By: Armbrister S.B. No. 564
73R2589 KLL-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the licensing of wholesale device distributors under
1-3 the Texas Food, Drug, and Cosmetic Act; providing civil and
1-4 administrative penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 431.021, Health and Safety Code, is
1-7 amended to read as follows:
1-8 Sec. 431.021. Prohibited Acts. The following acts and the
1-9 causing of the following acts within this state are unlawful and
1-10 prohibited:
1-11 (a) the introduction or delivery for introduction into
1-12 commerce of any food, drug, device, or cosmetic that is adulterated
1-13 or misbranded;
1-14 (b) the adulteration or misbranding of any food, drug,
1-15 device, or cosmetic in commerce;
1-16 (c) the receipt in commerce of any food, drug, device,
1-17 or cosmetic that is adulterated or misbranded, and the delivery or
1-18 proffered delivery thereof for pay or otherwise;
1-19 (d) the distribution in commerce of a consumer
1-20 commodity, if such commodity is contained in a package, or if there
1-21 is affixed to that commodity a label that does not conform to the
1-22 provisions of this chapter and of rules adopted under the authority
1-23 of this chapter; provided, however, that this prohibition shall not
1-24 apply to persons engaged in business as wholesale or retail
2-1 distributors of consumer commodities except to the extent that such
2-2 persons:
2-3 (1) are engaged in the packaging or labeling of
2-4 such commodities; or
2-5 (2) prescribe or specify by any means the manner
2-6 in which such commodities are packaged or labeled;
2-7 (e) the introduction or delivery for introduction into
2-8 commerce of any article in violation of Section 431.084, 431.114,
2-9 or 431.115;
2-10 (f) the dissemination of any false advertisement;
2-11 (g) the refusal to permit entry or inspection, or to
2-12 permit the taking of a sample or to permit access to or copying of
2-13 any record as authorized by Sections 431.042-431.044; or the
2-14 failure to establish or maintain any record or make any report
2-15 required under Section 512(j), (l), or (m) of the federal Act, or
2-16 the refusal to permit access to or verification or copying of any
2-17 such required record;
2-18 (h) the manufacture within this state of any food,
2-19 drug, device, or cosmetic that is adulterated or misbranded;
2-20 (i) the giving of a guaranty or undertaking referred
2-21 to in Section 431.059, which guaranty or undertaking is false,
2-22 except by a person who relied on a guaranty or undertaking to the
2-23 same effect signed by, and containing the name and address of the
2-24 person residing in this state from whom the person received in good
2-25 faith the food, drug, device, or cosmetic; or the giving of a
2-26 guaranty or undertaking referred to in Section 431.059, which
2-27 guaranty or undertaking is false;
3-1 (j) the removal or disposal of a detained or embargoed
3-2 article in violation of Section 431.048;
3-3 (k) the alteration, mutilation, destruction,
3-4 obliteration, or removal of the whole or any part of the labeling
3-5 of, or the doing of any other act with respect to a food, drug,
3-6 device, or cosmetic, if such act is done while such article is held
3-7 for sale after shipment in commerce and results in such article
3-8 being adulterated or misbranded;
3-9 (l)(1) forging, counterfeiting, simulating, or falsely
3-10 representing, or without proper authority using any mark, stamp,
3-11 tag, label, or other identification device authorized or required
3-12 by rules adopted under this chapter or the regulations promulgated
3-13 under the provisions of the federal Act;
3-14 (2) making, selling, disposing of, or keeping in
3-15 possession, control, or custody, or concealing any punch, die,
3-16 plate, stone, or other thing designed to print, imprint, or
3-17 reproduce the trademark, trade name, or other identifying mark,
3-18 imprint, or device of another or any likeness of any of the
3-19 foregoing on any drug or container or labeling thereof so as to
3-20 render such drug a counterfeit drug;
3-21 (3) the doing of any act that causes a drug to
3-22 be a counterfeit drug, or the sale or dispensing, or the holding
3-23 for sale or dispensing, of a counterfeit drug;
3-24 (m) the using by any person to the person's own
3-25 advantage, or revealing, other than to the commissioner, an
3-26 authorized agent, a health authority or to the courts when relevant
3-27 in any judicial proceeding under this chapter, of any information
4-1 acquired under the authority of this chapter concerning any method
4-2 or process that as a trade secret is entitled to protection;
4-3 (n) the using, on the labeling of any drug or device
4-4 or in any advertising relating to such drug or device, of any
4-5 representation or suggestion that approval of an application with
4-6 respect to such drug or device is in effect under Section 431.114
4-7 or Section 505, 515, or 520(g) of the federal Act, as the case may
4-8 be, or that such drug or device complies with the provisions of
4-9 such sections;
4-10 (o) the using, in labeling, advertising or other sales
4-11 promotion of any reference to any report or analysis furnished in
4-12 compliance with Sections 431.042-431.044 or Section 704 of the
4-13 federal Act;
4-14 (p) in the case of a prescription drug distributed or
4-15 offered for sale in this state, the failure of the manufacturer,
4-16 packer, or distributor of the drug to maintain for transmittal, or
4-17 to transmit, to any practitioner licensed by applicable law to
4-18 administer such drug who makes written request for information as
4-19 to such drug, true and correct copies of all printed matter that is
4-20 required to be included in any package in which that drug is
4-21 distributed or sold, or such other printed matter as is approved
4-22 under the federal Act. Nothing in this subsection shall be
4-23 construed to exempt any person from any labeling requirement
4-24 imposed by or under other provisions of this chapter;
4-25 (q)(1) placing or causing to be placed on any drug or
4-26 device or container of any drug or device, with intent to defraud,
4-27 the trade name or other identifying mark, or imprint of another or
5-1 any likeness of any of the foregoing;
5-2 (2) selling, dispensing, disposing of or causing
5-3 to be sold, dispensed, or disposed of, or concealing or keeping in
5-4 possession, control, or custody, with intent to sell, dispense, or
5-5 dispose of, any drug, device, or any container of any drug or
5-6 device, with knowledge that the trade name or other identifying
5-7 mark or imprint of another or any likeness of any of the foregoing
5-8 has been placed thereon in a manner prohibited by Subdivision (1)
5-9 of this subsection; or
5-10 (3) making, selling, disposing of, causing to be
5-11 made, sold, or disposed of, keeping in possession, control, or
5-12 custody, or concealing with intent to defraud any punch, die,
5-13 plate, stone, or other thing designed to print, imprint, or
5-14 reproduce the trademark, trade name, or other identifying mark,
5-15 imprint, or device of another or any likeness of any of the
5-16 foregoing on any drug or container or labeling of any drug or
5-17 container so as to render such drug a counterfeit drug;
5-18 (r) dispensing or causing to be dispensed a different
5-19 drug in place of the drug ordered or prescribed without the express
5-20 permission in each case of the person ordering or prescribing;
5-21 (s) the failure to register in accordance with Section
5-22 510 of the federal Act, the failure to provide any information
5-23 required by Section 510(j) or (k) of the federal Act, or the
5-24 failure to provide a notice required by Section 510(j)(2) of the
5-25 federal Act;
5-26 (t)(1) the failure or refusal to:
5-27 (A) comply with any requirement prescribed
6-1 under Section 518 or 520(g) of the federal Act; or
6-2 (B) furnish any notification or other
6-3 material or information required by or under Section 519 or 520(g)
6-4 of the federal Act;
6-5 (2) with respect to any device, the submission
6-6 of any report that is required by or under this chapter that is
6-7 false or misleading in any material respect;
6-8 (u) the movement of a device in violation of an order
6-9 under Section 304(g) of the federal Act or the removal or
6-10 alteration of any mark or label required by the order to identify
6-11 the device as detained;
6-12 (v) the failure to provide the notice required by
6-13 Section 412(b) or 412(c), the failure to make the reports required
6-14 by Section 412(d)(1)(B), or the failure to meet the requirements
6-15 prescribed under Section 412(d)(2) of the federal Act;
6-16 (w) the acceptance by a person of an unused
6-17 prescription or drug, in whole or in part, for the purpose of
6-18 resale, after the prescription or drug has been originally
6-19 dispensed, or sold;
6-20 (x) engaging in the wholesale distribution of drugs or
6-21 devices in this state without filing a licensing statement with the
6-22 commissioner as required by Section 431.202 or having a license as
6-23 required by Section 431.272, as applicable;
6-24 (y) engaging in the manufacture of food in this state
6-25 without first registering with the department as required by
6-26 Section 431.222; or
6-27 (z) unless approved by the United States Food and Drug
7-1 Administration pursuant to the federal Act, the sale, delivery,
7-2 holding, or offering for sale of a self-testing kit designed to
7-3 indicate whether a person has a human immunodeficiency virus
7-4 infection, acquired immune deficiency syndrome, or a related
7-5 disorder or condition.
7-6 SECTION 2. Section 431.111, Health and Safety Code, is
7-7 amended to read as follows:
7-8 Sec. 431.111. Adulterated Drug or Device. A drug or device
7-9 shall be deemed to be adulterated:
7-10 (a)(1) if it consists in whole or in part of any
7-11 filthy, putrid, or decomposed substance; or
7-12 (2)(A) if it has been prepared, packed, or held
7-13 under insanitary conditions whereby it may have been contaminated
7-14 with filth, or whereby it may have been rendered injurious to
7-15 health; or
7-16 (B) if it is a drug and the methods used
7-17 in, or the facilities or controls used for, its manufacture,
7-18 processing, packing, or holding do not conform to or are not
7-19 operated or administered in conformity with current good
7-20 manufacturing practice to assure that such drug meets the
7-21 requirements of this chapter as to safety and has the identity and
7-22 strength, and meets the quality and purity characteristics, which
7-23 it purports or is represented to possess; or
7-24 (3) if its container is composed, in whole or in
7-25 part, of any poisonous or deleterious substance which may render
7-26 the contents injurious to health; or
7-27 (4) if it:
8-1 (A) bears or contains, for purposes of
8-2 coloring only, a color additive that is unsafe under Section
8-3 431.161(a); or
8-4 (B) is a color additive, the intended use
8-5 of which in or on drugs or devices is for purposes of coloring
8-6 only, and is unsafe under Section 431.161(a); or
8-7 (5) if it is a new animal drug that is unsafe
8-8 under Section 512 of the federal Act;
8-9 (b) if it purports to be or is represented as a drug,
8-10 the name of which is recognized in an official compendium, and its
8-11 strength differs from, or its quality or purity falls below, the
8-12 standards set forth in such compendium. Such determination as to
8-13 strength, quality or purity shall be made in accordance with the
8-14 tests or methods of assay set forth in such compendium, or in the
8-15 absence of or inadequacy of such tests or methods of assay, those
8-16 prescribed under the authority of the federal Act. No drug defined
8-17 in an official compendium shall be deemed to be adulterated under
8-18 this paragraph because it differs from the standards of strength,
8-19 quality, or purity therefor set forth in such compendium, if its
8-20 difference in strength, quality, or purity from such standards is
8-21 plainly stated on its label. Whenever a drug is recognized in the
8-22 United States Pharmacopoeia National Formulary, it shall be subject
8-23 to the requirements of the United States Pharmacopoeia National
8-24 Formulary;
8-25 (c) if it is not subject to the provision of Paragraph
8-26 (b) and its strength differs from, or its purity or quality falls
8-27 below, that which it purports or is represented to possess;
9-1 (d) if it is a drug and any substance has been:
9-2 (1) mixed or packed therewith so as to reduce
9-3 its quality or strength; or
9-4 (2) substituted wholly or in part therefor;
9-5 (e) if it is, or purports to be or is represented as,
9-6 a device that is subject to a performance standard established
9-7 under Section 514 of the federal Act, unless the device is in all
9-8 respects in conformity with the standard;
9-9 (f)(1) if it is a class III device:
9-10 (A)(i) that is required by a regulation
9-11 adopted under Section 515(b) of the federal Act to have an approval
9-12 under that section of an application for premarket approval and
9-13 that is not exempt from Section 515 as provided by Section 520(g)
9-14 of the federal Act; and
9-15 (ii)(I) for which an application for
9-16 premarket approval or a notice of completion of a product
9-17 development protocol was not filed with the United States Food and
9-18 Drug Administration by the 90th day after the date of adoption of
9-19 the regulation; or
9-20 (II) for which that
9-21 application was filed and approval was denied or withdrawn, for
9-22 which that notice was filed and was declared incomplete, or for
9-23 which approval of the device under the protocol was withdrawn;
9-24 (B) that was classified under Section
9-25 513(f) of the federal Act into class III, which under Section
9-26 515(a) of the federal Act is required to have in effect an approved
9-27 application for premarket approval, that is not exempt from Section
10-1 515 as provided by Section 520(g) of the federal Act, and that does
10-2 not have the application in effect; or
10-3 (C) that was classified under Section
10-4 520(l) of the federal Act into class III, which under that section
10-5 is required to have in effect an approved application under Section
10-6 515 of the federal Act, and that does not have the application in
10-7 effect, except that:
10-8 (2)(A) in the case of a device classified under
10-9 Section 513(f) of the federal Act into class III and intended
10-10 solely for investigational use, Subdivision (1)(B) does not apply
10-11 to the device during the period ending on the 90th day after the
10-12 date of adoption of the regulations prescribing the procedures and
10-13 conditions required by Section 520(g)(2) of the federal Act; and
10-14 (B) in the case of a device subject to a
10-15 regulation adopted under Section 515(b) of the federal Act,
10-16 Subdivision (1) does not apply to the device during the period
10-17 ending on whichever of the following dates occurs later:
10-18 (i) the last day of the 30-day
10-19 calendar month beginning after the month in which the
10-20 classification of the device into class III became effective under
10-21 Section 513 of the federal Act; or
10-22 (ii) the 90th day after the date of
10-23 adoption of the regulation;
10-24 (g) if it is a banned device;
10-25 (h) <(g)> if it is a device and the methods used in,
10-26 or the facilities or controls used for its manufacture, packing,
10-27 storage, or installations are not in conformity with applicable
11-1 requirements under Section 520(f)(1) of the federal Act or an
11-2 applicable condition as prescribed by an order under Section
11-3 520(f)(2) of the federal Act; or
11-4 (i) <(h)> if it is a device for which an exemption has
11-5 been granted under Section 520(g) of the federal Act for
11-6 investigational use and the person who was granted the exemption or
11-7 any investigator who uses the device under the exemption fails to
11-8 comply with a requirement prescribed by or under that section.
11-9 SECTION 3. Chapter 431, Health and Safety Code, is amended
11-10 by adding Subchapter L to read as follows:
11-11 SUBCHAPTER L. WHOLESALE DEVICE DISTRIBUTORS
11-12 Sec. 431.271. DEFINITIONS. In this subchapter:
11-13 (1) "Importer" means any person who initially
11-14 distributes a device imported into the United States.
11-15 (2) "Wholesale distribution" means distribution to a
11-16 person other than a consumer or patient and includes distribution
11-17 by a manufacturer, repacker, own label distributor, jobber,
11-18 importer, or wholesaler.
11-19 (3) "Place of business" means each location at which a
11-20 device for wholesale distribution is located.
11-21 Sec. 431.272. LICENSE REQUIRED; MINIMUM STANDARDS. (a)
11-22 Except as provided by Section 431.273, a person may not engage in
11-23 the wholesale distribution of devices in this state unless the
11-24 person has a license from the commissioner for each place of
11-25 business.
11-26 (b) A wholesale distributor of devices in this state must
11-27 comply with the minimum requirements specified in the federal Act
12-1 and in this chapter.
12-2 Sec. 431.273. EXEMPTION FROM LICENSING. (a) A person is
12-3 exempt from licensing under this subchapter if the person engages
12-4 only in the following types of wholesale device distribution:
12-5 (1) intracompany sales; or
12-6 (2) the sale, purchase, or trade of a distressed or
12-7 reconditioned device by a salvage broker or a salvage operator
12-8 licensed under Chapter 432 (Texas Food, Drug, Device, and Cosmetic
12-9 Salvage Act).
12-10 (b) An exemption from the licensing requirements under this
12-11 section does not constitute an exemption from the other provisions
12-12 of this chapter or the rules adopted by the board to administer and
12-13 enforce this chapter.
12-14 Sec. 431.274. LICENSE APPLICATION. (a) A person applying
12-15 for a license under this subchapter shall provide, at a minimum,
12-16 the following information on a license application form furnished
12-17 by the commissioner:
12-18 (1) the name under which the business is conducted;
12-19 (2) the address of each place of business that is
12-20 licensed;
12-21 (3) the name and residence address of:
12-22 (A) the proprietor, if the business is a
12-23 proprietorship;
12-24 (B) all partners, if the business is a
12-25 partnership; or
12-26 (C) all principals, if the business is an
12-27 association;
13-1 (4) the date and place of incorporation if the
13-2 business is a corporation;
13-3 (5) the names and residence addresses of the
13-4 individuals in an administrative capacity showing:
13-5 (A) the managing proprietor, if the business is
13-6 a proprietorship;
13-7 (B) the managing partner, if the business is a
13-8 partnership;
13-9 (C) the officers and directors, if the business
13-10 is a corporation; or
13-11 (D) the persons in a managerial capacity, if the
13-12 business is an association; and
13-13 (6) the residence address of an individual in charge
13-14 of each place of business.
13-15 (b) The license application must be signed, verified, and
13-16 completed in a manner described in the rules adopted by the board.
13-17 (c) A person applying for a license under this subchapter
13-18 must pay a licensing fee for each place of business.
13-19 Sec. 431.275. EFFECT OF OPERATIONS IN OTHER JURISDICTIONS;
13-20 REPORTS. (a) A person who engages in the wholesale distribution
13-21 of devices outside this state may engage in wholesale distribution
13-22 of devices in this state if the person holds a license issued by
13-23 the commissioner.
13-24 (b) The commissioner may accept reports from authorities in
13-25 other jurisdictions to determine the extent of compliance with this
13-26 chapter. On examination of those reports and the person's
13-27 compliance history and current compliance record, the commissioner
14-1 may issue a license to the person if the commissioner determines
14-2 that the person is in compliance with this subchapter and the
14-3 board's rules.
14-4 (c) The commissioner shall consider each licensing
14-5 application filed by a person who wishes to engage in wholesale
14-6 distribution of devices in this state on an individual basis.
14-7 Sec. 431.276. FEES. (a) The department shall collect fees
14-8 for:
14-9 (1) a license that is filed or renewed;
14-10 (2) a license that is amended, including notification
14-11 of a change of location of a licensed place of business required
14-12 under Section 431.278, a change of the name of an association or
14-13 corporation, or a change in the ownership of the licensee; and
14-14 (3) an inspection performed to enforce this subchapter
14-15 and rules adopted under this subchapter.
14-16 (b) The board may charge annual fees.
14-17 (c) The board by rule shall set the fees in amounts that
14-18 allow the department to recover at least 50 percent of the annual
14-19 expenditures of state funds by the department in:
14-20 (1) reviewing and acting on a license or renewal
14-21 license;
14-22 (2) amending a license;
14-23 (3) inspecting a licensed facility; and
14-24 (4) implementing and enforcing this subchapter,
14-25 including a rule or order adopted or a license issued under this
14-26 subchapter.
14-27 (d) At least half of the licensing fees collected shall be
15-1 used to inspect an applicant or licensed place of business.
15-2 (e) Fees collected under this section shall be deposited to
15-3 the credit of the food and drug registration fee account of the
15-4 general revenue fund and may be appropriated to the department only
15-5 to carry out this chapter.
15-6 Sec. 431.277. LICENSE EXPIRATION. (a) The board by rule
15-7 may provide that licenses expire on different dates during the
15-8 year.
15-9 (b) If the board changes a license expiration date, the
15-10 board shall prorate the license fee payable on or before September
15-11 1 so that the licensee is required to pay only that portion of the
15-12 fee that is allocable to the number of months during which the
15-13 license is valid.
15-14 (c) The total renewal license fee is payable when the
15-15 license is renewed on the new expiration date.
15-16 Sec. 431.278. CHANGE OF LOCATION OF PLACE OF BUSINESS. (a)
15-17 Not fewer than 30 days in advance of the change, the licensee shall
15-18 notify the commissioner or the commissioner's designee in writing
15-19 of the licensee's intent to change the location of a licensed place
15-20 of business. The notice shall include the address of the new
15-21 location and the name and residence address of the individual in
15-22 charge of the business at the new location.
15-23 (b) Not later than the 10th day after the date of completion
15-24 of the change of location, the licensee shall notify the
15-25 commissioner or the commissioner's designee in writing to verify
15-26 the change of location, the address of the new location, and the
15-27 name and residence address of the individual in charge of the
16-1 business at the new address.
16-2 (c) Notice is adequate if the licensee provides the intent
16-3 and verification notices to the commissioner or the commissioner's
16-4 designee by certified mail, return receipt requested, mailed to the
16-5 central office of the department.
16-6 Sec. 431.279. REFUSAL TO LICENSE; SUSPENSION OR REVOCATION
16-7 OF LICENSE. (a) The commissioner may refuse an application or may
16-8 suspend or revoke a license if the applicant or licensee:
16-9 (1) has been convicted of a felony or misdemeanor that
16-10 involves moral turpitude;
16-11 (2) is an association, partnership, or corporation and
16-12 the managing officer has been convicted of a felony or misdemeanor
16-13 that involves moral turpitude;
16-14 (3) has been convicted in a state or federal court of
16-15 the illegal use, sale, or transportation of intoxicating liquors,
16-16 narcotic drugs, barbiturates, amphetamines, desoxyephedrine, their
16-17 compounds or derivatives, or any other dangerous or habit-forming
16-18 drugs;
16-19 (4) is an association, partnership, or corporation and
16-20 the managing officer has been convicted in a state or federal court
16-21 of the illegal use, sale, or transportation of intoxicating
16-22 liquors, narcotic drugs, barbiturates, amphetamines,
16-23 desoxyephedrine, their compounds or derivatives, or any other
16-24 dangerous or habit-forming drugs; or
16-25 (5) has not complied with this chapter or the board's
16-26 rules implementing this chapter.
16-27 (b) The commissioner may refuse an application for a license
17-1 or may suspend or revoke a license if the commissioner determines
17-2 from evidence presented during a hearing that the applicant or
17-3 licensee:
17-4 (1) has violated Section 431.021(l)(3), relating to
17-5 the counterfeiting of a drug or the sale or holding for sale of a
17-6 counterfeit drug;
17-7 (2) has violated Chapter 481 (Texas Controlled
17-8 Substances Act) or 483 (Dangerous Drugs); or
17-9 (3) has violated the rules of the director of the
17-10 Department of Public Safety, including being responsible for a
17-11 significant discrepancy in the records that state law requires the
17-12 applicant or licensee to maintain.
17-13 (c) The refusal to license an applicant or the suspension or
17-14 revocation of a license by the commissioner and the appeal from
17-15 that action are governed by the board's formal hearing procedures
17-16 and the procedures for a contested case hearing under the
17-17 Administrative Procedure and Texas Register Act (Article 6252-13a,
17-18 Vernon's Texas Civil Statutes).
17-19 SECTION 4. This Act takes effect September 1, 1993.
17-20 SECTION 5. The importance of this legislation and the
17-21 crowded condition of the calendars in both houses create an
17-22 emergency and an imperative public necessity that the
17-23 constitutional rule requiring bills to be read on three several
17-24 days in each house be suspended, and this rule is hereby suspended.