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By: Janek, Estes S.B. No. 1685
(In the Senate - Filed March 11, 2005; March 30, 2005, read
first time and referred to Committee on Health and Human Services;
May 5, 2005, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 8, Nays 0; May 5, 2005, sent
to printer.)
COMMITTEE SUBSTITUTE FOR S.B. No. 1685 By: Janek
A BILL TO BE ENTITLED
AN ACT
relating to the licensing and regulation of wholesale drug
distributors; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Subchapter I, Chapter 431, Health
and Safety Code, is amended to read as follows:
SUBCHAPTER I. WHOLESALE [DRUG] DISTRIBUTORS
OF NONPRESCRIPTION DRUGS
SECTION 2. Section 431.201, Health and Safety Code, is
amended to read as follows:
Sec. 431.201. DEFINITIONS. In this subchapter:
(1) "Nonprescription drug" means any drug that is not
a prescription drug as defined by Section 431.401.
(2) "Place of business" means each location at which a
drug for wholesale distribution is located.
(3) "Wholesale distribution" means distribution to a
person other than a consumer or patient, and includes distribution
by a manufacturer, repackager [repacker], own label distributor,
broker, jobber, warehouse, or wholesaler.
[(2) "Place of business" means each location at which
a drug for wholesale distribution is located.]
SECTION 3. Subchapter I, Chapter 431, Health and Safety
Code, is amended by adding Section 431.2011 to read as follows:
Sec. 431.2011. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to the wholesale distribution of
nonprescription drugs.
SECTION 4. Section 431.202, Health and Safety Code, is
amended to read as follows:
Sec. 431.202. LICENSE [STATEMENT] REQUIRED. (a) A person
may not engage in wholesale distribution of nonprescription drugs
in this state unless the person holds a wholesale drug distribution
license issued by the department under this subchapter or
Subchapter N [has filed with the commissioner a signed and verified
license statement on a form furnished by the commissioner].
(b) An applicant for a license under this subchapter must
submit an application to the department on the form prescribed by
the department or electronically on the TexasOnline Internet
website [The license statement must be filed annually].
(c) A license issued under this subchapter expires on the
second anniversary of the date of issuance.
SECTION 5. Section 431.204, Health and Safety Code, is
amended to read as follows:
Sec. 431.204. FEES. (a) The department [board] shall
collect fees for:
(1) a license that is filed or renewed;
(2) a license that is amended, including a
notification of a change in the location of a licensed place of
business required under Section 431.206; and
(3) an inspection performed in enforcing this
subchapter and rules adopted under this subchapter.
(b) The executive commissioner of the Health and Human
Services Commission [board may charge annual fees.
[(c) The board] by rule shall set the fees in amounts that
allow the department to recover [at least 50 percent of] the
biennial [annual] expenditures of state funds by the department in:
(1) reviewing and acting on a license;
(2) amending and renewing a license;
(3) inspecting a licensed facility; and
(4) implementing and enforcing this subchapter,
including a rule or order adopted or a license issued under this
subchapter.
(c) [(d)] Fees collected under this section shall be
deposited to the credit of the food and drug registration fee
account of the general revenue fund and [may be] appropriated to the
department [only] to carry out the administration and enforcement
of this chapter.
SECTION 6. Sections 431.206 and 431.207, Health and Safety
Code, are amended to read as follows:
Sec. 431.206. CHANGE OF LOCATION OF PLACE OF BUSINESS.
(a) Not fewer than 30 days in advance of the change, the licensee
shall notify the department [commissioner or the commissioner's
designee] in writing of the licensee's intent to change the
location of a licensed place of business.
(b) The notice shall include the address of the new
location, and the name and residence address of the individual in
charge of the business at the new location.
(c) Not more than 10 days after the completion of the change
of location, the licensee shall notify the department [commissioner
or the commissioner's designee] in writing to confirm the
completion of [verify] the change of location and provide
verification of the information previously provided or correct and
confirm any information that has changed since providing the notice
of intent[, the address of the new location, and the name and
residence address of the individual in charge of the business at the
new address].
(d) The notice and confirmation required by this section are
[Notice will be] deemed adequate if the licensee sends [provides]
the [intent and verification] notices [to the commissioner or the
commissioner's designee] by certified mail, return receipt
requested, [mailed] to the central office of the department or
submits them electronically through the TexasOnline Internet
website.
Sec. 431.207. REFUSAL TO LICENSE; SUSPENSION OR REVOCATION
OF LICENSE. (a) The commissioner of state health services may
refuse an application for a license or may suspend or revoke a
license if the applicant or licensee:
(1) has been convicted of a felony or misdemeanor that
involves moral turpitude;
(2) is an association, partnership, or corporation and
the managing officer has been convicted of a felony or misdemeanor
that involves moral turpitude;
(3) has been convicted in a state or federal court of
the illegal use, sale, or transportation of intoxicating liquors,
narcotic drugs, barbiturates, amphetamines, desoxyephedrine, their
compounds or derivatives, or any other dangerous or habit-forming
drugs;
(4) is an association, partnership, or corporation and
the managing officer has been convicted in a state or federal court
of the illegal use, sale, or transportation of intoxicating
liquors, narcotic drugs, barbiturates, amphetamines,
desoxyephedrine, their compounds or derivatives, or any other
dangerous or habit-forming drugs; [or]
(5) has not complied with this chapter or the [board's]
rules implementing this chapter;
(6) has violated Section 431.021(l)(3), relating to
the counterfeiting of a drug or the sale or holding for sale of a
counterfeit drug;
(7) has violated Chapter 481 (Texas Controlled
Substances Act) or 483 (Texas Dangerous Drug Act);
(8) has violated the rules of the director of the
Department of Public Safety, including being responsible for a
significant discrepancy in the records that state law requires the
applicant or licensee to maintain; or
(9) fails to complete a license application or submits
an application that contains false, misleading, or incorrect
information or contains information that cannot be verified by the
department.
(b) The executive commissioner of the Health and Human
Services Commission by rule shall establish minimum standards
required for the issuance or renewal of a license under this
subchapter [may refuse an application for a license or may suspend
or revoke a license if the commissioner determines from evidence
presented during a hearing that the applicant or licensee:
[(1) has violated Section 431.021(l)(3), relating to
the counterfeiting of a drug or the sale or holding for sale of a
counterfeit drug;
[(2) has violated Chapter 481 (Texas Controlled
Substances Act) or 483 (Dangerous Drugs); or
[(3) has violated the rules of the director of the
Department of Public Safety, including being responsible for a
significant discrepancy in the records that state law requires the
applicant or licensee to maintain].
(c) The refusal to license an applicant or the suspension or
revocation of a license by the department [commissioner] and the
appeal from that action are governed by [the board's formal hearing
procedures and] the procedures for a contested case hearing under
Chapter 2001, Government Code.
SECTION 7. Chapter 431, Health and Safety Code, is amended
by adding Subchapter N to read as follows:
SUBCHAPTER N. WHOLESALE DISTRIBUTORS OF PRESCRIPTION DRUGS
Sec. 431.401. DEFINITIONS. In this subchapter:
(1) "Authentication" means to affirmatively verify
before any wholesale distribution of a prescription drug occurs
that each transaction listed on the pedigree for the drug has
occurred.
(2) "Authorized distributor of record" means a
distributor with whom a manufacturer has established an ongoing
relationship to distribute the manufacturer's products in
accordance with Section 431.4011.
(3) "Chain pharmacy warehouse" means a location for
which a person holds a wholesale drug distribution license under
this subchapter, that serves primarily as a central warehouse for
drugs or devices, and from which intracompany sales or transfers of
drugs or devices are made to a group of pharmacies under common
ownership and control.
(4) "Logistics provider" means a person that receives
prescription drugs only from the original manufacturer, delivers
the prescription drugs at the direction of that manufacturer, and
does not purchase, sell, trade, or take title to any prescription
drug.
(5) "Normal distribution chain" means a chain of
custody for a drug from a manufacturer to:
(A) an authorized distributor of record to a
pharmacy to a patient;
(B) an authorized distributor of record to one
other authorized distributor of record; or
(C) an authorized distributor of record to a
chain pharmacy warehouse.
(6) "Pedigree" means a document or electronic file
containing information that records each wholesale distribution of
a prescription drug, from sale by a manufacturer, through
acquisition and sale by any wholesale distributor or repackager,
until final sale to a pharmacy or other person dispensing or
administering the prescription drug.
(7) "Place of business" means each location at which a
drug for wholesale distribution is located.
(8) "Prescription drug" has the meaning assigned by 21
C.F.R. Section 203.3.
(9) "Repackage" means repackaging or otherwise
changing the container, wrapper, or labeling of a drug to further
the distribution of a prescription drug. The term does not include
repackaging by a pharmacist to dispense a drug to a patient.
(10) "Repackager" means a person who engages in
repackaging.
(11) "Wholesale distribution" means distribution to a
person other than a consumer or patient, and includes distribution
by a manufacturer, repackager, own label distributor, broker,
jobber, warehouse, retail pharmacy that conducts wholesale
distribution, or wholesaler. The term does not include:
(A) intracompany sales of prescription drugs,
which means transactions or transfers of prescription drugs between
a division, subsidiary, parent, or affiliated or related company
that is under common ownership and control of a corporate entity;
(B) the sale, purchase, distribution, trade, or
transfer of prescription drugs or the offer to sell, purchase,
distribute, trade, or transfer a prescription drug for emergency
medical reasons;
(C) the distribution of prescription drug
samples by a representative of a manufacturer;
(D) the return of drugs by a hospital, health
care entity, retail pharmacy, chain pharmacy warehouse, or
charitable institution in accordance with 21 C.F.R. Section 203.23;
or
(E) the delivery by a retail pharmacy of a
prescription drug to a patient or a patient's agent under the lawful
order of a licensed practitioner.
Sec. 431.4011. ONGOING RELATIONSHIP. In this subchapter,
"ongoing relationship" means an association that exists when a
manufacturer and distributor enter into a written agreement under
which the distributor is authorized to distribute the
manufacturer's products for a period of time or for a number of
shipments. If the distributor is not authorized to distribute the
manufacturer's entire product line, the agreement must identify the
specific drug products that the distributor is authorized to
distribute.
Sec. 431.4012. APPLICABILITY OF SUBCHAPTER. This
subchapter applies only to the wholesale distribution of
prescription drugs.
Sec. 431.402. LICENSE REQUIRED. (a) A person may not
engage in wholesale distribution of prescription drugs in this
state unless the person holds a wholesale drug distribution license
under this subchapter for each place of business.
(b) A license issued under this subchapter expires on the
second anniversary of the date of issuance.
Sec. 431.403. EXEMPTION FROM LICENSING. (a) A person who
engages in wholesale distribution of prescription drugs in this
state for use in humans is exempt from this subchapter if the person
is exempt under:
(1) the Prescription Drug Marketing Act of 1987 (21
U.S.C. Section 353(c)(3)(B));
(2) the regulations adopted by the secretary to
administer and enforce that Act; or
(3) the interpretations of that Act set out in the
compliance policy manual of the United States Food and Drug
Administration.
(b) An exemption from the licensing requirements under this
section does not constitute an exemption from the other provisions
of this chapter or the rules adopted under this chapter to
administer and enforce the other provisions of this chapter.
Sec. 431.4031. EXEMPTION FROM CERTAIN PROVISIONS FOR
CERTAIN WHOLESALE DISTRIBUTORS. A wholesale distributor that
distributes prescription drugs that are medical gases or a
wholesale distributor that is a logistics provider on behalf of a
manufacturer is exempt from Sections 431.404(b) and (c), 431.405,
431.407, 431.408, 431.412, and 431.413.
Sec. 431.404. LICENSE APPLICATION. (a) An applicant for a
license under this subchapter must submit an application to the
department on the form prescribed by the department. The
application must contain:
(1) all trade or business names under which the
business is conducted;
(2) the address and telephone number of each place of
business that is licensed;
(3) the type of business and the name and residence
address of:
(A) the proprietor, if the business is a
proprietorship;
(B) all partners, if the business is a
partnership; or
(C) all principals, if the business is an
association;
(4) the date and place of incorporation, if the
business is a corporation;
(5) the names and business addresses of the
individuals in an administrative capacity showing:
(A) the managing proprietor, if the business is a
proprietorship;
(B) the managing partner, if the business is a
partnership;
(C) the officers and directors, if the business
is a corporation; or
(D) the persons in a managerial capacity, if the
business is an association;
(6) the name, telephone number, and any information
necessary to complete a criminal history record check on a
designated representative of each place of business;
(7) the state of incorporation, if the business is a
corporation;
(8) a list of all licenses and permits issued to the
applicant by any other state under which the applicant is permitted
to purchase or possess prescription drugs; and
(9) the name of the manager for each place of business.
(b) Each person listed in Subsections (a)(6) and (a)(9)
shall provide the following to the department:
(1) the person's places of residence for the past seven
years;
(2) the person's date and place of birth;
(3) the person's occupations, positions of employment,
and offices held during the past seven years;
(4) the business name and address of any business,
corporation, or other organization in which the person held an
office under Subdivision (3) or in which the person conducted an
occupation or held a position of employment;
(5) a statement of whether during the preceding seven
years the person was the subject of a proceeding to revoke a license
and the nature and disposition of the proceeding;
(6) a statement of whether during the preceding seven
years the person has been enjoined, either temporarily or
permanently, by a court from violating any federal or state law
regulating the possession, control, or distribution of
prescription drugs, including the details concerning the event;
(7) a written description of any involvement by the
person with any business, including any investments, other than the
ownership of stock in a publicly traded company or mutual fund
during the past seven years, that manufactured, administered,
prescribed, distributed, or stored pharmaceutical products and any
lawsuits in which the businesses were named as a party;
(8) a description of any felony offense for which the
person, as an adult, was found guilty, regardless of whether
adjudication of guilt was withheld or whether the person pled
guilty or nolo contendere;
(9) a description of any criminal conviction of the
person under appeal, a copy of the notice of appeal for that
criminal offense, and a copy of the final written order of an appeal
not later than the 15th day after the date of the appeal's
disposition; and
(10) a photograph of the person taken not earlier than
30 days before the date the application was submitted.
(c) The information submitted under Subsection (b) must be
attested to under oath.
(d) An applicant or license holder shall file with the
department a written notice of any change in the information
required under this section.
Sec. 431.405. QUALIFICATIONS FOR LICENSE. To qualify for
the issuance or renewal of a wholesale distributor license under
this subchapter, the designated representative of an applicant or
license holder must:
(1) be at least 21 years of age;
(2) have been employed full-time for at least three
years by a pharmacy or a wholesale distributor in a capacity related
to the dispensing or distributing of prescription drugs, including
recordkeeping for the dispensing or distributing of prescription
drugs;
(3) be employed by the applicant full-time in a
managerial-level position;
(4) be actively involved in and aware of the actual
daily operation of the wholesale distributor;
(5) be physically present at the applicant's place of
business during regular business hours, except when the absence of
the designated representative is authorized, including sick leave
and vacation leave;
(6) serve as a designated representative for only one
applicant at any one time;
(7) not have been convicted of a violation of any
federal, state, or local laws relating to wholesale or retail
prescription drug distribution or the distribution of controlled
substances; and
(8) not have been convicted of a felony under federal,
state, or local laws.
Sec. 431.406. EFFECT OF OPERATION IN OTHER JURISDICTIONS;
REPORTS. (a) A person who engages in the wholesale distribution
of drugs outside this state may engage in the wholesale
distribution of drugs in this state if the person holds a license
issued by the department.
(b) The department may accept reports from authorities in
other jurisdictions to determine the extent of compliance with this
subchapter and the minimum standards adopted under this subchapter.
(c) The department may issue a license to a person who
engages in the wholesale distribution of drugs outside this state
to engage in the wholesale distribution of drugs in this state if,
after an examination of the reports of the person's compliance
history and current compliance record, the department determines
that the person is in compliance with this subchapter and the rules
adopted under this subchapter.
(d) The department shall consider each license application
and any related documents or reports filed by or in connection with
a person who wishes to engage in wholesale distribution of drugs in
this state on an individual basis.
Sec. 431.407. CRIMINAL HISTORY RECORD INFORMATION. The
department shall submit to the Department of Public Safety the
fingerprints provided by a person with an initial or a renewal
license application to obtain the person's criminal history record
information and may forward the fingerprints to the Federal Bureau
of Investigation for a federal criminal history check.
Sec. 431.408. BOND. (a) A wholesale distributor applying
for or renewing a license shall submit payable to this state a bond
or other equivalent security acceptable to the department,
including an irrevocable letter of credit or a deposit in a trust
account or financial institution, in the amount of $100,000 payable
to this state.
(b) The bond or equivalent security submitted under
Subsection (a) shall secure payment of any fines or penalties
imposed by the department or imposed in connection with an
enforcement action by the attorney general, any fees or other
enforcement costs, including attorney's fees payable to the
attorney general, and any other fees and costs incurred by this
state related to that license holder, that are authorized under the
laws of this state and that the license holder fails to pay before
the 30th day after the date a fine, penalty, fee, or cost is
assessed.
(c) The department or this state may make a claim against a
bond or security submitted under Subsection (a) before the first
anniversary of the date a license expires or is revoked under this
subchapter.
(d) The department shall deposit the bonds and equivalent
securities received under this section in a separate account.
Sec. 431.409. FEES. (a) The department shall collect fees
for:
(1) a license that is filed or renewed;
(2) a license that is amended, including a
notification of a change in the location of a licensed place of
business required under Section 431.410; and
(3) an inspection performed in enforcing this
subchapter and rules adopted under this subchapter.
(b) The executive commissioner of the Health and Human
Services Commission by rule shall set the fees in amounts that are
reasonable and necessary and allow the department to recover the
biennial expenditures of state funds by the department in:
(1) reviewing and acting on a license;
(2) amending and renewing a license;
(3) inspecting a licensed facility; and
(4) implementing and enforcing this subchapter,
including a rule or order adopted or a license issued under this
subchapter.
(c) Fees collected under this section shall be deposited to
the credit of the food and drug registration fee account of the
general revenue fund and appropriated to the department to carry
out this chapter.
Sec. 431.410. CHANGE OF LOCATION OF PLACE OF BUSINESS.
(a) Not fewer than 30 days in advance of the change, the license
holder shall notify the department in writing of the license
holder's intent to change the location of a licensed place of
business.
(b) The notice shall include the address of the new location
and the name and residence address of the individual in charge of
the business at the new location.
(c) Not more than 10 days after the completion of the change
of location, the license holder shall notify the department in
writing to confirm the completion of the change of location and
provide verification of the information previously provided or
correct and confirm any information that has changed since
providing the notice of intent.
(d) The notice and confirmation required by this section are
considered adequate if the license holder sends the notices by
certified mail, return receipt requested, to the central office of
the department or submits the notices electronically through the
TexasOnline Internet website.
Sec. 431.411. MINIMUM RESTRICTIONS ON TRANSACTIONS. (a) A
wholesale distributor shall receive prescription drug returns or
exchanges from a pharmacy or chain pharmacy warehouse in accordance
with the terms and conditions of the agreement between the
wholesale distributor and the pharmacy or chain pharmacy warehouse.
The returns or exchanges received by the wholesale distributor as
provided by this subsection are not subject to the pedigree
requirement under Section 431.412. Wholesale distributors are
responsible for policing the returns process and ensuring the
operations are secure and do not allow the entry of an adulterated
or counterfeit product into distribution.
(b) A manufacturer or wholesale distributor may distribute
prescription drugs only to a person licensed by the appropriate
state licensing authorities or authorized by federal law to receive
the drug. Before furnishing prescription drugs to a person not
known to the manufacturer or wholesale distributor, the
manufacturer or wholesale distributor must verify that the person
is legally authorized by the appropriate state licensing authority
to receive the prescription drugs or authorized by federal law to
receive the drugs.
(c) Except as otherwise provided by this subsection,
prescription drugs distributed by a manufacturer or wholesale
distributor may be delivered only to the premises listed on the
license. A manufacturer or wholesale distributor may distribute
prescription drugs to an authorized person or agent of that person
at the premises of the manufacturer or wholesale distributor if:
(1) the identity and authorization of the recipient is
properly established; and
(2) delivery is made only to meet the immediate needs
of a particular patient of the authorized person.
(d) Prescription drugs may be distributed to a hospital
pharmacy receiving area if a pharmacist or an authorized receiving
person signs, at the time of delivery, a receipt showing the type
and quantity of the prescription drug received. Any discrepancy
between the receipt and the type and quantity of the prescription
drug actually received shall be reported to the delivering
manufacturer or wholesale distributor not later than the next
business day after the date of delivery to the pharmacy receiving
area.
Sec. 431.412. PEDIGREE REQUIRED. (a) A person who is
engaged in the wholesale distribution of a prescription drug,
including a repackager but excluding the original manufacturer and
the original labeler of a prescription drug, shall provide a
pedigree for each prescription drug that is not distributed through
the normal distribution chain and is sold, traded, or transferred
to any other person.
(b) A pharmacy that sells a drug to a person other than the
final consumer shall provide a pedigree to the person acquiring the
prescription drug.
(c) The sale, trade, or transfer of a prescription drug
between license holders with common ownership or for an emergency
is not subject to this section.
(d) A person who is engaged in the wholesale distribution of
a prescription drug, including a repackager, and who is in
possession of a pedigree for a prescription drug must verify before
distributing the prescription drug that each transaction listed on
the pedigree has occurred.
Sec. 431.413. PEDIGREE CONTENTS. (a) A pedigree must
include all necessary identifying information concerning each sale
in the product's chain of distribution from the manufacturer,
through acquisition and sale by a wholesale distributor or
repackager, until final sale to a pharmacy or other person
dispensing or administering the drug. At a minimum, the chain of
distribution information must include:
(1) the name, address, telephone number, and, if
available, the e-mail address of each person who owns or possesses
the prescription drug, except common carriers and logistics
providers;
(2) the signature of each owner of the prescription
drug;
(3) the name and address of each location from which
the product was shipped, if different from the owner's name and
address;
(4) the transaction dates; and
(5) certification that each recipient has
authenticated the pedigree.
(b) The pedigree must include, at a minimum, the:
(1) name of the prescription drug;
(2) dosage form and strength of the prescription drug;
(3) size of the container;
(4) number of containers;
(5) lot number of the prescription drug; and
(6) name of the manufacturer of the finished dosage
form.
(c) Each pedigree statement must be:
(1) maintained by the purchaser and the wholesale
distributor for at least three years; and
(2) available for inspection and photocopying on a
request by the department or a peace officer in this state.
(d) The executive commissioner of the Health and Human
Services Commission shall adopt rules to implement this section.
(e) The department shall:
(1) conduct a study on the implementation of
electronic pedigrees;
(2) in conducting the study under Subdivision (1),
consult with manufacturers, distributors, and pharmacies
responsible for the sale and distribution of prescription drugs in
this state; and
(3) based on the results of the study, establish an
implementation date, which may not be earlier than December 31,
2007, for electronic pedigrees.
(f) Subsection (e) and this subsection expire January 1,
2009.
Sec. 431.414. REFUSAL TO LICENSE; SUSPENSION OR REVOCATION
OF LICENSE. (a) The commissioner of state health services may
refuse an application for a license or may suspend or revoke a
license if the applicant or license holder:
(1) has been convicted of a felony or misdemeanor that
involves moral turpitude;
(2) is an association, partnership, or corporation and
the managing officer has been convicted of a felony or misdemeanor
that involves moral turpitude;
(3) has been convicted in a state or federal court of
the illegal use, sale, or transportation of intoxicating liquors,
narcotic drugs, barbiturates, amphetamines, desoxyephedrine, their
compounds or derivatives, or any other dangerous or habit-forming
drugs;
(4) is an association, partnership, or corporation and
the managing officer has been convicted in a state or federal court
of the illegal use, sale, or transportation of intoxicating
liquors, narcotic drugs, barbiturates, amphetamines,
desoxyephedrine, their compounds or derivatives, or any other
dangerous or habit-forming drugs;
(5) has not complied with this subchapter or the rules
implementing this subchapter;
(6) has violated Section 431.021(l)(3), relating to
the counterfeiting of a drug or the sale or holding for sale of a
counterfeit drug;
(7) has violated Chapter 481 (Texas Controlled
Substances Act) or 483 (Texas Dangerous Drug Act); or
(8) has violated the rules of the director of the
Department of Public Safety, including being responsible for a
significant discrepancy in the records that state law requires the
applicant or license holder to maintain.
(b) The executive commissioner of the Health and Human
Services Commission by rule shall establish minimum standards
required for the issuance or renewal of a license under this
subchapter.
(c) The department shall deny a license application that is
incomplete, contains false, misleading, or incorrect information,
or contains information that cannot be verified by the department.
(d) The refusal to license an applicant or the suspension or
revocation of a license by the department and the appeal from that
action are governed by the procedures for a contested case hearing
under Chapter 2001, Government Code.
Sec. 431.415. ORDER TO CEASE DISTRIBUTION. (a) The
commissioner of state health services shall issue an order
requiring a person, including a manufacturer, distributor, or
retailer of a prescription drug, to immediately cease distribution
of the drug if the commissioner determines there is a reasonable
probability that:
(1) a wholesale distributor has:
(A) violated this subchapter;
(B) falsified a pedigree; or
(C) sold, distributed, transferred,
manufactured, repackaged, handled, or held a counterfeit
prescription drug intended for human use that could cause serious
adverse health consequences or death; and
(2) other procedures would result in unreasonable
delay.
(b) An order under Subsection (a) must provide the person
subject to the order with an opportunity for an informal hearing on
the actions required by the order to be held not later than the 10th
day after the date of issuance of the order.
(c) If, after providing an opportunity for a hearing, the
commissioner of state health services determines that inadequate
grounds exist to support the actions required by the order, the
commissioner shall vacate the order.
SECTION 8. Section 431.059, Health and Safety Code, is
amended by amending Subsection (a) and adding Subsections (a-1) and
(a-2) to read as follows:
(a) A person commits an offense if the person violates any
of the provisions of Section 431.021 relating to unlawful or
prohibited acts. A first offense under this subsection is a Class A
misdemeanor unless it is shown on the trial of an offense under this
subsection that the defendant was previously convicted of an
offense under this subsection, in which event the offense is a state
jail felony. In a criminal proceeding under this section, it is not
necessary to prove intent, knowledge, recklessness, or criminal
negligence of the defendant beyond the degree of culpability, if
any, stated in Subsection (a-2) or Section 431.021, as applicable,
to establish criminal responsibility for the violation.
(a-1) A person commits an offense if the person engages in
the wholesale distribution of prescription drugs in violation of
Subchapter N. An offense under this subsection is punishable by a
fine not to exceed $50,000.
(a-2) A person commits an offense if the person knowingly
engages in the wholesale distribution of prescription drugs in
violation of Subchapter N. An offense under this subsection is
punishable by imprisonment for not more than 15 years, a fine not to
exceed $500,000, or both imprisonment and a fine.
SECTION 9. Section 431.021, Health and Safety Code, is
amended to read as follows:
Sec. 431.021. PROHIBITED ACTS. The following acts and the
causing of the following acts within this state are unlawful and
prohibited:
(a) the introduction or delivery for introduction into
commerce of any food, drug, device, or cosmetic that is adulterated
or misbranded;
(b) the adulteration or misbranding of any food, drug,
device, or cosmetic in commerce;
(c) the receipt in commerce of any food, drug, device,
or cosmetic that is adulterated or misbranded, and the delivery or
proffered delivery thereof for pay or otherwise;
(d) the distribution in commerce of a consumer
commodity, if such commodity is contained in a package, or if there
is affixed to that commodity a label that does not conform to the
provisions of this chapter and of rules adopted under the authority
of this chapter; provided, however, that this prohibition shall not
apply to persons engaged in business as wholesale or retail
distributors of consumer commodities except to the extent that such
persons:
(1) are engaged in the packaging or labeling of
such commodities; or
(2) prescribe or specify by any means the manner
in which such commodities are packaged or labeled;
(e) the introduction or delivery for introduction into
commerce of any article in violation of Section 431.084, 431.114,
or 431.115;
(f) the dissemination of any false advertisement;
(g) the refusal to permit entry or inspection, or to
permit the taking of a sample or to permit access to or copying of
any record as authorized by Sections 431.042-431.044; or the
failure to establish or maintain any record or make any report
required under Section 512(j), (l), or (m) of the federal Act, or
the refusal to permit access to or verification or copying of any
such required record;
(h) the manufacture within this state of any food,
drug, device, or cosmetic that is adulterated or misbranded;
(i) the giving of a guaranty or undertaking referred
to in Section 431.059, which guaranty or undertaking is false,
except by a person who relied on a guaranty or undertaking to the
same effect signed by, and containing the name and address of the
person residing in this state from whom the person received in good
faith the food, drug, device, or cosmetic; or the giving of a
guaranty or undertaking referred to in Section 431.059, which
guaranty or undertaking is false;
(j) the use, removal, or disposal of a detained or
embargoed article in violation of Section 431.048;
(k) the alteration, mutilation, destruction,
obliteration, or removal of the whole or any part of the labeling
of, or the doing of any other act with respect to a food, drug,
device, or cosmetic, if such act is done while such article is held
for sale after shipment in commerce and results in such article
being adulterated or misbranded;
(l)(1) forging, counterfeiting, simulating, or
falsely representing, or without proper authority using any mark,
stamp, tag, label, or other identification device authorized or
required by rules adopted under this chapter or the regulations
promulgated under the provisions of the federal Act;
(2) making, selling, disposing of, or keeping in
possession, control, or custody, or concealing any punch, die,
plate, stone, or other thing designed to print, imprint, or
reproduce the trademark, trade name, or other identifying mark,
imprint, or device of another or any likeness of any of the
foregoing on any drug or container or labeling thereof so as to
render such drug a counterfeit drug;
(3) the doing of any act that causes a drug to be
a counterfeit drug, or the sale or dispensing, or the holding for
sale or dispensing, of a counterfeit drug;
(m) the using by any person to the person's own
advantage, or revealing, other than to the commissioner, an
authorized agent, a health authority or to the courts when relevant
in any judicial proceeding under this chapter, of any information
acquired under the authority of this chapter concerning any method
or process that as a trade secret is entitled to protection;
(n) the using, on the labeling of any drug or device or
in any advertising relating to such drug or device, of any
representation or suggestion that approval of an application with
respect to such drug or device is in effect under Section 431.114 or
Section 505, 515, or 520(g) of the federal Act, as the case may be,
or that such drug or device complies with the provisions of such
sections;
(o) the using, in labeling, advertising or other sales
promotion of any reference to any report or analysis furnished in
compliance with Sections 431.042-431.044 or Section 704 of the
federal Act;
(p) in the case of a prescription drug distributed or
offered for sale in this state, the failure of the manufacturer,
packer, or distributor of the drug to maintain for transmittal, or
to transmit, to any practitioner licensed by applicable law to
administer such drug who makes written request for information as
to such drug, true and correct copies of all printed matter that is
required to be included in any package in which that drug is
distributed or sold, or such other printed matter as is approved
under the federal Act. Nothing in this subsection shall be
construed to exempt any person from any labeling requirement
imposed by or under other provisions of this chapter;
(q)(1) placing or causing to be placed on any drug or
device or container of any drug or device, with intent to defraud,
the trade name or other identifying mark, or imprint of another or
any likeness of any of the foregoing;
(2) selling, dispensing, disposing of or causing
to be sold, dispensed, or disposed of, or concealing or keeping in
possession, control, or custody, with intent to sell, dispense, or
dispose of, any drug, device, or any container of any drug or
device, with knowledge that the trade name or other identifying
mark or imprint of another or any likeness of any of the foregoing
has been placed thereon in a manner prohibited by Subdivision (1) of
this subsection; or
(3) making, selling, disposing of, causing to be
made, sold, or disposed of, keeping in possession, control, or
custody, or concealing with intent to defraud any punch, die,
plate, stone, or other thing designed to print, imprint, or
reproduce the trademark, trade name, or other identifying mark,
imprint, or device of another or any likeness of any of the
foregoing on any drug or container or labeling of any drug or
container so as to render such drug a counterfeit drug;
(r) dispensing or causing to be dispensed a different
drug in place of the drug ordered or prescribed without the express
permission in each case of the person ordering or prescribing;
(s) the failure to register in accordance with Section
510 of the federal Act, the failure to provide any information
required by Section 510(j) or (k) of the federal Act, or the failure
to provide a notice required by Section 510(j)(2) of the federal
Act;
(t)(1) the failure or refusal to:
(A) comply with any requirement prescribed
under Section 518 or 520(g) of the federal Act; or
(B) furnish any notification or other
material or information required by or under Section 519 or 520(g)
of the federal Act;
(2) with respect to any device, the submission of
any report that is required by or under this chapter that is false
or misleading in any material respect;
(u) the movement of a device in violation of an order
under Section 304(g) of the federal Act or the removal or alteration
of any mark or label required by the order to identify the device as
detained;
(v) the failure to provide the notice required by
Section 412(b) or 412(c), the failure to make the reports required
by Section 412(d)(1)(B), or the failure to meet the requirements
prescribed under Section 412(d)(2) of the federal Act;
(w) except as provided under Subchapter M of this
chapter and Section 562.1085, Occupations Code, the acceptance by a
person of an unused prescription or drug, in whole or in part, for
the purpose of resale, after the prescription or drug has been
originally dispensed, or sold;
(x) engaging in the wholesale distribution of drugs or
operating as a distributor or manufacturer of devices in this state
without obtaining a license issued by the department under
Subchapter I, L, or N [filing a licensing statement with the
commissioner as required by Section 431.202 or having a license as
required by Section 431.272], as applicable;
(y) engaging in the manufacture of food in this state
or operating as a warehouse operator in this state without having a
license as required by Section 431.222 or operating as a food
wholesaler in this state without having a license under Section
431.222 or being registered under Section 431.2211, as appropriate;
(z) unless approved by the United States Food and Drug
Administration pursuant to the federal Act, the sale, delivery,
holding, or offering for sale of a self-testing kit designed to
indicate whether a person has a human immunodeficiency virus
infection, acquired immune deficiency syndrome, or a related
disorder or condition; [or]
(aa) making a false statement or false representation
in an application for a license or in a statement, report, or other
instrument to be filed with or requested by the department [the
board, the commissioner, or the department] under this chapter;
(bb) failing to comply with a requirement or request
to provide information or failing to submit an application,
statement, report, or other instrument required by the department;
(cc) performing, causing the performance of, or aiding
and abetting the performance of an act described by Subdivision
(x);
(dd) purchasing or otherwise receiving a prescription
drug from a pharmacy in violation of Section 431.411(a);
(ee) selling, distributing, or transferring a
prescription drug to a person who is not authorized under state or
federal law to receive the prescription drug in violation of
Section 431.411(b);
(ff) failing to deliver prescription drugs to
specified premises as required by Section 431.411(c);
(gg) failing to maintain or provide pedigrees as
required by Section 431.412 or 431.413; or
(hh) failing to obtain, pass, or authenticate a
pedigree as required by Section 431.412 or 431.413.
SECTION 10. Section 411.110, Government Code, is amended to
read as follows:
Sec. 411.110. ACCESS TO CRIMINAL HISTORY RECORD
INFORMATION: [TEXAS] DEPARTMENT OF STATE HEALTH SERVICES.
(a) The [Texas] Department of State Health Services is entitled to
obtain from the department criminal history record information
maintained by the department that relates to:
(1) a person who is:
(A) [(1)] an applicant for a license or
certificate under the Emergency Medical Services Act (Chapter 773,
Health and Safety Code);
(B) [(2)] an owner or manager of an applicant for
an emergency medical services provider license under that Act; or
(C) [(3)] the holder of a license or certificate
under that Act; or
(2) an applicant for a license or a license holder
under Subchapter N, Chapter 431, Health and Safety Code.
(b) Criminal history record information obtained by the
[Texas] Department of State Health Services under Subsection (a)
may not be released or disclosed to any person except on court
order, with the written consent of the person or entity that is the
subject of the criminal history record information, or as provided
by Subsection (e).
(c) After an entity is licensed or certified, the [Texas]
Department of State Health Services shall destroy the criminal
history record information that relates to that entity.
(d) The Department of State Health Services [Texas Board of
Health] shall destroy criminal history record information that
relates to an applicant that is not certified.
(e) The Department of State Health Services [Texas Board of
Health] is not prohibited from disclosing criminal history record
information obtained under Subsection (a) in a criminal proceeding
or in a hearing conducted by the [Texas] Department of State Health
Services.
SECTION 11. Sections 431.2021 and 431.205, Health and
Safety Code, are repealed.
SECTION 12. Not later than January 1, 2006, the executive
commissioner of the Health and Human Services Commission shall
adopt the rules necessary to implement the changes in law made by
this Act by amending Subchapter I, Chapter 431, Health and Safety
Code, and adding Subchapter N, Chapter 431, Health and Safety Code.
SECTION 13. Not later than January 1, 2006, the Department
of State Health Services shall prescribe the forms required to
implement the changes in law made by this Act by the amendment of
Subchapter I, Chapter 431, Health and Safety Code, and the addition
of Subchapter N, Chapter 431, Health and Safety Code.
SECTION 14. The change in law made by this Act applies only
to an offense committed on or after March 1, 2006. An offense
committed before that date is covered by the law in effect when the
offense was committed, and the former law is continued in effect for
that purpose. For purposes of this section, an offense was
committed before March 1, 2006, if any element of the offense was
committed before that date.
SECTION 15. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2005.
(b) Sections 1 through 9 of this Act take effect March 1,
2006.
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