Wholesale drug distributors are strictly regulated by Federal and state licensing agencies. State agencies regulate distributors differently depending on their unique distribution model and drug product category (OTC vs Rx). It is critical for pharmaceutical distribution companies to understand their drug licensing obligations for every state into which their drug product is distributed.
Complete Compliance Solutions assists OTC and Rx wholesale drug distributors with identifying appropriate license type, securing required licenses, and managing license renewals.
Secure Your State Drug Distributor Licenses with Complete Compliance Solutions Today
Why You Need a State Licensing Partner as a Wholesale Drug Distributor
What is state licensing for drug distribution?
The US Food and Drug Administration (FDA) is responsible for ensuring the safety of our nation's drug supply. The FDA regulates pharmaceutical trading partners along the supply chain, including wholesale drug distributors. Drug distributors purchase pharmaceuticals from manufacturers and sell to dispensers, such as pharmacies, hospitals, and retailers. Wholesale drug distributors are responsible for moving a majority of drugs in the supply chain. These companies range in size from top 10 Forbes companies to small businesses, with several millions of distributors in operation today.
Current FDA regulations require prescription drug wholesale distributors be licensed by each state in which they distribute products. Federal regulations establish minimum licensing standards to be adopted by state licensing agencies. However, states are permitted to adopt stricter standards and a majority of states have elected to implement more onerous licensing requirements.
The lack of uniform drug distributor licensing standards has resulted in a confusing patchwork of state regulations with different licensing requirements. For instance, some states require fingerprinting and criminal background checks for key personnel.
And, some states have expanded regulation of drug products to include regulation of OTC drug distributors shipping product into their state. So, distributors of consumer products classified as OTC drugs must secure drug distributor licenses if operating in regulated states.
States regulate distributors differently based on their unique distribution model. Distribution models and licensing obligations vary based on whether the company manufacturers and distributes their own or another company's drug products, distributes products but never physically possesses the product, or distributes products under the direction of a distributor or manufacturer (3PL).
Understanding state drug licensing obligations is complicated and time-consuming. CCS takes ownership over your drug distributor licensing needs. We manage the details of applying for and securing required licenses, freeing up your company resources to focus on your business goals.
What are the penalties associated with not obtaining proper state licensing?
Pharmaceutical firms risk formal disciplinary action and fines for the distribution of drugs into a regulated state without the required wholesale drug distributor permit. Companies doubtful of rigid agency regulation of pharmaceutical companies are encouraged to review the Kansas Board of Pharmacy website listing multiple facility disciplinary orders issued to both in-state and out-of-state facilities for violations of Board rules. Once disciplinary orders are connected with a company, these orders most certainly will need to be disclosed to other state agencies when applying for or renewing a license.
Increasingly, state agencies are requiring wholesale drug distributors provide state licensing details on their trading partners as a requirement to obtain or renew their license. Failure to confirm their trading partners hold appropriate state registrations risks putting the distributor's license in jeopardy. Companies risk losing partners in the supply chain who are unable to distribute or purchase products from a partner lacking appropriate state licensure.
What is the process for state license renewal?
The process and timeline for renewing each state drug license varies by state. To avoid risk of operating with an expired license, renewal deadlines and procedures for each state license must be managed carefully.
About half of state drug wholesaler licenses are renewed annually, while the remaining state licenses are renewed every two or three years. And expiration dates vary by state. License expiration dates are linked to the date the license was issued or are based on a defined date for all holders of a specific drug permit type.
Each state regulates the renewal process for their state distributor licenses. With increased staffing challenges causing delays in processing license renewal applications, it is important companies submit permit renewal applications well in advance of drug distributor license renewal deadlines. How far in advance state agencies allow submission of renewal applications vary by state.
State agencies communicate renewal instructions differently, with some states mailing paper renewal applications and other states emailing online renewal instructions. Maintaining correct contact information on file with agencies is important for ensuring important renewal instructions aren't missed. Once renewal applications are submitted, companies must carefully track each application to confirm license renewal.
Tracking multiple license renewal requirements is time-consuming and companies risk an expired license if important deadlines are missed. CCS manages our client's drug licensing portfolio by tracking license renewal deadlines, submitting renewal applications, and tracking receipt of renewed licenses.
We Help Wholesale Drug Distributors Secure State Licenses
Requirements for Licensure
Wholesale drug distributors are strictly regulated at both the state and Federal level.
At the Federal level, pharmaceutical distributors are regulated by the US Food and Drug Administration (FDA). The Drug Supply Chain Security Act (DSCSA) requires wholesale distributors of Rx drugs to report state licensure and other information to the FDA annually. For every distribution facility operated by the distributor, distributors must annually report state license information, including license number and expiration date. Drug distributors engaged in the distribution of controlled substances are also regulated by the Drug Enforcement Agency (DEA). A DEA Controlled Substance Registration is required to distribute this drug category.
At the state level, Rx wholesale drug distributors must be licensed in all states where they conduct business. Additionally, approximately 15 states regulate distribution of OTC drug products into their state. Depending on the state, licenses may also be referred to as "permits" or "registrations."
State Application Requirements
The application process for state drug licenses varies for every state. The wholesaler must obtain an in-state license first before out-of-state agencies will issue a license. Most state agencies require a facility inspection as part of the licensing process. Some states also require a Drug Distributor Accreditation from the National Association of Boards of Pharmacy (NABP) (formerly known as a Verified-Accredited Wholesale Distributor (VAWD) certificate).
State application requirements may include:
Fingerprinting and criminal background checks for key personnel
Proof of Secretary of State registration
Policies and Procedures
Wholesale drug distributors applying for licensure must maintain written policies and procedures for:
Receiving, storing, and distributing drugs
Reporting drug losses and thefts
Handling drug product recalls
Handling returned, damaged, and outdated drugs
Handling security or operation crises
Segregating outdated drugs
Reporting criminal activities.
When applying for a wholesale drug distributor license, a designated representative must be identified for each facility. The designated representative must meet specific criteria related to violations of Federal and state laws and wholesale distributor experience. Qualifications must also be met for key personnel engaged in drug distribution activities.
The drug wholesaler license applicant must verify their facility meets specific requirements related to construction and condition, specifically:
Be of suitable size and construction to facilitate cleaning, maintenance, and proper wholesale distribution operations
Have adequate storage areas to provide adequate lighting, ventilation, temperature, sanitation, and security conditions
Have a quarantine area for storage of drugs that are outdated, damaged, misbranded, or counterfeit
Have appropriate inventory controls to detect and document any theft, counterfeiting, or diversion of drugs
Have adequate security to prevent unauthorized entry.
Process for obtaining a state drug distributor license
Complete Compliance Solutions supports our clients with applying for and securing required drug distributor licenses. Our clients work directly with our licensing experts throughout the entire licensing process. Our licensing support process includes:
Determining licensing obligations based on unique business model
Collecting and tracking required application information
Preparing and submitting applications
Assisting with license fee payments
Tracking application status
Communicating with agencies to keep license review on track
Tracking issued licenses
Documenting license renewal requirements.
Once licenses are secured, Complete Compliance Solutions supports license renewals to avoid the risk of expired licenses. And, if business operations change, we assist with updating license information.
State Drug Distributor Licensing FAQ
How long does it take to get a state wholesale drug distributor license
State agency review and approval time to obtain a drug distributor license varies by state. Depending on the state agency, licenses can take 2 weeks to upwards of 12 weeks from the date the application is submitted.
What is the difference between a pharmaceutical wholesaler, pharmaceutical distributor, and wholesale drug distributor?
Wholesalers buy pharmaceutical product in bulk at a discount from distributors and work closely with pharmacies, hospitals, clinics, and retailers to match their need. Distributors work closely with a manufacturer to distribute their product usually to wholesalers. Wholesale drug distributors purchase drug products from the manufacturer and distribute the products directly to pharmacies, hospitals, clinics and retailers.
How to verify wholesale drug distributor licensed in a state?
Most state agencies provide a pharmaceutical license verification link on their website to search the name of a Rx wholesale drug distributor. In addition to active licenses, expired and inactive licenses and a history of board actions may be available. The US FDA maintains a webpage providing license look up links for each state.
What is a VAWD certificate?
Verified-Accredited Wholesale Distributors (VAWD), now known as a Drug Distributor Accreditation is issued by the National Association of Boards of Pharmacy. The purpose of the Drug Distributor Accreditation is to establish uniform safeguards to protect the public from drugs that have been contaminated, diverted, or counterfeited. Accredited facilities demonstrate they are licensed in good standing and are employing quality practices for safely storing, handling, and shipping prescription drugs.
The Consequences of Operating without a State License
Operating a pharmacy or dispensing medication without required state drug licenses is a serious offense that can result in significant consequences. In many