Amended in Senate August 6, 2014

Amended in Senate June 17, 2014

Amended in Assembly May 5, 2014

Amended in Assembly April 23, 2014

Amended in Assembly March 18, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 2605


Introduced by Assembly Member Bonilla

February 21, 2014


An act to amend Sectionsbegin insert 208,end insert 4040.5, 4043, 4060, 4081, 4101, 4105, 4120,begin delete 4126,end delete 4149, 4160, 4161, 4162, 4162.5, 4164, 4165, 4166, 4167, 4168, 4169, 4201, 4305.5, 4312, 4331, and 4400 of, to amend the heading of Article 11 (commencing with Section 4160) of Chapter 9 of Division 2 of, to add Sectionsbegin delete 4025.5,end deletebegin insert 4022.7,end insert4044.5, 4053.1,begin delete and 4107end deletebegin insert 4107, and 4161.5end insert to, and to repeal and add Section 4045 of, the Business and Professions Code, relating to pharmacy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2605, as amended, Bonilla. Pharmacy: third-party logistics providers.

(1) Under the Pharmacy Law, a violation of which is a crime, the California State Board of Pharmacy licenses and regulates the practice of pharmacy. Existing law restricts the purchase, trade, sale, or transfer of dangerous drugs or dangerous devices, as defined, to licensed wholesalers and other authorized persons. Under the Pharmacy Law, the board licenses and regulates entities, including third-party logistics providers, as wholesalers. The Pharmacy Law defines a “third-party logistics provider” or a “reverse third-party logistics provider” as an entity licensed as a wholesaler that contracts with a dangerous drug manufacturer to provide or coordinate warehousing, distribution, or other similar services on behalf of a manufacturer, but for which there is no change of ownership in the dangerous drugs. Existing law requires a wholesaler tobegin insert have a pharmacist or designated representative on its premises and toend insert be supervised or managed by a designatedbegin delete representative-in-charge andend deletebegin insert representative-in-charge. Existing lawend insert requires a separate license for each place of business owned or operated by a wholesaler. Existing law also requires a wholesaler to submit a surety bond of $100,000 payable to a specified fund of the board to secure payment of any administrative fine imposed by the board. Existing law, the federal Drug Supply Chain Security Act, prohibits a third-party logistics provider, as defined, from conducting any activities in a state unless each facility of the provider is licensed by the state from which drugs are distributed by the provider in accordance with regulations to be promulgated by the Secretary of the United States Department of Health and Human Services.

This bill would revise the definition of the terms “third-party logistics provider” and “reverse third-party logistics provider” to conform to federal law, as specified, and would require a third-party logistics provider of a dangerous drug or dangerous device to be separately licensed by the board as a third-party logistics provider. The bill would require a third-party logistics provider to be supervised and managed by abegin delete facility manager-in-chargeend deletebegin insert responsible managerend insert who wouldbegin insert need to be licensed by the board as a designated representative-3PL. Under the bill, a designated representative-3PL and a responsible manager wouldend insert be subject to similar requirements as those imposed on abegin insert designated representative and aend insert designatedbegin delete representative-in-charge with respect to wholesalers.end deletebegin insert representative-in-charge, respectively.end insert The bill would limit a place of business to a single board-issued licensebegin insert, except for entities under common ownership that meet specified requirements,end insert and would require that at least one designated representative, in the case of a wholesaler, orbegin delete facility manager,end deletebegin insert designated representative-3PL,end insert in the case of a third-party logistics provider, be present during business hours for each licensed place of business. The bill would require a third-party logistics provider to submit a surety bond of $90,000 payable to a specified fund of the board to secure payment of any administrative fine imposed by the board.begin insert The bill would enact parallel requirements with respect to nonresident third-party logistics providers and would make related conforming changes and delete obsolete provisions. After specified federal regulations under the federal Drug Supply Chain Security Act are promulgated, the bill would require the board to act to identify any California laws governing interstate commerce in conflict with those regulations and act to remove the conflict.end insert

begin delete

The bill would

end delete
begin insert

Existing law makes a wholesaler that uses the services of a carrier liable for the security and integrity of any dangerous drug or devices through that carrier until the drugs or devices are delivered to the transferee.

end insert
begin insert

This bill would extend that liability when the wholesaler uses the services of a third-party logistics provider and would require a third-party logistics provider that uses the services of a carrier to have in place and comply with specified written policies and procedures.

end insert
begin insert

(2) Existing law requires that all records of manufacture and of sale, acquisition, or disposition of dangerous drugs or dangerous devices be open to inspection by authorized officers of the law during business hours and be preserved for at least 3 years.

end insert

begin insertThis bill would make those requirements also applicable to records of receipt and shipment of dangerous drugs and dangerous devices. The bill wouldend insert also require a manufacturer, wholesaler, third-party logistics provider, or pharmacy that has reasonable cause to believe that a dangerous drug or device that is or was in its possession, and has been sold or distributed in or through California, is counterfeit or the subject of a fraudulent transaction to notify the board within 72 hours of obtaining that knowledge.

begin delete

(2) The Pharmacy Law requires a person located outside this state that ships, sells, mails, or delivers dangerous drugs or dangerous devices into this state, or sells, brokers, or distributes dangerous drugs or devices within this state to be a licensed nonresident wholesaler.

end delete
begin delete

This bill would, in addition, require a person located outside this state that performs those actions or that warehouses or distributes dangerous drugs or dangerous devices into this state, or warehouses dangerous drugs or devices within this state to be licensed as either a nonresident wholesaler or a nonresident third-party logistics provider. The bill would make conforming changes, and would delete obsolete cross-references and provisions.

end delete

(3) Existing law sets the fees for the issuance and renewal of licenses for wholesalers and designated representatives at specified amounts and authorizes those fees to be increased to specified higher amounts.

This bill would instead set the fees at the higher amounts.

(4) Because a violation of the requirements described in paragraphs (1) and (2) above would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

begin delete
P4    1

SECTION 1.  

Section 4025.5 is added to the Business and
2Professions Code
, to read:

3

4025.5.  

(a) “Facility manager” means an individual licensed
4by the board who oversees the operations of a third-party logistics
5provider with respect to dangerous drugs and dangerous devices
6received by, stored in, or shipped from the licensed place of
7business of the third-party logistics provider.

8(b) “Facility manager-in-charge” means a facility manager
9licensed by the board who is designated by a third-party logistics
10provider and approved by the board pursuant to Section 4160 to
11oversee a licensed place of business of the third-party logistics
12provider. The facility manager-in-charge is responsible for ensuring
13the compliance of the licensed placed of business with state and
14federal laws and with the third-party logistics provider’s customer
15 specifications.

end delete
16begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 208 of the end insertbegin insertBusiness and Professions Codeend insert
17begin insert is amended to read:end insert

18

208.  

(a) Beginning April 1, 2014, a CURES fee of six dollars
19($6) shall be assessed annually on each of the licensees specified
20in subdivision (b) to pay the reasonable costs associated with
21operating and maintaining CURES for the purpose of regulating
22those licensees. The fee assessed pursuant to this subdivision shall
23be billed and collected by the regulating agency of each licensee
P5    1at the time of the licensee’s license renewal. If the reasonable
2regulatory cost of operating and maintaining CURES is less than
3six dollars ($6) per licensee, the Department of Consumer Affairs
4may, by regulation, reduce the fee established by this section to
5the reasonable regulatory cost.

6(b) (1) Licensees authorized pursuant to Section 11150 of the
7Health and Safety Code to prescribe, order, administer, furnish,
8or dispense Schedule II, Schedule III, or Schedule IV controlled
9substances or pharmacists licensed pursuant to Chapter 9
10(commencing with Section 4000) of Division 2.

11(2) begin deleteWholesalers and end deletebegin insertWholesalers, third-party logistics providers, end insert
12nonresident wholesalersbegin insert, and nonresident third-party logistics
13providersend insert
of dangerous drugs licensed pursuant to Article 11
14(commencing with Section 4160) of Chapter 9 of Division 2.

15(3) Nongovernmental clinics licensed pursuant to Article 13
16(commencing with Section 4180) and Article 14 (commencing
17with Section 4190) of Chapter 9 of Division 2.

18(4) Nongovernmental pharmacies licensed pursuant to Article
197 (commencing with Section 4110) of Chapter 9 of Division 2.

20(c) The funds collected pursuant to subdivision (a) shall be
21deposited in the CURES Fund, which is hereby created within the
22State Treasury. Moneys in the CURES Fund shall, upon
23appropriation by the Legislature, be available to the Department
24of Consumer Affairs to reimburse the Department of Justice for
25costs to operate and maintain CURES for the purposes of regulating
26the licensees specified in subdivision (b).

27(d) The Department of Consumer Affairs shall contract with
28the Department of Justice on behalf of the Medical Board of
29California, the Dental Board of California, the California State
30Board of Pharmacy, the Veterinary Medical Board, the Board of
31 Registered Nursing, the Physician Assistant Board of the Medical
32Board of California, the Osteopathic Medical Board of California,
33the Naturopathic Medicine Committee of the Osteopathic Medical
34Board, the State Board of Optometry, and the California Board of
35Podiatric Medicine to operate and maintain CURES for the
36purposes of regulating the licensees specified in subdivision (b).

37begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 4022.7 is added to the end insertbegin insertBusiness and Professions
38Code
end insert
begin insert, to read:end insert

begin insert
P6    1

begin insert4022.7.end insert  

(a) “Designated representative-3PL” means an
2individual to whom a license has been granted pursuant to Section
34053.1.

4(b) “Responsible manager” means a designated
5representative-3PL selected by a third-party logistics provider
6and approved by the board as responsible for ensuring compliance
7of the licensed place of business with state and federal laws with
8respect to dangerous drugs and dangerous devices received by,
9stored in, or shipped from the licensed place of business of the
10third-party logistics provider.

end insert
11

begin deleteSEC. 2.end delete
12begin insertSEC. 3.end insert  

Section 4040.5 of the Business and Professions Code
13 is amended to read:

14

4040.5.  

“Reverse distributor” means every person who acts as
15an agent for pharmacies, drug wholesalers, third-party logistics
16providers, manufacturers, and other entities by receiving,
17inventorying, warehousing, and managing the disposition of
18outdated or nonsaleable dangerous drugs.

19

begin deleteSEC. 3.end delete
20begin insertSEC. 4.end insert  

Section 4043 of the Business and Professions Code is
21amended to read:

22

4043.  

“Wholesaler” means and includes a person who acts as
23a wholesale merchant, broker, jobber, customs broker, reverse
24distributor, agent, or a nonresident wholesaler, who sells for resale,
25or negotiates for distribution, or takes possession of, any drug or
26device included in Section 4022. Unless otherwise authorized by
27law, a wholesaler may not store, warehouse, or authorize the
28storage or warehousing of drugs with any person or at any location
29not licensed by the board.

30

begin deleteSEC. 4.end delete
31begin insertSEC. 5.end insert  

Section 4044.5 is added to the Business and Professions
32Code
, to read:

33

4044.5.  

“Reverse third-party logistics provider” means an entity
34that processes or manages the disposition of an outdated or
35nonsaleable dangerous drug or dangerous device on behalf of a
36manufacturer, wholesaler, or dispenser of the dangerous drug or
37dangerous device, but does not take ownership of the dangerous
38drug or dangerous device nor have the responsibility to direct its
39sale or disposition. Unless otherwise specified in this chapter,
P7    1every provision of this chapter that applies to a third-party logistics
2provider shall also apply to a reverse third-party logistics provider.

3

begin deleteSEC. 5.end delete
4begin insertSEC. 6.end insert  

Section 4045 of the Business and Professions Code is
5repealed.

6

begin deleteSEC. 6.end delete
7begin insertSEC. 7.end insert  

Section 4045 is added to the Business and Professions
8Code
, to read:

9

4045.  

“Third-party logistics provider” means an entity that
10provides or coordinates warehousing or other logistics services
11for a dangerous drug or dangerous device in intrastate or interstate
12commerce on behalf of a manufacturer, wholesaler, or dispenser
13of the dangerous drug or dangerous device, but does not take
14ownership of the dangerous drug or dangerous device, nor have
15responsibility to direct its sale or disposition.

16

begin deleteSEC. 7.end delete
17begin insertSEC. 8.end insert  

Section 4053.1 is added to the Business and Professions
18Code
, to read:

19

4053.1.  

(a) Notwithstanding Section 4051, the board may issue
20a license to a qualified individual as abegin delete facility managerend deletebegin insert designated
21representative-3PLend insert
to provide sufficient and qualified supervision
22of a third-party logistics provider’s place of business. Thebegin delete facility
23managerend delete
begin insert designated representative-3PLend insert shall protect the public
24health and safety in the handling, storage, warehousing,
25distribution, and shipment of dangerous drugs and dangerous
26devices in the third-party logistics provider’s place of business.

27(b) An individual who is at least 18 years of age may apply for
28abegin delete facility managerend deletebegin insert designated representative-3PLend insert license. In order
29to obtain and maintain that license, the individual shall meet all
30of the following requirements:

31(1) He or she shall be a high school graduate or possess a general
32education development certificate equivalent.

33(2) He or she shall meet one of the following requirements:

34(A) Have a minimum of one year of paid work experience in
35the past three years with a third-party logistics provider.

36(B) Have a minimum of one year of paid work experience in
37the past three years in a licensed pharmacy, or with a drug
38wholesaler, drug distributor, or drug manufacturer, performing
39duties related to the distribution or dispensing of dangerous drugs
40or dangerous devices.

P8    1(C) Meet all of the prerequisites to take the examination required
2for licensure as a pharmacist by the board.

3(3) (A) He or she shall complete a training program approved
4by the board that, at a minimum, addresses each of the following
5subjects:

6(i) Knowledge and understanding of California law and federal
7law relating to the distribution of dangerous drugs and dangerous
8devices.

9(ii) Knowledge and understanding of California law and federal
10law relating to the distribution of controlled substances.

11(iii) Knowledge and understanding of quality control systems.

12(iv) Knowledge and understanding of the United States
13Pharmacopoeiabegin insert or federal Food and Drug Administrationend insert standards
14relating to the safe storage, handling, and transport of dangerous
15drugsbegin insert and dangerous devicesend insert.

16(B) The board may, by regulation, require the training program
17required under this paragraph to include additional material.

18(C) The board shall not issue a license as abegin delete facility managerend delete
19begin insert designated representative-3PLend insert until the applicant provides proof
20of completion of the training required by this paragraph to the
21board.

22(c) A third-party logistics provider shall not operate without at
23least onebegin delete facility managerend deletebegin insert designated representative-3PLend insert present
24at each of its licensed places of business as required under Section
254160.

26

begin deleteSEC. 8.end delete
27begin insertSEC. 9.end insert  

Section 4060 of the Business and Professions Code is
28amended to read:

29

4060.  

A person shall not possess any controlled substance,
30except that furnished to a person upon the prescription of a
31physician, dentist, podiatrist, optometrist, veterinarian, or
32naturopathic doctor pursuant to Section 3640.7, or furnished
33pursuant to a drug order issued by a certified nurse-midwife
34pursuant to Section 2746.51, a nurse practitioner pursuant to
35Section 2836.1, a physician assistant pursuant to Section 3502.1,
36a naturopathic doctor pursuant to Section 3640.5, or a pharmacist
37pursuant to Section 4052.1, 4052.2, or 4052.6. This section does
38not apply to the possession of any controlled substance by a
39manufacturer, wholesaler, third-party logistics provider, pharmacy,
40pharmacist, physician, podiatrist, dentist, optometrist, veterinarian,
P9    1naturopathic doctor, certified nurse-midwife, nurse practitioner,
2or physician assistant, if in stock in containers correctly labeled
3with the name and address of the supplier or producer.

4This section does not authorize a certified nurse-midwife, a nurse
5practitioner, a physician assistant, or a naturopathic doctor, to order
6his or her own stock of dangerous drugs and devices.

7

begin deleteSEC. 9.end delete
8begin insertSEC. 10.end insert  

Section 4081 of the Business and Professions Code
9 is amended to read:

10

4081.  

(a) All records of manufacture and of sale, acquisition,
11begin insert receipt, shipment,end insert or disposition of dangerous drugs or dangerous
12devices shall be at all times during business hours open to
13inspection by authorized officers of the law, and shall be preserved
14for at least three years from the date of making. A current inventory
15shall be kept by every manufacturer, wholesaler, third-party
16logistics provider, pharmacy, veterinary food-animal drug retailer,
17physician, dentist, podiatrist, veterinarian, laboratory, clinic,
18hospital, institution, or establishment holding a currently valid and
19unrevoked certificate, license, permit, registration, or exemption
20under Division 2 (commencing with Section 1200) of the Health
21and Safety Code or under Part 4 (commencing with Section 16000)
22of Division 9 of the Welfare and Institutions Code who maintains
23a stock of dangerous drugs or dangerous devices.

24(b) The owner, officer, and partner of a pharmacy, wholesaler,
25third-party logistics provider, or veterinary food-animal drug
26retailer shall be jointly responsible, with the pharmacist-in-charge,
27begin delete facility manager-in-charge,end deletebegin insert responsible manager,end insert or designated
28representative-in-charge, for maintaining the records and inventory
29described in this section.

30(c) The pharmacist-in-charge,begin delete facility manager-in-charge,end delete
31begin insert responsible manager,end insert or designated representative-in-charge shall
32not be criminally responsible for acts of the owner, officer, partner,
33or employee that violate this section and of which the
34pharmacist-in-charge,begin delete facility manager-in-charge,end deletebegin insert responsible
35manager,end insert
or designated representative-in-charge had no knowledge,
36or in which he or she did not knowingly participate.

37

begin deleteSEC. 10.end delete
38begin insertSEC. 11.end insert  

Section 4101 of the Business and Professions Code
39 is amended to read:

P10   1

4101.  

(a) A pharmacist may take charge of and act as the
2pharmacist-in-charge of a pharmacy upon application by the
3pharmacy and approval by the board. A pharmacist-in-charge who
4ceases to act as the pharmacist-in-charge of the pharmacy shall
5notify the board in writing within 30 days of the date of that change
6in status.

7(b) A designated representative or a pharmacist may take charge
8of, and act as, the designated representative-in-charge of a
9wholesaler or veterinary food-animal drug retailer upon application
10by the wholesaler or veterinary food-animal drug retailer and
11approval by the board. A designated representative-in-charge who
12ceases to act as the designated representative-in-charge at that
13 entity shall notify the board in writing within 30 days of the date
14of that change in status.

15(c) Abegin delete facility managerend deletebegin insert designated representative-3PLend insert may take
16charge of, and act as, thebegin delete facility manager-in-chargeend deletebegin insert responsible
17managerend insert
of a third-party logistics provider upon application by
18the third-party logistics provider and approval by the board. A
19begin delete facility manager-in-chargeend deletebegin insert responsible managerend insert who ceases to act
20as thebegin delete facility manager-in-chargeend deletebegin insert responsible managerend insert at that entity
21shall notify the board in writing within 30 days of the date of that
22change in status.

23

begin deleteSEC. 11.end delete
24begin insertSEC. 12.end insert  

Section 4105 of the Business and Professions Code
25 is amended to read:

26

4105.  

(a) All records or other documentation of the acquisition
27and disposition of dangerous drugs and dangerous devices by any
28entity licensed by the board shall be retained on the licensed
29premises in a readily retrievable form.

30(b) The licensee may remove the original records or
31documentation from the licensed premises on a temporary basis
32for license-related purposes. However, a duplicate set of those
33records or other documentation shall be retained on the licensed
34premises.

35(c) The records required by this section shall be retained on the
36licensed premises for a period of three years from the date of
37making.

38(d) (1) Any records that are maintained electronically shall be
39maintained so that the pharmacist-in-charge, or the pharmacist on
40duty if the pharmacist-in-charge is not on duty, shall, at all times
P11   1during which the licensed premises are open for business, be able
2to produce a hardcopy and electronic copy of all records of
3acquisition or disposition or other drug or dispensing-related
4records maintained electronically.

5(2) In the case of a veterinary food-animal drug retailer,
6wholesaler, or third-party logistics provider, any records that are
7maintained electronically shall be maintained so that the designated
8representative-in-charge or thebegin delete facility manager-in-charge,end delete
9begin insert responsible manager,end insert or the designated representative on dutybegin delete or
10the facility manager on dutyend delete
begin insert or the designated representative-3PL
11on dutyend insert
if the designated representative-in-charge orbegin delete facility
12manager-in-chargeend delete
begin insert responsible managerend insert is not on duty, shall, at
13all times during which the licensed place of business is open for
14business, be able to produce a hardcopy and electronic copy of all
15records of acquisition or disposition or other drug or
16dispensing-related records maintained electronically.

17(e) (1) Notwithstanding subdivisions (a), (b), and (c), the board
18may, upon written request, grant to a licensee a waiver of the
19requirements that the records described in subdivisions (a), (b),
20and (c) be kept on the licensed premises.

21(2) A waiver granted pursuant to this subdivision shall not affect
22the board’s authority under this section or any other provision of
23this chapter.

24(f) When requested by an authorized officer of the law or by an
25authorized representative of the board, the owner, corporate officer,
26or manager of an entity licensed by the board shall provide the
27board with the requested records within three business days of the
28time the request was made. The entity may request in writing an
29extension of this timeframe for a period not to exceed 14 calendar
30days from the date the records were requested. A request for an
31extension of time is subject to the approval of the board. An
32extension shall be deemed approved if the board fails to deny the
33extension request within two business days of the time the
34extension request was made directly to the board.

35

begin deleteSEC. 12.end delete
36begin insertSEC. 13.end insert  

Section 4107 is added to the Business and Professions
37Code
, to read:

38

4107.  

If a manufacturer, wholesaler, third-party logistics
39provider, or pharmacy has reasonable cause to believe that a
40dangerous drug or dangerous device in, or having been in, its
P12   1possession is counterfeit or the subject of a fraudulent transaction,
2the manufacturer, wholesaler, third-party logistics provider, or
3pharmacy shall notify the board within 72 hours of obtaining that
4knowledge. This section shall apply to any dangerous drug or
5dangerous device that has been sold or distributed in or through
6this state.

7

begin deleteSEC. 13.end delete
8begin insertSEC. 14.end insert  

Section 4120 of the Business and Professions Code
9 is amended to read:

10

4120.  

(a) A nonresident pharmacy shall not sell or distribute
11dangerous drugs or dangerous devices in this state through any
12person or media other than a wholesaler or third-party logistics
13provider who has obtained a license pursuant to this chapter or
14through a selling or distribution outlet that is licensed as a
15wholesaler or third-party logistics provider pursuant to this chapter
16without registering as a nonresident pharmacy.

17(b) Applications for a nonresident pharmacy registration shall
18be made on a form furnished by the board. The board may require
19any information as the board deems reasonably necessary to carry
20out the purposes of this section.

21(c) The Legislature, by enacting this section, does not intend a
22license issued to any nonresident pharmacy pursuant to this section
23to change or affect the tax liability imposed by Chapter 3
24(commencing with Section 23501) of Part 11 of Division 2 of the
25Revenue and Taxation Code on any nonresident pharmacy.

26(d) The Legislature, by enacting this section, does not intend a
27license issued to any nonresident pharmacy pursuant to this section
28to serve as any evidence that the nonresident pharmacy is doing
29business within this state.

begin delete
30

SEC. 14.  

Section 4126 of the Business and Professions Code
31 is amended to read:

32

4126.  

(a) Notwithstanding any other law, a covered entity may
33contract with a pharmacy to provide pharmacy services to patients
34of the covered entity, as defined in Section 256b of Title 42 of the
35United States Code, including dispensing preferentially priced
36drugs obtained pursuant to Section 256b of Title 42 of the United
37States Code. Contracts between those covered entities and
38pharmacies shall comply with guidelines published by the Health
39Resources and Services Administration and shall be available for
40inspection by board staff during normal business hours.

P13   1(b) Drugs purchased pursuant to Section 256b of Title 42 of the
2United States Code and received by a pharmacy shall be segregated
3from the pharmacy’s other drug stock by either physical or
4electronic means. All records of acquisition and disposition of
5these drugs shall be readily retrievable in a form separate from the
6pharmacy’s other records.

7(c) Drugs obtained by a pharmacy to be dispensed to patients
8of a covered entity pursuant to Section 256b of Title 42 of the
9United States Code that cannot be distributed because of a change
10in circumstances for the covered entity or the pharmacy shall be
11returned to the distributor from which they were obtained. For the
12purposes of this section, a change in circumstances includes, but
13is not limited to, the termination or expiration of the contract
14between the pharmacy and the covered entity, the closure of a
15pharmacy, disciplinary action against the pharmacy, or closure of
16the covered entity.

17(d) A licensee that participates in a contract to dispense
18preferentially priced drugs pursuant to this section shall not have
19both a pharmacy and a wholesaler license, or both a pharmacy and
20a third-party logistics provider license.

21(e) Neither a covered entity nor a pharmacy shall be required
22to obtain a license as a wholesaler or a third-party logistics provider
23based on acts reasonably necessary to fully participate in the drug
24purchase program established by Section 256b of Title 42 of the
25United States Code.

end delete
26

SEC. 15.  

Section 4149 of the Business and Professions Code
27 is amended to read:

28

4149.  

(a) A nonresident distributor shall not sell or distribute
29hypodermic needles or syringes in this state without obtaining a
30license from the board pursuant to Section 4141.

31(b) Notwithstanding subdivision (a), a license is not required if
32the nonresident distributor sells or distributes solely through a
33person who is licensed as a wholesaler or third-party logistics
34provider pursuant to Section 4160.

35(c) The Legislature, by enacting this section, does not intend a
36license issued to any nonresident distributor pursuant to this article
37to serve as evidence that the entity is doing business within this
38state.

P14   1

SEC. 16.  

The heading of Article 11 (commencing with Section
24160) of Chapter 9 of Division 2 of the Business and Professions
3Code
is amended to read:

4 

5Article 11.  Wholesalers, Third-Party Logistics Providers, and
6Manufacturers
7

 

8

SEC. 17.  

Section 4160 of the Business and Professions Code
9 is amended to read:

10

4160.  

(a) A person shall not act as a wholesaler or third-party
11logistics provider of any dangerous drug or dangerous device unless
12he or she has obtained a license from the board.

13(b) Upon approval by the board and the payment of the required
14fee, the board shall issue a license to the applicant.

15(c) begin insert(1)end insertbegin insertend insertA separate license shall be required for each place of
16business owned or operated by a wholesaler or third-party logistics
17provider. Each place of business may only be issued a single license
18by thebegin delete board.end deletebegin insert board, except as provided in paragraph (2).end insert Each
19license shall be renewed annually and shall not be transferable. At
20all times during which a place of business is open for business, at
21least one designated representative, in the case of a wholesaler, or
22begin delete facility manager,end deletebegin insert designated representative-3PLend insert in the case of a
23third-party logistics provider, shall be present.

begin insert

24(2) A wholesaler and a third-party logistics provider under
25common ownership may be licensed at the same place of business
26provided that all of the following requirements are satisfied:

end insert
begin insert

27(A) The wholesaler and the third-party logistics provider each
28separately maintain the records required under Section 4081.

end insert
begin insert

29(B) Dangerous drugs and dangerous devices owned by the
30wholesaler are not commingled with the dangerous drugs and
31dangerous devices handled by the third-party logistics provider.

end insert
begin insert

32(C) Any individual acting as a designated representative for the
33wholesaler is not concurrently acting as a designated
34representative-3PL on behalf of the third-party logistics provider.
35Nothing in this subparagraph shall be construed to prohibit an
36individual from concurrently holding a license to act as a
37designated representative and to act as a designated
38representative-3PL.

end insert
begin insert

39(D) The wholesaler has its own designated
40representative-in-charge responsible for the operations of the
P15   1wholesaler and the third-party logistics provider has its own
2responsible manager responsible for the operations of the
3third-party logistics provider. The same individual shall not
4concurrently serve as the responsible manager and the designated
5representative-in-charge for a wholesaler and a third-party
6logistics provider licensed at the same place of business.

end insert
begin insert

7(E) The third-party logistics provider does not handle the
8prescription drugs or prescription devices owned by a prescriber.

end insert
begin insert

9(F) The third-party logistics provider is not a reverse third-party
10logistics provider.

end insert
begin insert

11(G) The wholesaler is not acting as a reverse distributor.

end insert

12(d) Every wholesaler shall be supervised or managed by a
13designated representative-in-charge. The designated
14representative-in-charge shall be responsible for the wholesaler’s
15compliance with state and federal laws governingbegin delete wholesalers.end delete
16begin insert wholesalers.end insert As part of its initial application for a license, and for
17each renewal, each wholesaler shall, on a form designed by the
18board, provide identifying information and the California license
19number for a designated representative or pharmacist proposed to
20serve as the designated representative-in-charge. The proposed
21designated representative-in-charge shall be subject to approval
22by the board. The board shall not issue or renew a wholesaler
23license without identification of an approved designated
24representative-in-charge for thebegin delete wholesaler.end deletebegin insert wholesaler. The
25designated representative-in-charge shall maintain an active
26license as a designated representative with the board at all times
27during which he or she is designated as the designated
28representative-in-charge.end insert

29(e) Each place of business of a third-party logistics provider
30shall be supervised and managed by abegin delete facility manager-in-charge.end delete
31begin insert responsible manager.end insert Thebegin delete facility manager-in-chargeend deletebegin insert responsible
32managerend insert
shall be responsible for the compliance of the place of
33business with state and federal laws governing third-party logistics
34providers and with the third-party logistics provider’s customer
35specificationsbegin insert, except where the customer’s specifications conflict
36with state or federal lawsend insert
. As part of its initial application for a
37license, and for each renewal, each third-party logistics provider
38shall, on a form designated by the board, provide identifying
39information and the California license number for abegin delete facility
40managerend delete
begin insert designated representative-3PLend insert proposed to serve as the
P16   1begin delete facility manager-in-charge.end deletebegin insert responsible manager.end insert The proposed
2begin delete facility manager-in-chargeend deletebegin insert responsible managerend insert shall be subject
3to approval by the board. The board shall not issue or renew a
4third-party logistics provider license without identification of an
5approvedbegin delete facility manager-in-chargeend deletebegin insert responsible managerend insert for the
6third-party logistics provider.begin insert The responsible manager shall
7maintain an active license as a designated representative-3PL
8with the board at all times during which he or she is designated
9 as the responsible manager.end insert

10(f) A wholesaler shall notify the board in writing, on a form
11designed by the board, within 30 days of the date when a
12designated representative-in-charge ceases to act as the designated
13representative-in-charge, and shall on the same form propose
14another designated representative or pharmacist to take over as
15the designated representative-in-charge. The proposed replacement
16designated representative-in-charge shall be subject to approval
17by the board. If disapproved, the wholesaler shall propose another
18replacement within 15 days of the date of disapproval, and shall
19continue to name proposed replacements until a designated
20representative-in-charge is approved by the board.

21(g) A third-party logistics provider shall notify the board in
22writing, on a form designed by the board, within 30 days of the
23date when abegin delete facility manager-in-chargeend deletebegin insert responsible managerend insert ceases
24to act as thebegin delete facility manager-in-charge,end deletebegin insert responsible manager,end insert and
25shall on the same form propose anotherbegin delete facility managerend deletebegin insert designated
26representative-3PLend insert
to take over as thebegin delete facility manager-in-charge.end delete
27begin insert responsible manager.end insert The proposed replacementbegin delete facility
28manager-in-chargeend delete
begin insert responsible managerend insert shall be subject to
29approval by the board. If disapproved, the third-party logistics
30provider shall propose another replacement within 15 days of the
31date of disapproval, and shall continue to name proposed
32replacements until abegin delete facility manager-in-chargeend deletebegin insert responsible
33managerend insert
is approved by the board.

34(h) A drug manufacturer premises licensed by the Food and
35Drug Administration or licensed pursuant to Section 111615 of
36the Health and Safety Code that only distributes dangerous drugs
37and dangerous devices of its own manufacture is exempt from this
38section and Section 4161.

39(i) The board may issue a temporary license, upon conditions
40and for periods of time as the board determines to be in the public
P17   1interest. A temporary license fee shall be required in an amount
2established by the board as specified in subdivision (f) of Section
34400. When needed to protect public safety, a temporary license
4may be issued for a period not to exceed 180 days, subject to terms
5and conditions that the board deems necessary. If the board
6determines that a temporary license was issued by mistake or denies
7the application for a permanent license, the temporary license shall
8terminate upon either personal service of the notice of termination
9upon the licenseholder or service by certified mail, return receipt
10requested, at the licenseholder’s address of record with the board,
11whichever occurs first. Neither for purposes of retaining a
12temporary license, nor for purposes of any disciplinary or license
13denial proceeding before the board, shall the temporary
14licenseholder be deemed to have a vested property right or interest
15in the license.

16

SEC. 18.  

Section 4161 of the Business and Professions Code
17 is amended to read:

18

4161.  

(a) A person located outside this state that (1) ships,
19sells, mails, warehouses, distributes, or delivers dangerous drugs
20or dangerous devices into this state or (2) sells, brokers,
21warehouses, or distributes dangerous drugs or devices within this
22state shall be considered a nonresident wholesaler or a nonresident
23third-party logistics provider.

24(b) A nonresident wholesaler or nonresident third-party logistics
25provider shall be licensed by the board prior to shipping, selling,
26mailing, warehousing, distributing, or delivering dangerous drugs
27or dangerous devices to a site located in this state or selling,
28brokering, warehousing, or distributing dangerous drugs or devices
29within this state.

30(c) begin insert(1)end insertbegin insertend insertA separate license shall be required for each place of
31business owned or operated by a nonresident wholesaler or
32nonresident third-party logistics provider from or through which
33dangerous drugs or dangerous devices are shipped, sold, mailed,
34warehoused, distributed, or delivered to a site located in this state
35or sold, brokered, warehoused, or distributed within this state.
36Each place of business may only be issued a single license by the
37boardbegin insert, except as provided in paragraph (2)end insert. A license shall be
38renewed annually and shall not be transferable.

begin insert

39(2) A nonresident wholesaler and a nonresident third-party
40logistics provider under common ownership may be licensed at
P18   1the same place of business provided that all of the following
2requirements are satisfied:

end insert
begin insert

3(A) The wholesaler and the third-party logistics provider each
4separately maintain the records required under Section 4081.

end insert
begin insert

5(B) Dangerous drugs and dangerous devices owned by the
6wholesaler are not commingled with the dangerous drugs and
7dangerous devices handled by the third-party logistics provider.

end insert
begin insert

8(C) Any individual acting as a designated representative for the
9wholesaler is not concurrently acting as a designated
10representative-3PL on behalf of the third-party logistics provider.
11Nothing in this subparagraph shall be construed to prohibit an
12 individual from concurrently holding a license to act as a
13designated representative and to act as a designated
14representative-3PL.

end insert
begin insert

15(D) The wholesaler has its own designated
16representative-in-charge responsible for the operations of the
17wholesaler and the third-party logistics provider has its own
18responsible manager responsible for the operations of the
19third-party logistics provider. The same individual shall not
20concurrently serve as the responsible manager and the designated
21representative-in-charge for a wholesaler and a third-party
22logistics provider licensed at the same place of business.

end insert
begin insert

23(E) The third-party logistics provider does not handle the
24prescription drugs or prescription devices owned by a prescriber.

end insert
begin insert

25(F) The third-party logistics provider is not a reverse third-party
26logistics provider.

end insert
begin insert

27(G) The wholesaler is not acting as a reverse distributor.

end insert

28(d) The following information shall be reported, in writing, to
29the board at the time of initial application for licensure by a
30nonresident wholesaler or a nonresident third-party logistics
31provider, on renewal of a nonresident wholesaler or nonresident
32third-party logistics provider license, or within 30 days of a change
33in that information:

34(1) Its agent for service of process in this state.

35(2) Its principal corporate officers, as specified by the board, if
36any.

37(3) Its general partners, as specified by the board, if any.

38(4) Its owners if the applicant is not a corporation or partnership.

P19   1(e) A report containing the information in subdivision (d) shall
2be made within 30 days of any change of ownership, office,
3corporate officer, or partner.

4(f) A nonresident wholesaler or nonresident third-party logistics
5provider shall comply with all directions and requests for
6information from the regulatory or licensing agency of the state
7in which it is licensed, as well as with all requests for information
8made by the board.

9(g) A nonresident wholesaler or nonresident third-party logistics
10provider shall maintain records of dangerous drugs and dangerous
11devices sold, traded, transferred, warehoused, or distributed to
12persons in this state or within this state, so that the records are in
13a readily retrievable form.

14(h) A nonresident wholesaler or nonresident third-party logistics
15provider shall at all times maintain a valid, unexpired license,
16permit, or registration to conduct the business of the wholesaler
17or nonresident third-party logistics provider in compliance with
18the laws of the state in which it is a resident. An application for a
19nonresident wholesaler or nonresident third-party logistics provider
20license in this state shall include a license verification from the
21licensing authority in the applicant’s state of residence.

22(i) begin insert(1)end insertbegin insertend insertThe board shall not issue or renew a nonresident
23wholesalerbegin delete or nonresident third-party logistics providerend delete license
24until the nonresident wholesalerbegin delete or nonresident third-party logistics
25providerend delete
identifies a designated representative-in-chargebegin delete or facility
26manger-in-chargeend delete
and notifies the board in writing of the identity
27and license number of the designated representative-in-chargebegin delete or
28facility manager-in-chargeend delete
.

begin insert

29(2) The board shall not issue or renew a nonresident third-party
30logistics provider license until the nonresident third-party logistics
31provider identifies a responsible manager and notifies the board
32in writing of the identity and license number of the designated
33representative-3PL who will be the responsible manager.

end insert

34(j) The designated representative-in-charge shall be responsible
35for the compliance of the nonresident wholesaler with state and
36federal laws governing wholesalers. Thebegin delete facility manager-in-chargeend delete
37begin insert responsible managerend insert shall be responsible for the compliance of
38the nonresident third-party logistics provider’s place of business
39with state and federal laws governing third-party logistics
40providers. A nonresident wholesaler or nonresident third-party
P20   1logistics provider shall identify and notify the board of a new
2designated representative-in-charge orbegin delete facility manager-in-chargeend delete
3begin insert responsible managerend insert within 30 days of the date that the prior
4designated representative-in-charge orbegin delete facility manager-in-chargeend delete
5begin insert responsible managerend insert ceases to be the designated
6representative-in-charge orbegin delete facility manager-in-charge.end deletebegin insert responsible
7manager.end insert

8(k) The board may issue a temporary license, upon conditions
9and for periods of time as the board determines to be in the public
10interest. A temporary license fee shall be five hundred fifty dollars
11($550) or another amount established by the board not to exceed
12the annual fee for renewal of a license to compound injectable
13sterile drug products. When needed to protect public safety, a
14temporary license may be issued for a period not to exceed 180
15days, subject to terms and conditions that the board deems
16necessary. If the board determines that a temporary license was
17issued by mistake or denies the application for a permanent license,
18the temporary license shall terminate upon either personal service
19of the notice of termination upon the licenseholder or service by
20certified mail, return receipt requested, at the licenseholder’s
21address of record with the board, whichever occurs first. Neither
22for purposes of retaining a temporary license, nor for purposes of
23any disciplinary or license denial proceeding before the board,
24shall the temporary licenseholder be deemed to have a vested
25property right or interest in the license.

26(l) The registration fee shall be the fee specified in subdivision
27(f) of Section 4400.

28begin insert

begin insertSEC. 19.end insert  

end insert

begin insertSection 4161.5 is added to the end insertbegin insertBusiness and
29Professions Code
end insert
begin insert, to read:end insert

begin insert
30

begin insert4161.5.end insert  

At such time as federal regulations are promulgated
31to implement Section 584 of the federal Food, Drug, and Cosmetic
32Act (21 U.S.C. Sec. 360eee-3), the board shall immediately identify
33any standard, requirement, or regulation in California law
34governing interstate commerce that is in conflict with the federal
35regulations and act to remove the conflict in the manner permitted
36by law.

end insert
37

begin deleteSEC. 19.end delete
38begin insertSEC. 20.end insert  

Section 4162 of the Business and Professions Code
39 is amended to read:

P21   1

4162.  

(a) (1) An applicant for the issuance or renewal of a
2wholesaler license, which is not government owned and operated,
3shall submit a surety bond of one hundred thousand dollars
4($100,000) or other equivalent means of security acceptable to the
5board payable to the Pharmacy Board Contingent Fund. The
6purpose of the surety bond is to secure payment of any
7administrative fine imposed by the board and any cost recovery
8ordered pursuant to Section 125.3.

9(2) An applicant for the issuance or renewal of a third-party
10logistics provider license, which is not government owned and
11operated, shall submit a surety bond of ninety thousand dollars
12($90,000) or other equivalent means of security acceptable to the
13board payable to the Pharmacy Board Contingent Fund. The
14purpose of the surety bond is to secure payment of any
15administrative fine imposed by the board and any cost recovery
16ordered pursuant to Section 125.3.

17(3) For purposes of paragraphs (1) and (2), the board may accept
18a surety bond less than the amount required under paragraph (1)
19or (2) if the annual gross receipts of the previous tax year for the
20wholesaler or third-party logistics provider is ten million dollars
21($10,000,000) or less, in which case the surety bond shall be
22twenty-five thousand dollars ($25,000).

23(4) A person to whom an approved new drug application has
24been issued by the United States Food and Drug Administration
25who engages in the wholesale distribution of only the dangerous
26drug specified in the new drug application, and is licensed or
27applies for licensure as a wholesaler or third-party logistics
28provider, shall not be required to post a surety bond as provided
29in paragraph (1) or (2).

30(5) For licensees subject to paragraph (3) or (4), the board may
31require a bond up to one hundred thousand dollars ($100,000) for
32any licensee who has been disciplined by any state or federal
33agency or has been issued an administrative fine pursuant to this
34chapter.

35(b) The board may make a claim against the bond if the licensee
36fails to pay a fine within 30 days after the order imposing the fine,
37or costs become final.

38(c) A single surety bond or other equivalent means of security
39acceptable to the board shall satisfy the requirement of subdivision
P22   1(a) for all licensed sites under common control as defined in
2Section 4126.5.

3

begin deleteSEC. 20.end delete
4begin insertSEC. 21.end insert  

Section 4162.5 of the Business and Professions Code
5 is amended to read:

6

4162.5.  

(a) (1) An applicant for the issuance or renewal of a
7nonresident wholesaler license shall submit a surety bond of one
8hundred thousand dollars ($100,000), or other equivalent means
9of security acceptable to the board, such as an irrevocable letter
10of credit, or a deposit in a trust account or financial institution,
11payable to the Pharmacy Board Contingent Fund. The purpose of
12the surety bond is to secure payment of any administrative fine
13imposed by the board and any cost recovery ordered pursuant to
14Section 125.3.

15(2) An applicant for the issuance or renewal of a nonresident
16third-party logistics provider license shall submit a surety bond of
17ninety thousand dollars ($90,000), or other equivalent means of
18security acceptable to the board, such as an irrevocable letter of
19credit, or a deposit in a trust account or financial institution,
20payable to the Pharmacy Board Contingent Fund. The purpose of
21the surety bond is to secure payment of any administrative fine
22imposed by the board and any cost recovery ordered pursuant to
23Section 125.3.

24(3) For purposes of paragraphs (1) and (2), the board may accept
25a surety bond less than the amount required under paragraph (1)
26or (2) if the annual gross receipts of the previous tax year for the
27nonresident wholesaler or the nonresident third-party logistics
28provider is ten million dollars ($10,000,000) or less, in which case
29the surety bond shall be twenty-five thousand dollars ($25,000).

30(4) For applicants who satisfy paragraph (3), the board may
31require a bond up to one hundred thousand dollars ($100,000) for
32any nonresident wholesaler or nonresident third-party logistics
33provider who has been disciplined by any state or federal agency
34or has been issued an administrative fine pursuant to this chapter.

35(5) A person to whom an approved new drug application or a
36biologics license application has been issued by the United States
37Food and Drug Administration who engages in the wholesale
38distribution of only the dangerous drug specified in the new drug
39application or biologics license application, and is licensed or
40applies for licensure as a nonresident wholesaler or a nonresident
P23   1third-party logistics provider, shall not be required to post a surety
2bond as provided in this section.

3(b) The board may make a claim against the bond if the licensee
4fails to pay a fine within 30 days of the issuance of the fine or
5when the costs become final.

6(c) A single surety bond or other equivalent means of security
7acceptable to the board shall satisfy the requirement of subdivision
8(a) for all licensed sites under common control as defined in
9Section 4126.5.

10

begin deleteSEC. 21.end delete
11begin insertSEC. 22.end insert  

Section 4164 of the Business and Professions Code
12 is amended to read:

13

4164.  

(a) A wholesaler or third-party logistics provider licensed
14by the board that distributes controlled substances, dangerous
15drugs, or dangerous devices within or into this state shall report
16to the board all distributions of dangerous drugs and controlled
17substances that are subject to abuse, as determined by the board.

18(b) Each wholesaler shall develop and maintain a system for
19tracking individual sales of dangerous drugs at preferential or
20contract prices to pharmacies that primarily or solely dispense
21prescription drugs to patients of long-term care facilities. The
22system shall be capable of identifying purchases of any dangerous
23drug at preferential or contract prices by customers that vary
24significantly from prior ordering patterns for the same customer,
25including by identifying purchases in the preceding 12 calendar
26months by that customer or similar customers and identifying
27current purchases that exceed prior purchases by either that
28customer or similar customers by a factor of 20 percent.

29(c) Upon written, oral, or electronic request by the board, a
30wholesaler shall furnish data tracked pursuant to subdivision (b)
31to the board in written, hardcopy, or electronic form. The board
32shall specify the dangerous drugs, the customers, or both the
33dangerous drugs and customers for which data are to be furnished,
34and the wholesaler shall have 30 calendar days to comply with the
35request.

36(d) As used in this section, “preferential or contract prices”
37means and refers to purchases by contract of dangerous drugs at
38prices below the market wholesale price for those drugs.

P24   1

begin deleteSEC. 22.end delete
2begin insertSEC. 23.end insert  

Section 4165 of the Business and Professions Code
3 is amended to read:

4

4165.  

A wholesaler or third-party logistics provider licensed
5by the board who sells or transfers any dangerous drug or
6dangerous device into this state or who receives, by sale or
7otherwise, any dangerous drug or dangerous device from any
8person in this state shall, on request, furnish an authorized officer
9of the law with all records or other documentation of that sale or
10transfer.

11

begin deleteSEC. 23.end delete
12begin insertSEC. 24.end insert  

Section 4166 of the Business and Professions Code
13 is amended to read:

14

4166.  

(a) begin deleteAny end deletebegin insertA end insertwholesaler that uses the services ofbegin delete anyend deletebegin insert aend insert
15 third-party logistics provider or carrier, including, but not limited
16to, the United States Postal Service orbegin delete anyend deletebegin insert aend insert common carrier, shall
17be liable for the security and integrity of any dangerous drugs or
18dangerous devices through that provider or carrier until the drugs
19or devices are delivered to the transferee at its board-licensed
20premises.

begin insert

21(b) A third-party logistics provider that uses the services of a
22carrier, including, but not limited to, the United States Postal
23Service or a common carrier, shall have in place and comply with
24written policies and procedures that provide for both of the
25following:

end insert
begin insert

26(1) Verification that the third-party logistics provider, or the
27owner of the dangerous drugs or dangerous devices stored at the
28third-party logistics provider, has imposed obligations on the
29carrier that provide for the security and integrity of any dangerous
30drugs or dangerous devices transported by the carrier until the
31drugs or devices are delivered to the transferee at its premises.

end insert
begin insert

32(2) Confirmation, prior to shipping a dangerous drug or
33dangerous device, that the intended recipient is legally authorized
34to receive the dangerous drug or dangerous device.

end insert
begin delete

35(b)

end delete

36begin insert(c)end insert Nothing in this section is intended to affect the liability of
37a wholesaler, third-party logistics provider, or other distributor for
38dangerous drugs or dangerous devices after their delivery to the
39transferee.

P25   1

begin deleteSEC. 24.end delete
2begin insertSEC. 25.end insert  

Section 4167 of the Business and Professions Code
3 is amended to read:

4

4167.  

A wholesaler or third-party logistics provider shall not
5obtain, by purchase or otherwise, any dangerous drugs or dangerous
6devices that it cannot maintain, in a secure manner, at the place of
7business licensed by the board.

8

begin deleteSEC. 25.end delete
9begin insertSEC. 26.end insert  

Section 4168 of the Business and Professions Code
10 is amended to read:

11

4168.  

A county or municipality shall not issue a business
12license for any establishment that requires a wholesaler or
13third-party logistics provider license unless the establishment
14possesses a current wholesaler or third-party logistics provider
15license issued by the board. For purposes of this section, an
16“establishment” is the licensee’s physical location in California.

17

begin deleteSEC. 26.end delete
18begin insertSEC. 27.end insert  

Section 4169 of the Business and Professions Code
19 is amended to read:

20

4169.  

(a) A person or entity shall not do any of the following:

21(1) Purchase, trade, sell, warehouse, distribute, or transfer
22dangerous drugs or dangerous devices at wholesale with a person
23or entity that is not licensed with the board as a wholesaler,
24third-party logistics provider, or pharmacy.

25(2) Purchase, trade, sell, or transfer dangerous drugs that the
26person knew or reasonably should have known were adulterated,
27as set forth in Article 2 (commencing with Section 111250) of
28Chapter 6 of Part 5 of Division 104 of the Health and Safety Code.

29(3) Purchase, trade, sell, or transfer dangerous drugs that the
30person knew or reasonably should have known were misbranded,
31as defined in Section 111335 of the Health and Safety Code.

32(4) Purchase, trade, sell, or transfer dangerous drugs or
33dangerous devices after the beyond use date on the label.

34(5) Fail to maintain records of the acquisition or disposition of
35dangerous drugs or dangerous devices for at least three years.

36(b) Notwithstanding any other law, a violation of this section
37may subject the person or entity that has committed the violation
38to a fine not to exceed the amount specified in Section 125.9 for
39each occurrence, pursuant to a citation issued by the board.

P26   1(c) Amounts due from any person under this section shall be
2offset as provided under Section 12419.5 of the Government Code.
3Amounts received by the board under this section shall be deposited
4into the Pharmacy Board Contingent Fund.

5(d) This section shall not apply to a pharmaceutical manufacturer
6licensed by the Food and Drug Administration or by the State
7Department of Public Health.

8

begin deleteSEC. 27.end delete
9begin insertSEC. 28.end insert  

Section 4201 of the Business and Professions Code
10 is amended to read:

11

4201.  

(a) Each application to conduct a pharmacy, wholesaler,
12third-party logistics provider, or veterinary food-animal drug
13retailer, shall be made on a form furnished by the board, and shall
14state the name, address, usual occupation, and professional
15qualifications, if any, of the applicant. If the applicant is other than
16a natural person, the application shall state the information as to
17each person beneficially interested therein.

18(b) As used in this section, and subject to subdivision (c), the
19term “person beneficially interested” means and includes:

20(1) If the applicant is a partnership or other unincorporated
21association, each partner or member.

22(2) If the applicant is a corporation, each of its officers, directors,
23and stockholders, provided that no natural person shall be deemed
24to be beneficially interested in a nonprofit corporation.

25(3) If the applicant is a limited liability company, each officer,
26manager, or member.

27(c) If the applicant is a partnership or other unincorporated
28association, a limited liability company, or a corporation, and the
29number of partners, members, or stockholders, as the case may
30be, exceeds five, the application shall so state, and shall further
31state the information required by subdivision (a) as to each of the
32five partners, members, or stockholders who own the five largest
33interests in the applicant entity. Upon request by the executive
34officer, the applicant shall furnish the board with the information
35required by subdivision (a) as to partners, members, or stockholders
36not named in the application, or shall refer the board to an
37appropriate source of that information.

38(d) The application shall contain a statement to the effect that
39the applicant has not been convicted of a felony and has not
40violated any of the provisions of this chapter. If the applicant
P27   1cannot make this statement, the application shall contain a
2statement of the violation, if any, or reasons which will prevent
3the applicant from being able to comply with the requirements
4with respect to the statement.

5(e) Upon the approval of the application by the board and
6payment of the fee required by this chapter for each pharmacy,
7wholesaler, third-party logistics provider, or veterinary food-animal
8drug retailer, the executive officer of the board shall issue a license
9to conduct a pharmacy, wholesaler, third-party logistics provider,
10or veterinary food-animal drug retailer, if all of the provisions of
11this chapter have been complied with.

12(f) Notwithstanding any other law, the pharmacy license shall
13authorize the holder to conduct a pharmacy. The license shall be
14renewed annually and shall not be transferable.

15(g) Notwithstanding any other law, the wholesaler license shall
16authorize the holder to wholesale dangerous drugs and dangerous
17devices. The license shall be renewed annually and shall not be
18transferable.

19(h) Notwithstanding any other law, the third-party logistics
20provider license shall authorize the holder to provide or coordinate
21warehousing, distribution, or other similar services of dangerous
22drugs and dangerous devices. The license shall be renewed annually
23and shall not be transferable.

24(i) Notwithstanding any other law, the veterinary food-animal
25drug retailer license shall authorize the holder to conduct a
26veterinary food-animal drug retailer and to sell and dispense
27veterinary food-animal drugs as defined in Section 4042.

28(j) For licenses referred to in subdivisions (f), (g), (h), and (i),
29any change in the proposed beneficial ownership interest shall be
30reported to the board within 30 days thereafter upon a form to be
31furnished by the board.

32

begin deleteSEC. 28.end delete
33begin insertSEC. 29.end insert  

Section 4305.5 of the Business and Professions Code
34 is amended to read:

35

4305.5.  

(a) A person that is licensed as a wholesaler,
36third-party logistics provider, or veterinary food-animal drug
37retailer, shall notify the board within 30 days of the termination
38of employment of the designated representative-in-charge orbegin delete facility
39manager-in-charge.end delete
begin insert responsible manager.end insert Failure to notify the
P28   1board within the 30-day period shall constitute grounds for
2disciplinary action.

3(b) A person that is licensed as a wholesaler, third-party logistics
4provider, or veterinary food-animal drug retailer, that willfully
5fails to notify the board of the termination of employment of the
6designated representative-in-charge orbegin delete facility manager-in-chargeend delete
7begin insert responsible managerend insert at its licensed place of business, and that
8continues to operate the place of business in the absence of the
9designated representative-in-charge orbegin delete facility manager-in-chargeend delete
10begin insert responsible managerend insert for that place of business shall be subject to
11summary suspension or revocation of its license as a wholesaler,
12third-party logistics provider, or veterinary food-animal drug
13retailer at that place of business.

14(c) A designated representative-in-charge of a wholesaler or
15veterinary food-animal drug retailer, or abegin delete facility manager-in-chargeend delete
16begin insert responsible managerend insert of a third-party logistics provider, who
17terminates his or her employment at the licensed place of business,
18shall notify the board within 30 days of the termination of
19employment. Failure to notify the board within the 30-day period
20shall constitute grounds for disciplinary action.

21

begin deleteSEC. 29.end delete
22begin insertSEC. 30.end insert  

Section 4312 of the Business and Professions Code
23 is amended to read:

24

4312.  

(a) The board may cancel the license of a wholesaler,
25third-party logistics provider, pharmacy, or veterinary food-animal
26drug retailer if the licensed premises remain closed, as defined in
27subdivision (e), other than by order of the board. For good cause
28shown, the board may cancel a license after a shorter period of
29closure. To cancel a license pursuant to this subdivision, the board
30shall make a diligent, good faith effort to give notice by personal
31service on the licensee. If a written objection is not received within
3210 days after personal service is made or a diligent, good faith
33effort to give notice by personal service on the licensee has failed,
34the board may cancel the license without the necessity of a hearing.
35If the licensee files a written objection, the board shall file an
36 accusation based on the licensee remaining closed. Proceedings
37shall be conducted in accordance with Chapter 5 (commencing
38with Section 11500) of Part 1 of Division 3 of Title 2 of the
39Government Code, and the board shall have all the powers granted
40in that chapter.

P29   1(b) If the license of a wholesaler, third-party logistics provider,
2pharmacy, or veterinary food-animal drug retailer is canceled
3pursuant to subdivision (a) or revoked pursuant to Article 19
4(commencing with Section 4300), or a wholesaler, third-party
5logistics provider, pharmacy, or veterinary food-animal drug
6retailer notifies the board of its intent to remain closed or to
7discontinue business, the licensee shall, within 10 days thereafter,
8arrange for the transfer of all dangerous drugs and controlled
9substances or dangerous devices to another licensee authorized to
10possess the dangerous drugs and controlled substances or dangerous
11devices. The licensee transferring the dangerous drugs and
12controlled substances or dangerous devices shall immediately
13confirm in writing to the board that the transfer has taken place.

14(c) If a wholesaler, third-party logistics provider, pharmacy, or
15veterinary food-animal drug retailer fails to comply with
16subdivision (b), the board may seek and obtain an order from the
17superior court in the county in which the wholesaler, third-party
18logistics provider, pharmacy, or veterinary food-animal drug
19retailer is located, authorizing the board to enter the wholesaler,
20third-party logistics provider, pharmacy, or veterinary food-animal
21drug retailer and inventory and store, transfer, sell, or arrange for
22the sale of, all dangerous drugs and controlled substances and
23dangerous devices found in the wholesaler, third-party logistics
24provider, pharmacy, or veterinary food-animal drug retailer.

25(d) If the board sells or arranges for the sale of any dangerous
26drugs, controlled substances, or dangerous devices pursuant to
27subdivision (c), the board may retain from the proceeds of the sale
28an amount equal to the cost to the board of obtaining and enforcing
29an order issued pursuant to subdivision (c), including the cost of
30disposing of the dangerous drugs, controlled substances, or
31dangerous devices. The remaining proceeds, if any, shall be
32returned to the licensee from whose premises the dangerous drugs
33or controlled substances or dangerous devices were removed.

34(1) The licensee shall be notified of his or her right to the
35remaining proceeds by personal service or by certified mail,
36postage prepaid.

37(2) If a statute or regulation requires the licensee to file with
38the board his or her address, and any change of address, the notice
39required by this subdivision may be sent by certified mail, postage
40prepaid, to the latest address on file with the board and service of
P30   1notice in this manner shall be deemed completed on the 10th day
2after the mailing.

3(3) If the licensee is notified as provided in this subdivision,
4and the licensee fails to contact the board for the remaining
5proceeds within 30 calendar days after personal service has been
6made or service by certified mail, postage prepaid, is deemed
7completed, the remaining proceeds shall be deposited by the board
8into the Pharmacy Board Contingent Fund. These deposits shall
9be deemed to have been received pursuant to Chapter 7
10(commencing with Section 1500) of Title 10 of Part 3 of the Code
11of Civil Procedure and shall be subject to claim or other disposition
12as provided in that chapter.

13(e) For the purposes of this section, “closed” means not engaged
14in the ordinary activity for which a license has been issued for at
15least one day each calendar week during any 120-day period.

16(f) Nothing in this section shall be construed as requiring a
17pharmacy to be open seven days a week.

18

begin deleteSEC. 30.end delete
19begin insertSEC. 31.end insert  

Section 4331 of the Business and Professions Code
20 is amended to read:

21

4331.  

(a) A person who isbegin delete neither a pharmacist norend deletebegin insert not a
22pharmacist, a designated representative-in-charge, orend insert
a designated
23representative and who takes charge of a wholesaler or veterinary
24food-animal drug retailer or who dispenses a prescription or
25furnishes dangerous devices, except as otherwise provided in this
26chapter, is guilty of a misdemeanor.

27(b) A person who is not abegin delete facility managerend deletebegin insert responsible manager
28or a designated representative-3PLend insert
who takes charge of a
29third-party logistics provider or coordinates the warehousing or
30distribution of dangerous drugs or dangerous devices within a
31third-party logistics provider, except as otherwise provided in this
32chapter, is guilty of a misdemeanor.

33(c) A person licensed as a veterinary food-animal drug retailer
34that fails to place in charge of that veterinary food-animal drug
35retailer a pharmacist or designated representative, or any person
36who, by himself or herself, or by any other person, permits the
37dispensing of prescriptions, except by a pharmacist or designated
38representative, or as otherwise provided in this chapter, is guilty
39of a misdemeanor.

P31   1(d) A person licensed as a wholesaler that fails to place in charge
2of that wholesaler a pharmacist or designated representative, or
3any person who, by himself or herself, or by any other person,
4permits the furnishing of dangerous drugs or dangerous devices,
5except by a pharmacist or designated representative, or as otherwise
6provided in this chapter, is guilty of a misdemeanor.

7(e) A person licensed as a third-party logistics provider that fails
8to place in charge of a licensed place of business of the third-party
9logistics provider abegin delete facility manager,end deletebegin insert responsible manager,end insert or any
10person who, by himself or herself, or by any other person, permits
11the furnishing of dangerous drugs or dangerous devices, except
12by a facility manager, or as otherwise provided in this chapter, is
13guilty of a misdemeanor.

14

begin deleteSEC. 31.end delete
15begin insertSEC. 32.end insert  

Section 4400 of the Business and Professions Code,
16as added by Section 9 of Chapter 565 of the Statutes of 2013, is
17amended to read:

18

4400.  

The amount of fees and penalties prescribed by this
19chapter, except as otherwise provided, is that fixed by the board
20according to the following schedule:

21(a) The fee for a nongovernmental pharmacy license shall be
22four hundred dollars ($400) and may be increased to five hundred
23twenty dollars ($520). The fee for the issuance of a temporary
24nongovernmental pharmacy permit shall be two hundred fifty
25dollars ($250) and may be increased to three hundred twenty-five
26dollars ($325).

27(b) The fee for a nongovernmental pharmacy license annual
28renewal shall be two hundred fifty dollars ($250) and may be
29increased to three hundred twenty-five dollars ($325).

30(c) The fee for the pharmacist application and examination shall
31be two hundred dollars ($200) and may be increased to two
32hundred sixty dollars ($260).

33(d) The fee for regrading an examination shall be ninety dollars
34($90) and may be increased to one hundred fifteen dollars ($115).
35If an error in grading is found and the applicant passes the
36examination, the regrading fee shall be refunded.

37(e) The fee for a pharmacist license and biennial renewal shall
38be one hundred fifty dollars ($150) and may be increased to one
39hundred ninety-five dollars ($195).

P32   1(f) The fee for a nongovernmental wholesaler or third-party
2logistics provider license and annual renewal shall be seven
3hundred eighty dollars ($780) and may be decreased to no less
4than six hundred dollars ($600). The application fee for any
5additional location after licensure of the first 20 locations shall be
6three hundred dollars ($300) and may be decreased to no less than
7two hundred twenty-five dollars ($225). A temporary license fee
8shall be seven hundred fifteen dollars ($715) and may be decreased
9to no less than five hundred fifty dollars ($550).

10(g) The fee for a hypodermic license and renewal shall be one
11hundred twenty-five dollars ($125) and may be increased to one
12hundred sixty-five dollars ($165).

13(h) (1) The fee for application, investigation, and issuance of
14a license as a designated representative pursuant to Section 4053,
15or as abegin delete facility managerend deletebegin insert designated representative-3PLend insert pursuant
16to Section 4053.1, shall be three hundred thirty dollars ($330) and
17may be decreased to no less than two hundred fifty-five dollars
18($255).

19(2) The fee for the annual renewal of a license as a designated
20representative orbegin delete facility managerend deletebegin insert designated representative-3PLend insert
21 shall be one hundred ninety-five dollars ($195) and may be
22decreased to no less than one hundred fifty dollars ($150).

23(i) (1) The fee for the application, investigation, and issuance
24of a license as a designated representative for a veterinary
25food-animal drug retailer pursuant to Section 4053 shall be three
26hundred thirty dollars ($330) and may be decreased to no less than
27two hundred fifty-five dollars ($255).

28(2) The fee for the annual renewal of a license as a designated
29representative for a veterinary food-animal drug retailer shall be
30one hundred ninety-five dollars ($195) and may be decreased to
31no less than one hundred fifty dollars ($150).

32(j) (1) The application fee for a nonresident wholesaler or
33third-party logistics provider license issued pursuant to Section
344161 shall be seven hundred eighty dollars ($780) and may be
35decreased to no less than six hundred dollars ($600).

36(2) For nonresident wholesalers or third-party logistics providers
37that have 21 or more facilities operating nationwide the application
38fees for the first 20 locations shall be seven hundred eighty dollars
39($780) and may be decreased to no less than six hundred dollars
40($600). The application fee for any additional location after
P33   1licensure of the first 20 locations shall be three hundred dollars
2($300) and may be decreased to no less than two hundred
3twenty-five dollars ($225). A temporary license fee shall be seven
4hundred fifteen dollars ($715) and may be decreased to no less
5than five hundred fifty dollars ($550).

6(3) The annual renewal fee for a nonresident wholesaler license
7or third-party logistics provider license issued pursuant to Section
84161 shall be seven hundred eighty dollars ($780) and may be
9decreased to no less than six hundred dollars ($600).

10(k) The fee for evaluation of continuing education courses for
11accreditation shall be set by the board at an amount not to exceed
12forty dollars ($40) per course hour.

13(l) The fee for an intern pharmacist license shall be ninety dollars
14($90) and may be increased to one hundred fifteen dollars ($115).
15The fee for transfer of intern hours or verification of licensure to
16another state shall be twenty-five dollars ($25) and may be
17increased to thirty dollars ($30).

18(m) The board may waive or refund the additional fee for the
19issuance of a license where the license is issued less than 45 days
20before the next regular renewal date.

21(n) The fee for the reissuance of any license, or renewal thereof,
22that has been lost or destroyed or reissued due to a name change
23shall be thirty-five dollars ($35) and may be increased to forty-five
24dollars ($45).

25(o) The fee for the reissuance of any license, or renewal thereof,
26that must be reissued because of a change in the information, shall
27be one hundred dollars ($100) and may be increased to one hundred
28thirty dollars ($130).

29(p) It is the intent of the Legislature that, in setting fees pursuant
30to this section, the board shall seek to maintain a reserve in the
31Pharmacy Board Contingent Fund equal to approximately one
32year’s operating expenditures.

33(q) The fee for any applicant for a nongovernmental clinic
34license shall be four hundred dollars ($400) and may be increased
35to five hundred twenty dollars ($520) for each license. The annual
36fee for renewal of the license shall be two hundred fifty dollars
37($250) and may be increased to three hundred twenty-five dollars
38($325) for each license.

39(r) The fee for the issuance of a pharmacy technician license
40shall be eighty dollars ($80) and may be increased to one hundred
P34   1five dollars ($105). The fee for renewal of a pharmacy technician
2license shall be one hundred dollars ($100) and may be increased
3to one hundred thirty dollars ($130).

4(s) The fee for a veterinary food-animal drug retailer license
5shall be four hundred five dollars ($405) and may be increased to
6four hundred twenty-five dollars ($425). The annual renewal fee
7for a veterinary food-animal drug retailer license shall be two
8hundred fifty dollars ($250) and may be increased to three hundred
9twenty-five dollars ($325).

10(t) The fee for issuance of a retired license pursuant to Section
114200.5 shall be thirty-five dollars ($35) and may be increased to
12forty-five dollars ($45).

13(u) The fee for issuance or renewal of a nongovernmental sterile
14compounding pharmacy license shall be six hundred dollars ($600)
15and may be increased to seven hundred eighty dollars ($780). The
16fee for a temporary license shall be five hundred fifty dollars ($550)
17and may be increased to seven hundred fifteen dollars ($715).

18(v) The fee for the issuance or renewal of a nonresident sterile
19compounding pharmacy license shall be seven hundred eighty
20dollars ($780). In addition to paying that application fee, the
21nonresident sterile compounding pharmacy shall deposit, when
22submitting the application, a reasonable amount, as determined by
23the board, necessary to cover the board’s estimated cost of
24performing the inspection required by Section 4127.2. If the
25required deposit is not submitted with the application, the
26application shall be deemed to be incomplete. If the actual cost of
27the inspection exceeds the amount deposited, the board shall
28provide to the applicant a written invoice for the remaining amount
29and shall not take action on the application until the full amount
30has been paid to the board. If the amount deposited exceeds the
31amount of actual and necessary costs incurred, the board shall
32remit the difference to the applicant.

33(w) This section shall become operative on July 1, 2014.

34

begin deleteSEC. 32.end delete
35begin insertSEC. 33.end insert  

No reimbursement is required by this act pursuant
36to Section 6 of Article XIII B of the California Constitution because
37the only costs that may be incurred by a local agency or school
38district will be incurred because this act creates a new crime or
39infraction, eliminates a crime or infraction, or changes the penalty
40for a crime or infraction, within the meaning of Section 17556 of
P35   1the Government Code, or changes the definition of a crime within
2the meaning of Section 6 of Article XIII B of the California
3Constitution.



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