Safeguarding the Pharmaceutical Distribution System

In November 2013, Congress passed and President Obama signed into law the Drug Quality and Security Act (the “2013 Act”) Public Law 113-54), which intended to create uniform, national licensing standards for wholesale distributors and third-party logistics providers for the purpose of safeguarding the pharmaceutical distribution system.  In passing the new law, Congress recognized a need for clarity in distinguishing between manufacturers, wholesalers and distributors. Indeed, the 2013 Act established uniform, national licensing standards that specifically preempted existing state licensing requirements for participation in the supply chain of pharmaceutical products.

The 2013 Act was in part a response to the 2012 meningitis outbreak that the Federal Government attributed to unsanitary conditions at a Massachusetts compounding pharmacy, as well as concerns over increases in counterfeit, falsified, substandard and dangerous prescription medications. While the focus of the 2013 Act was compounding pharmacies, California’s statutory oversight of wholesalers and manufacturers does not provide a statutory distinction between dangerous drugs and dangerous devices, both of which the Board of Pharmacy (the “Board”) regulates principally under Article 11 (Wholesalers and Manufacturers), Chapter 9 (Pharmacy), Division 2 (Healing Arts) of the California Business and Professions Code.

California responded in 2014 with Assembly Bill 2605 (introduced in February 2014 and signed by Governor Brown in September 2014).  AB 2014 clarified existing law in California so that the applicable statutory provisions complied with the 2013 Act and its preemptive reach.  In doing so, AB 2605 affected 26 statutes in California, including but not limited to California Business and Professions Code Sections 4160, 4167, 4168 and 4169.