1-1 By: Armbrister S.B. No. 564
1-2 (In the Senate - Filed March 2, 1993; March 3, 1993, read
1-3 first time and referred to Committee on Health and Human Services;
1-4 April 13, 1993, reported favorably by the following vote: Yeas 9,
1-5 Nays 0; April 13, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Zaffirini x
1-9 Ellis x
1-10 Madla x
1-11 Moncrief x
1-12 Nelson x
1-13 Patterson x
1-14 Shelley x
1-15 Truan x
1-16 Wentworth x
1-17 A BILL TO BE ENTITLED
1-18 AN ACT
1-19 relating to the licensing of wholesale device distributors under
1-20 the Texas Food, Drug, and Cosmetic Act; providing civil and
1-21 administrative penalties.
1-22 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-23 SECTION 1. Section 431.021, Health and Safety Code, is
1-24 amended to read as follows:
1-25 Sec. 431.021. Prohibited Acts. The following acts and the
1-26 causing of the following acts within this state are unlawful and
1-27 prohibited:
1-28 (a) the introduction or delivery for introduction into
1-29 commerce of any food, drug, device, or cosmetic that is adulterated
1-30 or misbranded;
1-31 (b) the adulteration or misbranding of any food, drug,
1-32 device, or cosmetic in commerce;
1-33 (c) the receipt in commerce of any food, drug, device,
1-34 or cosmetic that is adulterated or misbranded, and the delivery or
1-35 proffered delivery thereof for pay or otherwise;
1-36 (d) the distribution in commerce of a consumer
1-37 commodity, if such commodity is contained in a package, or if there
1-38 is affixed to that commodity a label that does not conform to the
1-39 provisions of this chapter and of rules adopted under the authority
1-40 of this chapter; provided, however, that this prohibition shall not
1-41 apply to persons engaged in business as wholesale or retail
1-42 distributors of consumer commodities except to the extent that such
1-43 persons:
1-44 (1) are engaged in the packaging or labeling of
1-45 such commodities; or
1-46 (2) prescribe or specify by any means the manner
1-47 in which such commodities are packaged or labeled;
1-48 (e) the introduction or delivery for introduction into
1-49 commerce of any article in violation of Section 431.084, 431.114,
1-50 or 431.115;
1-51 (f) the dissemination of any false advertisement;
1-52 (g) the refusal to permit entry or inspection, or to
1-53 permit the taking of a sample or to permit access to or copying of
1-54 any record as authorized by Sections 431.042-431.044; or the
1-55 failure to establish or maintain any record or make any report
1-56 required under Section 512(j), (l), or (m) of the federal Act, or
1-57 the refusal to permit access to or verification or copying of any
1-58 such required record;
1-59 (h) the manufacture within this state of any food,
1-60 drug, device, or cosmetic that is adulterated or misbranded;
1-61 (i) the giving of a guaranty or undertaking referred
1-62 to in Section 431.059, which guaranty or undertaking is false,
1-63 except by a person who relied on a guaranty or undertaking to the
1-64 same effect signed by, and containing the name and address of the
1-65 person residing in this state from whom the person received in good
1-66 faith the food, drug, device, or cosmetic; or the giving of a
1-67 guaranty or undertaking referred to in Section 431.059, which
1-68 guaranty or undertaking is false;
2-1 (j) the removal or disposal of a detained or embargoed
2-2 article in violation of Section 431.048;
2-3 (k) the alteration, mutilation, destruction,
2-4 obliteration, or removal of the whole or any part of the labeling
2-5 of, or the doing of any other act with respect to a food, drug,
2-6 device, or cosmetic, if such act is done while such article is held
2-7 for sale after shipment in commerce and results in such article
2-8 being adulterated or misbranded;
2-9 (l)(1) forging, counterfeiting, simulating, or falsely
2-10 representing, or without proper authority using any mark, stamp,
2-11 tag, label, or other identification device authorized or required
2-12 by rules adopted under this chapter or the regulations promulgated
2-13 under the provisions of the federal Act;
2-14 (2) making, selling, disposing of, or keeping in
2-15 possession, control, or custody, or concealing any punch, die,
2-16 plate, stone, or other thing designed to print, imprint, or
2-17 reproduce the trademark, trade name, or other identifying mark,
2-18 imprint, or device of another or any likeness of any of the
2-19 foregoing on any drug or container or labeling thereof so as to
2-20 render such drug a counterfeit drug;
2-21 (3) the doing of any act that causes a drug to
2-22 be a counterfeit drug, or the sale or dispensing, or the holding
2-23 for sale or dispensing, of a counterfeit drug;
2-24 (m) the using by any person to the person's own
2-25 advantage, or revealing, other than to the commissioner, an
2-26 authorized agent, a health authority or to the courts when relevant
2-27 in any judicial proceeding under this chapter, of any information
2-28 acquired under the authority of this chapter concerning any method
2-29 or process that as a trade secret is entitled to protection;
2-30 (n) the using, on the labeling of any drug or device
2-31 or in any advertising relating to such drug or device, of any
2-32 representation or suggestion that approval of an application with
2-33 respect to such drug or device is in effect under Section 431.114
2-34 or Section 505, 515, or 520(g) of the federal Act, as the case may
2-35 be, or that such drug or device complies with the provisions of
2-36 such sections;
2-37 (o) the using, in labeling, advertising or other sales
2-38 promotion of any reference to any report or analysis furnished in
2-39 compliance with Sections 431.042-431.044 or Section 704 of the
2-40 federal Act;
2-41 (p) in the case of a prescription drug distributed or
2-42 offered for sale in this state, the failure of the manufacturer,
2-43 packer, or distributor of the drug to maintain for transmittal, or
2-44 to transmit, to any practitioner licensed by applicable law to
2-45 administer such drug who makes written request for information as
2-46 to such drug, true and correct copies of all printed matter that is
2-47 required to be included in any package in which that drug is
2-48 distributed or sold, or such other printed matter as is approved
2-49 under the federal Act. Nothing in this subsection shall be
2-50 construed to exempt any person from any labeling requirement
2-51 imposed by or under other provisions of this chapter;
2-52 (q)(1) placing or causing to be placed on any drug or
2-53 device or container of any drug or device, with intent to defraud,
2-54 the trade name or other identifying mark, or imprint of another or
2-55 any likeness of any of the foregoing;
2-56 (2) selling, dispensing, disposing of or causing
2-57 to be sold, dispensed, or disposed of, or concealing or keeping in
2-58 possession, control, or custody, with intent to sell, dispense, or
2-59 dispose of, any drug, device, or any container of any drug or
2-60 device, with knowledge that the trade name or other identifying
2-61 mark or imprint of another or any likeness of any of the foregoing
2-62 has been placed thereon in a manner prohibited by Subdivision (1)
2-63 of this subsection; or
2-64 (3) making, selling, disposing of, causing to be
2-65 made, sold, or disposed of, keeping in possession, control, or
2-66 custody, or concealing with intent to defraud any punch, die,
2-67 plate, stone, or other thing designed to print, imprint, or
2-68 reproduce the trademark, trade name, or other identifying mark,
2-69 imprint, or device of another or any likeness of any of the
2-70 foregoing on any drug or container or labeling of any drug or
3-1 container so as to render such drug a counterfeit drug;
3-2 (r) dispensing or causing to be dispensed a different
3-3 drug in place of the drug ordered or prescribed without the express
3-4 permission in each case of the person ordering or prescribing;
3-5 (s) the failure to register in accordance with Section
3-6 510 of the federal Act, the failure to provide any information
3-7 required by Section 510(j) or (k) of the federal Act, or the
3-8 failure to provide a notice required by Section 510(j)(2) of the
3-9 federal Act;
3-10 (t)(1) the failure or refusal to:
3-11 (A) comply with any requirement prescribed
3-12 under Section 518 or 520(g) of the federal Act; or
3-13 (B) furnish any notification or other
3-14 material or information required by or under Section 519 or 520(g)
3-15 of the federal Act;
3-16 (2) with respect to any device, the submission
3-17 of any report that is required by or under this chapter that is
3-18 false or misleading in any material respect;
3-19 (u) the movement of a device in violation of an order
3-20 under Section 304(g) of the federal Act or the removal or
3-21 alteration of any mark or label required by the order to identify
3-22 the device as detained;
3-23 (v) the failure to provide the notice required by
3-24 Section 412(b) or 412(c), the failure to make the reports required
3-25 by Section 412(d)(1)(B), or the failure to meet the requirements
3-26 prescribed under Section 412(d)(2) of the federal Act;
3-27 (w) the acceptance by a person of an unused
3-28 prescription or drug, in whole or in part, for the purpose of
3-29 resale, after the prescription or drug has been originally
3-30 dispensed, or sold;
3-31 (x) engaging in the wholesale distribution of drugs or
3-32 devices in this state without filing a licensing statement with the
3-33 commissioner as required by Section 431.202 or having a license as
3-34 required by Section 431.272, as applicable;
3-35 (y) engaging in the manufacture of food in this state
3-36 without first registering with the department as required by
3-37 Section 431.222; or
3-38 (z) unless approved by the United States Food and Drug
3-39 Administration pursuant to the federal Act, the sale, delivery,
3-40 holding, or offering for sale of a self-testing kit designed to
3-41 indicate whether a person has a human immunodeficiency virus
3-42 infection, acquired immune deficiency syndrome, or a related
3-43 disorder or condition.
3-44 SECTION 2. Section 431.111, Health and Safety Code, is
3-45 amended to read as follows:
3-46 Sec. 431.111. Adulterated Drug or Device. A drug or device
3-47 shall be deemed to be adulterated:
3-48 (a)(1) if it consists in whole or in part of any
3-49 filthy, putrid, or decomposed substance; or
3-50 (2)(A) if it has been prepared, packed, or held
3-51 under insanitary conditions whereby it may have been contaminated
3-52 with filth, or whereby it may have been rendered injurious to
3-53 health; or
3-54 (B) if it is a drug and the methods used
3-55 in, or the facilities or controls used for, its manufacture,
3-56 processing, packing, or holding do not conform to or are not
3-57 operated or administered in conformity with current good
3-58 manufacturing practice to assure that such drug meets the
3-59 requirements of this chapter as to safety and has the identity and
3-60 strength, and meets the quality and purity characteristics, which
3-61 it purports or is represented to possess; or
3-62 (3) if its container is composed, in whole or in
3-63 part, of any poisonous or deleterious substance which may render
3-64 the contents injurious to health; or
3-65 (4) if it:
3-66 (A) bears or contains, for purposes of
3-67 coloring only, a color additive that is unsafe under Section
3-68 431.161(a); or
3-69 (B) is a color additive, the intended use
3-70 of which in or on drugs or devices is for purposes of coloring
4-1 only, and is unsafe under Section 431.161(a); or
4-2 (5) if it is a new animal drug that is unsafe
4-3 under Section 512 of the federal Act;
4-4 (b) if it purports to be or is represented as a drug,
4-5 the name of which is recognized in an official compendium, and its
4-6 strength differs from, or its quality or purity falls below, the
4-7 standards set forth in such compendium. Such determination as to
4-8 strength, quality or purity shall be made in accordance with the
4-9 tests or methods of assay set forth in such compendium, or in the
4-10 absence of or inadequacy of such tests or methods of assay, those
4-11 prescribed under the authority of the federal Act. No drug defined
4-12 in an official compendium shall be deemed to be adulterated under
4-13 this paragraph because it differs from the standards of strength,
4-14 quality, or purity therefor set forth in such compendium, if its
4-15 difference in strength, quality, or purity from such standards is
4-16 plainly stated on its label. Whenever a drug is recognized in the
4-17 United States Pharmacopoeia National Formulary, it shall be subject
4-18 to the requirements of the United States Pharmacopoeia National
4-19 Formulary;
4-20 (c) if it is not subject to the provision of Paragraph
4-21 (b) and its strength differs from, or its purity or quality falls
4-22 below, that which it purports or is represented to possess;
4-23 (d) if it is a drug and any substance has been:
4-24 (1) mixed or packed therewith so as to reduce
4-25 its quality or strength; or
4-26 (2) substituted wholly or in part therefor;
4-27 (e) if it is, or purports to be or is represented as,
4-28 a device that is subject to a performance standard established
4-29 under Section 514 of the federal Act, unless the device is in all
4-30 respects in conformity with the standard;
4-31 (f)(1) if it is a class III device:
4-32 (A)(i) that is required by a regulation
4-33 adopted under Section 515(b) of the federal Act to have an approval
4-34 under that section of an application for premarket approval and
4-35 that is not exempt from Section 515 as provided by Section 520(g)
4-36 of the federal Act; and
4-37 (ii)(I) for which an application for
4-38 premarket approval or a notice of completion of a product
4-39 development protocol was not filed with the United States Food and
4-40 Drug Administration by the 90th day after the date of adoption of
4-41 the regulation; or
4-42 (II) for which that
4-43 application was filed and approval was denied or withdrawn, for
4-44 which that notice was filed and was declared incomplete, or for
4-45 which approval of the device under the protocol was withdrawn;
4-46 (B) that was classified under Section
4-47 513(f) of the federal Act into class III, which under Section
4-48 515(a) of the federal Act is required to have in effect an approved
4-49 application for premarket approval, that is not exempt from Section
4-50 515 as provided by Section 520(g) of the federal Act, and that does
4-51 not have the application in effect; or
4-52 (C) that was classified under Section
4-53 520(l) of the federal Act into class III, which under that section
4-54 is required to have in effect an approved application under Section
4-55 515 of the federal Act, and that does not have the application in
4-56 effect, except that:
4-57 (2)(A) in the case of a device classified under
4-58 Section 513(f) of the federal Act into class III and intended
4-59 solely for investigational use, Subdivision (1)(B) does not apply
4-60 to the device during the period ending on the 90th day after the
4-61 date of adoption of the regulations prescribing the procedures and
4-62 conditions required by Section 520(g)(2) of the federal Act; and
4-63 (B) in the case of a device subject to a
4-64 regulation adopted under Section 515(b) of the federal Act,
4-65 Subdivision (1) does not apply to the device during the period
4-66 ending on whichever of the following dates occurs later:
4-67 (i) the last day of the 30-day
4-68 calendar month beginning after the month in which the
4-69 classification of the device into class III became effective under
4-70 Section 513 of the federal Act; or
5-1 (ii) the 90th day after the date of
5-2 adoption of the regulation;
5-3 (g) if it is a banned device;
5-4 (h) <(g)> if it is a device and the methods used in,
5-5 or the facilities or controls used for its manufacture, packing,
5-6 storage, or installations are not in conformity with applicable
5-7 requirements under Section 520(f)(1) of the federal Act or an
5-8 applicable condition as prescribed by an order under Section
5-9 520(f)(2) of the federal Act; or
5-10 (i) <(h)> if it is a device for which an exemption has
5-11 been granted under Section 520(g) of the federal Act for
5-12 investigational use and the person who was granted the exemption or
5-13 any investigator who uses the device under the exemption fails to
5-14 comply with a requirement prescribed by or under that section.
5-15 SECTION 3. Chapter 431, Health and Safety Code, is amended
5-16 by adding Subchapter L to read as follows:
5-17 SUBCHAPTER L. WHOLESALE DEVICE DISTRIBUTORS
5-18 Sec. 431.271. DEFINITIONS. In this subchapter:
5-19 (1) "Importer" means any person who initially
5-20 distributes a device imported into the United States.
5-21 (2) "Wholesale distribution" means distribution to a
5-22 person other than a consumer or patient and includes distribution
5-23 by a manufacturer, repacker, own label distributor, jobber,
5-24 importer, or wholesaler.
5-25 (3) "Place of business" means each location at which a
5-26 device for wholesale distribution is located.
5-27 Sec. 431.272. LICENSE REQUIRED; MINIMUM STANDARDS.
5-28 (a) Except as provided by Section 431.273, a person may not engage
5-29 in the wholesale distribution of devices in this state unless the
5-30 person has a license from the commissioner for each place of
5-31 business.
5-32 (b) A wholesale distributor of devices in this state must
5-33 comply with the minimum requirements specified in the federal Act
5-34 and in this chapter.
5-35 Sec. 431.273. EXEMPTION FROM LICENSING. (a) A person is
5-36 exempt from licensing under this subchapter if the person engages
5-37 only in the following types of wholesale device distribution:
5-38 (1) intracompany sales; or
5-39 (2) the sale, purchase, or trade of a distressed or
5-40 reconditioned device by a salvage broker or a salvage operator
5-41 licensed under Chapter 432 (Texas Food, Drug, Device, and Cosmetic
5-42 Salvage Act).
5-43 (b) An exemption from the licensing requirements under this
5-44 section does not constitute an exemption from the other provisions
5-45 of this chapter or the rules adopted by the board to administer and
5-46 enforce this chapter.
5-47 Sec. 431.274. LICENSE APPLICATION. (a) A person applying
5-48 for a license under this subchapter shall provide, at a minimum,
5-49 the following information on a license application form furnished
5-50 by the commissioner:
5-51 (1) the name under which the business is conducted;
5-52 (2) the address of each place of business that is
5-53 licensed;
5-54 (3) the name and residence address of:
5-55 (A) the proprietor, if the business is a
5-56 proprietorship;
5-57 (B) all partners, if the business is a
5-58 partnership; or
5-59 (C) all principals, if the business is an
5-60 association;
5-61 (4) the date and place of incorporation if the
5-62 business is a corporation;
5-63 (5) the names and residence addresses of the
5-64 individuals in an administrative capacity showing:
5-65 (A) the managing proprietor, if the business is
5-66 a proprietorship;
5-67 (B) the managing partner, if the business is a
5-68 partnership;
5-69 (C) the officers and directors, if the business
5-70 is a corporation; or
6-1 (D) the persons in a managerial capacity, if the
6-2 business is an association; and
6-3 (6) the residence address of an individual in charge
6-4 of each place of business.
6-5 (b) The license application must be signed, verified, and
6-6 completed in a manner described in the rules adopted by the board.
6-7 (c) A person applying for a license under this subchapter
6-8 must pay a licensing fee for each place of business.
6-9 Sec. 431.275. EFFECT OF OPERATIONS IN OTHER JURISDICTIONS;
6-10 REPORTS. (a) A person who engages in the wholesale distribution
6-11 of devices outside this state may engage in wholesale distribution
6-12 of devices in this state if the person holds a license issued by
6-13 the commissioner.
6-14 (b) The commissioner may accept reports from authorities in
6-15 other jurisdictions to determine the extent of compliance with this
6-16 chapter. On examination of those reports and the person's
6-17 compliance history and current compliance record, the commissioner
6-18 may issue a license to the person if the commissioner determines
6-19 that the person is in compliance with this subchapter and the
6-20 board's rules.
6-21 (c) The commissioner shall consider each licensing
6-22 application filed by a person who wishes to engage in wholesale
6-23 distribution of devices in this state on an individual basis.
6-24 Sec. 431.276. FEES. (a) The department shall collect fees
6-25 for:
6-26 (1) a license that is filed or renewed;
6-27 (2) a license that is amended, including notification
6-28 of a change of location of a licensed place of business required
6-29 under Section 431.278, a change of the name of an association or
6-30 corporation, or a change in the ownership of the licensee; and
6-31 (3) an inspection performed to enforce this subchapter
6-32 and rules adopted under this subchapter.
6-33 (b) The board may charge annual fees.
6-34 (c) The board by rule shall set the fees in amounts that
6-35 allow the department to recover at least 50 percent of the annual
6-36 expenditures of state funds by the department in:
6-37 (1) reviewing and acting on a license or renewal
6-38 license;
6-39 (2) amending a license;
6-40 (3) inspecting a licensed facility; and
6-41 (4) implementing and enforcing this subchapter,
6-42 including a rule or order adopted or a license issued under this
6-43 subchapter.
6-44 (d) At least half of the licensing fees collected shall be
6-45 used to inspect an applicant or licensed place of business.
6-46 (e) Fees collected under this section shall be deposited to
6-47 the credit of the food and drug registration fee account of the
6-48 general revenue fund and may be appropriated to the department only
6-49 to carry out this chapter.
6-50 Sec. 431.277. LICENSE EXPIRATION. (a) The board by rule
6-51 may provide that licenses expire on different dates during the
6-52 year.
6-53 (b) If the board changes a license expiration date, the
6-54 board shall prorate the license fee payable on or before September
6-55 1 so that the licensee is required to pay only that portion of the
6-56 fee that is allocable to the number of months during which the
6-57 license is valid.
6-58 (c) The total renewal license fee is payable when the
6-59 license is renewed on the new expiration date.
6-60 Sec. 431.278. CHANGE OF LOCATION OF PLACE OF BUSINESS.
6-61 (a) Not fewer than 30 days in advance of the change, the licensee
6-62 shall notify the commissioner or the commissioner's designee in
6-63 writing of the licensee's intent to change the location of a
6-64 licensed place of business. The notice shall include the address
6-65 of the new location and the name and residence address of the
6-66 individual in charge of the business at the new location.
6-67 (b) Not later than the 10th day after the date of completion
6-68 of the change of location, the licensee shall notify the
6-69 commissioner or the commissioner's designee in writing to verify
6-70 the change of location, the address of the new location, and the
7-1 name and residence address of the individual in charge of the
7-2 business at the new address.
7-3 (c) Notice is adequate if the licensee provides the intent
7-4 and verification notices to the commissioner or the commissioner's
7-5 designee by certified mail, return receipt requested, mailed to the
7-6 central office of the department.
7-7 Sec. 431.279. REFUSAL TO LICENSE; SUSPENSION OR REVOCATION
7-8 OF LICENSE. (a) The commissioner may refuse an application or may
7-9 suspend or revoke a license if the applicant or licensee:
7-10 (1) has been convicted of a felony or misdemeanor that
7-11 involves moral turpitude;
7-12 (2) is an association, partnership, or corporation and
7-13 the managing officer has been convicted of a felony or misdemeanor
7-14 that involves moral turpitude;
7-15 (3) has been convicted in a state or federal court of
7-16 the illegal use, sale, or transportation of intoxicating liquors,
7-17 narcotic drugs, barbiturates, amphetamines, desoxyephedrine, their
7-18 compounds or derivatives, or any other dangerous or habit-forming
7-19 drugs;
7-20 (4) is an association, partnership, or corporation and
7-21 the managing officer has been convicted in a state or federal court
7-22 of the illegal use, sale, or transportation of intoxicating
7-23 liquors, narcotic drugs, barbiturates, amphetamines,
7-24 desoxyephedrine, their compounds or derivatives, or any other
7-25 dangerous or habit-forming drugs; or
7-26 (5) has not complied with this chapter or the board's
7-27 rules implementing this chapter.
7-28 (b) The commissioner may refuse an application for a license
7-29 or may suspend or revoke a license if the commissioner determines
7-30 from evidence presented during a hearing that the applicant or
7-31 licensee:
7-32 (1) has violated Section 431.021(l)(3), relating to
7-33 the counterfeiting of a drug or the sale or holding for sale of a
7-34 counterfeit drug;
7-35 (2) has violated Chapter 481 (Texas Controlled
7-36 Substances Act) or 483 (Dangerous Drugs); or
7-37 (3) has violated the rules of the director of the
7-38 Department of Public Safety, including being responsible for a
7-39 significant discrepancy in the records that state law requires the
7-40 applicant or licensee to maintain.
7-41 (c) The refusal to license an applicant or the suspension or
7-42 revocation of a license by the commissioner and the appeal from
7-43 that action are governed by the board's formal hearing procedures
7-44 and the procedures for a contested case hearing under the
7-45 Administrative Procedure and Texas Register Act (Article 6252-13a,
7-46 Vernon's Texas Civil Statutes).
7-47 SECTION 4. This Act takes effect September 1, 1993.
7-48 SECTION 5. The importance of this legislation and the
7-49 crowded condition of the calendars in both houses create an
7-50 emergency and an imperative public necessity that the
7-51 constitutional rule requiring bills to be read on three several
7-52 days in each house be suspended, and this rule is hereby suspended.
7-53 * * * * *
7-54 Austin,
7-55 Texas
7-56 April 13, 1993
7-57 Hon. Bob Bullock
7-58 President of the Senate
7-59 Sir:
7-60 We, your Committee on Health and Human Services to which was
7-61 referred S.B. No. 564, have had the same under consideration, and I
7-62 am instructed to report it back to the Senate with the
7-63 recommendation that it do pass and be printed.
7-64 Zaffirini,
7-65 Chair
7-66 * * * * *
7-67 WITNESSES
7-68 FOR AGAINST ON
7-69 ___________________________________________________________________
7-70 Name: Dennis Baker x
8-1 Representing: Tx Dept of Health
8-2 City: Austin
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