. Drugs; or
3. Federal or state medical assistance programs;
(b) The furnishing of false or fraudulent information in any application;
(c) Suspension or revocation of a license or permit by federal, state, or local government;
(d) Compliance with a previously granted license or permit; and
(e) Failure to maintain and make readily available those records required to be maintained by an outsourcing facility.
(2) The Board shall have the right to deny a license to an applicant if, in considering the factors listed in subsection 1 of this Section, it determines that granting such a license would not be consistent with public health and safety.
Section 3. General Requirements. An outsourcing facility shall:
(1) Permit, to the extent authorized by laws or rules, board agents to enter and inspect its premises and delivery vehicles, to audit its records and written operating procedures, and to confiscate prescription drugs and records; and
(2) Follow closure procedures as stated in 201 KAR 2:106 Section 2.
Section 4. Incorporation by Reference. (1) "Application to Operate as an Outsourcer 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 in-state and out-of-state outsourcing facilities.
(b) The necessity of this administrative regulation: This regulation sets requirements as authorized by KRS 315.340 and 315.342.
(c) How this administrative regulation conforms to the content 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 315.340 and 315.342.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: Outsourcing facilities will know how to obtain a permit 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 100 facilities 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): KRS 315.340 permits a fee (initial application and renewal) up to $500, but the board will only charge $250. KRS 315.342 permits a fee of $250 (initial application and renewal), and the board will charge $250.
(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
(a) Initially: No new costs will be incurred by the board, since many of the businesses previously licensed by the board as wholesale distributors will now convert to an outsourcer facility license. It costs approximately $250 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 $250 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 establish fees authorized by KRS 315.340 and 315.342.
(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 315.340 authorize the board to promulgate administrative regulations to regulate and control in-state outsourcing facilities. KRS 315.342 authorize the board to promulgate administrative regulations to regulate and control out-of-state outsourcing facilities.
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 $25,000 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 $25,000 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 $25,000 to license, inspect, and enforce the laws and regulations that govern outsourcing facilities for the first year.
(d) How much will it cost to administer this program for subsequent years? The board anticipates it will spend $25,000 to license, inspect, and enforce the laws and regulations that govern outsourcing facilities 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