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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1990 

                        CHAPTER 526-S.F.No. 1758 
           An act relating to health; requiring the licensing of 
          wholesale drug distributors; regulating the use of 
          biosynthetic bovine somatotropin; providing penalties; 
          amending Minnesota Statutes 1988, sections 151.01, 
          subdivision 28; 151.06, subdivision 1; 151.15, 
          subdivision 3; and 151.25; proposing coding for new 
          law in Minnesota Statutes, chapter 151. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [PURPOSE.] 
    The legislature finds that biosynthetic bovine somatotropin 
has not been fully researched to provide conclusive evidence 
about animal health effects.  In the public interest, the 
legislature intends biosynthetic bovine somatotropin to be 
closely regulated and administered only in research or necessary 
medical circumstances for one year after the effective date of 
sections 2 and 4 of this act. 
    Sec. 2.  Minnesota Statutes 1988, section 151.01, 
subdivision 28, is amended to read: 
    Subd. 28.  [VETERINARY LEGEND DRUG.] "Veterinary legend 
drug" means biosynthetic bovine somatotropin (BST) until one 
year after the effective date of section 4 of this act or a drug 
that is required by federal law to bear the following 
statement:  "Caution:  Federal law restricts this drug to use by 
or on the order of a licensed veterinarian." 
    Sec. 3.  Minnesota Statutes 1988, section 151.06, 
subdivision 1, is amended to read: 
    Subdivision 1.  (a)  [POWERS AND DUTIES.] The board of 
pharmacy shall have the power and it shall be its duty: 
    (1) to regulate the practice of pharmacy; 
    (2) to regulate the manufacture, wholesale, and retail sale 
of drugs within this state; 
    (3) to regulate the identity, labeling, purity, and quality 
of all drugs and medicines dispensed in this state, using the 
United States Pharmacopeia and the National Formulary, or any 
revisions thereof, or standards adopted under the federal act as 
the standard; 
    (4) to enter and inspect by its authorized representative 
any and all places where drugs, medicines, medical gases, or 
veterinary drugs or devices are sold, vended, given away, 
compounded, dispensed, manufactured, wholesaled, or held; it may 
secure samples or specimens of any drugs, medicines, medical 
gases, or veterinary drugs or devices after paying or offering 
to pay for such sample; it shall be entitled to inspect and make 
copies of any and all records of shipment, purchase, 
manufacture, quality control, and sale of these items provided, 
however, that such inspection shall not extend to financial 
data, sales data, or pricing data; 
    (5) to examine and license as pharmacists all applicants 
whom it shall deem qualified to be such; 
    (6) to license wholesale drug distributors; 
    (7) to deny, suspend, revoke, or refuse to renew any 
registration or license required under this chapter, to any 
applicant or registrant or licensee upon any of the following 
grounds: 
     (i) fraud or deception in connection with the securing of 
such license or registration; 
     (ii) in the case of a pharmacist, conviction in any court 
of a felony; 
     (iii) in the case of a pharmacist, conviction in any court 
of an offense involving moral turpitude; 
     (iv) habitual indulgence in the use of narcotics, 
stimulants, or depressant drugs; or habitual indulgence in 
intoxicating liquors in a manner which could cause conduct 
endangering public health; 
     (v) unprofessional conduct or conduct endangering public 
health; 
     (vi) gross immorality; 
     (vii) employing, assisting, or enabling in any manner an 
unlicensed person to practice pharmacy; 
     (viii) conviction of theft of drugs, or the unauthorized 
use, possession, or sale thereof; 
     (ix) violation of any of the provisions of this chapter or 
any of the rules of the state board of pharmacy; 
     (x) in the case of a pharmacy license, operation of such 
pharmacy without a pharmacist present and on duty; 
     (xi) in the case of a pharmacist, physical or mental 
disability which could cause incompetency in the practice of 
pharmacy; or 
    (xii) in the case of a pharmacist, the suspension or 
revocation of a license to practice pharmacy in another state; 
    (7) (8) to employ necessary assistants and make rules for 
the conduct of its business; and 
    (8) (9) to perform such other duties and exercise such 
other powers as the provisions of the act may require.  
     (b)  [TEMPORARY SUSPENSION.] In addition to any other 
remedy provided by law, the board may, without a hearing, 
temporarily suspend a license for not more than 60 days if the 
board finds that a pharmacist has violated a statute or rule 
that the board is empowered to enforce and continued practice by 
the pharmacist would create an imminent risk of harm to others.  
The suspension shall take effect upon written notice to the 
pharmacist, specifying the statute or rule violated.  At the 
time it issues the suspension notice, the board shall schedule a 
disciplinary hearing to be held under the administrative 
procedure act.  The pharmacist shall be provided with at least 
20 days notice of any hearing held under this subdivision. 
     (c)  [RULES.] For the purposes aforesaid it shall be the 
duty of the board to make and publish uniform rules not 
inconsistent herewith for carrying out and enforcing the 
provisions of this chapter.  
     Sec. 4.  Minnesota Statutes 1988, section 151.15, 
subdivision 3, is amended to read: 
    Subd. 3.  [UNLICENSED PERSONS; VETERINARY LEGEND DRUGS.] It 
shall be unlawful for any person other than a licensed 
veterinarian or pharmacist to compound or dispense veterinary 
legend drugs except as provided in this chapter.  Until one year 
after the effective date of section 4 of this act, a 
veterinarian or veterinarian's assistant may use biosynthetic 
bovine somatotropin (BST) for medical or research purposes only. 
Biosynthetic bovine somatotropin (BST) may not be dispensed to, 
used by, or administered by a person who is not a licensed 
veterinarian or a veterinarian's assistant under the 
veterinarian's supervision. 
    Sec. 5.  Minnesota Statutes 1988, section 151.25, is 
amended to read: 
    151.25 [REGISTRATION OF MANUFACTURERS OR WHOLESALERS; FEE; 
PROHIBITIONS.] 
    The board shall require and provide for the annual 
registration of every person engaged in manufacturing or selling 
at wholesale drugs, medicines, chemicals, or poisons for 
medicinal purposes, now or hereafter doing business with 
accounts in this state.  Upon a payment of a fee as set by the 
board, the board shall issue a registration certificate in such 
form as it may prescribe to such manufacturer or wholesaler.  
Such registration certificate shall be displayed in a 
conspicuous place in such manufacturer's or wholesaler's place 
of business for which it is issued and expire on the date set by 
the board.  It shall be unlawful for any person to manufacture 
or sell at wholesale drugs, medicines, chemicals, or poisons for 
medicinal purposes unless such a certificate has been issued to 
the person by the board.  It shall be unlawful for any person 
engaged in the manufacture or selling at wholesale of drugs, 
medicines, chemicals, or poisons for medicinal purposes, or the 
person's agent, to sell legend drugs or biosynthetic bovine 
somatotropin (BST) until one year after the effective date of 
section 2 of this act to other than a pharmacy, except as 
provided in this chapter. 
    Sec. 6.  [151.43] [SCOPE.] 
    Sections 6 to 14 apply to any person, partnership, 
corporation, or other business enterprise engaging in the 
wholesale distribution of prescription drugs within the state. 
    Sec. 7.  [151.44] [DEFINITIONS.] 
    As used in sections 6 to 14, the following terms have the 
meanings given in paragraphs (a) to (f): 
    (a) "Wholesale drug distribution" means distribution of 
prescription drugs to persons other than a consumer or patient, 
but does not include: 
    (1) a sale between a division, subsidiary, parent, 
affiliated, or related company under the common ownership and 
control of a corporate entity; 
    (2) the purchase or other acquisition, by a hospital or 
other health care entity that is a member of a group purchasing 
organization, of a drug for its own use from the organization or 
from other hospitals or health care entities that are members of 
such organizations; 
    (3) the sale, purchase, or trade of a drug or an offer to 
sell, purchase, or trade a drug by a charitable organization 
described in section 501(c)(3) of the Internal Revenue Code of 
1986, as amended through December 31, 1988, to a nonprofit 
affiliate of the organization to the extent otherwise permitted 
by law; 
    (4) the sale, purchase, or trade of a drug or offer to 
sell, purchase, or trade a drug among hospitals or other health 
care entities that are under common control; 
    (5) the sale, purchase, or trade of a drug or offer to 
sell, purchase, or trade a drug for emergency medical reasons; 
    (6) the sale, purchase, or trade of a drug, an offer to 
sell, purchase, or trade a drug, or the dispensing of a drug 
pursuant to a prescription; 
    (7) the transfer of prescription drugs by a retail pharmacy 
to another retail pharmacy to alleviate a temporary shortage; 
    (8) the distribution of prescription drug samples by 
manufacturers representatives; or 
    (9) the sale, purchase, or trade of blood and blood 
components. 
    (b) "Wholesale drug distributor" means anyone engaged in 
wholesale drug distribution, including but not limited to, 
manufacturers; repackers; own-label distributors; jobbers; 
brokers; warehouses, including manufacturers' and distributors' 
warehouses, chain drug warehouses, and wholesale drug 
warehouses; independent wholesale drug traders; and pharmacies 
that conduct wholesale drug distribution.  A wholesale drug 
distributor does not include a common carrier or individual 
hired primarily to transport prescription drugs. 
    (c) "Manufacturer" means anyone who is engaged in the 
manufacturing, preparing, propagating, compounding, processing, 
packaging, repackaging, or labeling of a prescription drug. 
    (d) "Prescription drug" means a drug required by federal or 
state law or regulation to be dispensed only by a prescription, 
including finished dosage forms and active ingredients subject 
to United States Code, title 21, sections 811 and 812.  
    (e) "Blood" means whole blood collected from a single donor 
and processed either for transfusion or further manufacturing. 
    (f) "Blood components" means that part of blood separated 
by physical or mechanical means. 
    Sec. 8.  [151.45] [WHOLESALE DRUG DISTRIBUTOR ADVISORY TASK 
FORCE.] 
    The board shall appoint a wholesale drug distributor 
advisory task force composed of five members, to be selected and 
to perform duties and responsibilities as follows: 
    (a) One member must be a pharmacist who is neither a member 
of the board nor a board employee. 
    (b) Two members must be representatives of wholesale drug 
distributors as defined in section 7, paragraph (b). 
    (c) One member must be a representative of drug 
manufacturers. 
    (d) One member must be a public member as defined by 
section 214.02. 
    (e) The advisory task force shall review and make 
recommendations to the board on the merit of all rules dealing 
with wholesale drug distributors and drug manufacturers that are 
proposed by the board; and no rule affecting wholesale drug 
distributors proposed by the board may be adopted without first 
being submitted to the task force for review and comment. 
    (f) In making advisory task force appointments, the board 
shall consider recommendations received from each of the 
wholesale drug distributor, pharmacist, and drug manufacturer 
classes cited in paragraphs (a) to (c), and shall adopt rules 
that provide for solicitation of the recommendations. 
    Sec. 9.  [151.46] [PROHIBITED DRUG PURCHASES OR RECEIPT.] 
    It is unlawful for any person to knowingly purchase or 
receive a prescription drug from a source other than a person or 
entity licensed under the laws of the state, except where 
otherwise provided.  Licensed wholesale drug distributors other 
than pharmacies may not dispense or distribute prescription 
drugs directly to patients.  A person violating the provisions 
of this section is guilty of a misdemeanor. 
    Sec. 10.  [151.47] [WHOLESALE DRUG DISTRIBUTOR LICENSING 
REQUIREMENTS.] 
    Subdivision 1.  [REQUIREMENTS.] All wholesale drug 
distributors are subject to the requirements in paragraphs (a) 
to (e).  
    (a) No person or distribution outlet may act as a wholesale 
drug distributor without first obtaining a license from the 
board and paying the required fee. 
    (b) No license may be issued or renewed for a wholesale 
drug distributor to operate unless the applicant agrees to 
operate in a manner prescribed by federal and state law and 
according to the rules adopted by the board. 
    (c) The board may require a separate license for each 
facility directly or indirectly owned or operated by the same 
business entity within the state, or for a parent entity with 
divisions, subsidiaries, or affiliate companies within the 
state, when operations are conducted at more than one location 
and joint ownership and control exists among all the entities. 
    (d) As a condition for receiving and retaining a wholesale 
drug distributor license issued under sections 6 to 14, an 
applicant shall satisfy the board that it has and will 
continuously maintain: 
    (1) adequate storage conditions and facilities; 
    (2) minimum liability and other insurance as may be 
required under any applicable federal or state law; 
    (3) a viable security system that includes an after hours 
central alarm, or comparable entry detection capability; 
restricted access to the premises; comprehensive employment 
applicant screening; and safeguards against all forms of 
employee theft; 
    (4) a system of records describing all wholesale drug 
distributor activities set forth in section 7 for at least the 
most recent two-year period, which must be reasonably accessible 
as defined by board regulations in any inspection authorized by 
the board; 
    (5) principals and persons, including officers, directors, 
primary shareholders, and key management executives who must at 
all times demonstrate and maintain their capability of 
conducting business in conformity with sound financial practices 
as well as state and federal law; 
    (6) complete, updated information, to be provided to the 
board as a condition for obtaining and retaining a license, 
about each wholesale drug distributor to be licensed, including 
all pertinent corporate licensee information, if applicable, or 
other ownership, principal, key personnel, and facilities 
information found to be necessary by the board; 
    (7) written policies and procedures that assure reasonable 
wholesale drug distributor preparation for, protection against, 
and handling of any facility security or operation problems, 
including, but not limited to, those caused by natural disaster 
or government emergency, inventory inaccuracies or product 
shipping and receiving, outdated product or other unauthorized 
product control, appropriate disposition of returned goods, and 
product recalls; 
    (8) sufficient inspection procedures for all incoming and 
outgoing product shipments; and 
    (9) operations in compliance with all federal requirements 
applicable to wholesale drug distribution. 
     (e) An agent or employee of any licensed wholesale drug 
distributor need not seek licensure under this section. 
     Subd. 2.  [REQUIREMENTS MUST CONFORM WITH FEDERAL LAW.] All 
requirements set forth in this section must conform to wholesale 
drug distributor licensing guidelines formally adopted by the 
United States Food and Drug Administration; and in case of 
conflict between a wholesale drug distributor licensing 
requirement imposed by the board and a Food and Drug 
Administration wholesale drug distributor guideline, the latter 
controls. 
    Sec. 11.  [151.48] [OUT-OF-STATE WHOLESALE DRUG DISTRIBUTOR 
LICENSING REQUIREMENTS.] 
    (a) It is unlawful for an out-of-state wholesale drug 
distributor to conduct business in the state without first 
obtaining a license from the board and paying the required fee. 
    (b) Application for an out-of-state wholesale drug 
distributor license under this section must be made on a form 
furnished by the board.  
    (c) The issuance of a license under sections 6 to 14 does 
not affect tax liability imposed by the department of revenue on 
any out-of-state wholesale drug distributor. 
    (d) No person acting as principal or agent for any 
out-of-state wholesale drug distributor may sell or distribute 
drugs in the state unless the distributor has obtained a license.
    (e) The board may adopt regulations that permit 
out-of-state wholesale drug distributors to obtain a license on 
the basis of reciprocity to the extent that an out-of-state 
wholesale drug distributor: 
    (1) possesses a valid license granted by another state 
under legal standards comparable to those that must be met by a 
wholesale drug distributor of this state as prerequisites for 
obtaining a license under the laws of this state; and 
    (2) can show that the other state would extend reciprocal 
treatment under its own laws to a wholesale drug distributor of 
this state. 
    Sec. 12.  [151.49] [LICENSE RENEWAL APPLICATION 
PROCEDURES.] 
    The board shall mail application blanks for renewal of a 
license required by sections 6 to 14 to each licensee on or 
before the first day of the month before the month in which the 
license expires and, if application for renewal of the license 
with the required fee is not made before the expiration date, 
the existing license or renewal lapses and becomes null and void 
upon the date of expiration. 
    Sec. 13.  [151.50] [RULES.] 
    The board shall adopt rules to carry out the purposes and 
enforce the provisions of sections 6 to 14.  All rules adopted 
under this section must conform to wholesale drug distributor 
licensing guidelines formally adopted by the United States Food 
and Drug Administration; and in case of conflict between a rule 
adopted by the board and a Food and Drug Administration 
wholesale drug distributor guideline, the latter controls. 
    Sec. 14.  [151.51] [BOARD ACCESS TO WHOLESALE DRUG 
DISTRIBUTOR RECORDS.] 
    Wholesale drug distributors may keep records at a central 
location apart from the principal office of the wholesale drug 
distributor or the location at which the drugs were stored and 
from which they were shipped, provided that the records must be 
made available for inspection within two working days of a 
request by the board.  The records may be kept in any form 
permissible under federal law applicable to prescription drugs 
record keeping. 
    Sec. 15.  [EFFECTIVE DATE.] 
    Sections 3, and 5 to 14 are effective on January 1, 1991. 
     Sections 2 and 4 and the portion of section 5 that relates 
to biosynthetic bovine somatotropin (BST) are effective 30 days 
after the commissioner of agriculture publishes notice in the 
State Register that (a) the states of Minnesota and Wisconsin, 
or (b) states having 40 percent or more of milk production as 
determined by the United States Department of Agriculture 
statistics for the most recent available calendar year, 
including Minnesota, have adopted provisions that restrict 
general use of biosynthetic bovine somatotropin (BST). 
Notwithstanding this section and sections 2 and 4 and the 
portion of section 5 that relates to biosynthetic bovine 
somatotropin, restrictions on the general use of biosynthetic 
bovine somatotropin, remain in effect only so long as 
restrictions are effective in the state of Wisconsin or in 
states having 40 percent or more of milk production, including 
Minnesota.  On the date that restrictions on the general use of 
biosynthetic bovine somatotropin are no longer in effect in the 
state of Wisconsin and in states having 40 percent or more of 
milk production, including Minnesota, sections 2 and 4 and the 
portion of section 5 that relates to biosynthetic bovine 
somatotropin have no effect and biosynthetic bovine somatotropin 
may be sold for general use. 
    Presented to the governor April 24, 1990 
    Signed by the governor April 26, 1990, 3:33 p.m.