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How DSCSA Changes the Licensing Landscape for Third-Party Logistics

Posted by Stephanie March on January 10, 2018

The Drug Supply Chain Security Act (DSCSA), passed in November 2013, has become a buzzword in the pharma industry in the past few years, and will continue to be until the completion of the implementation in 2023.  DSCSA describes creating an electronic, inter operable system that stores transaction information and history of a drug from the time of manufacture to when it is dispensed to a patient.

The big license earthquake came when the FDA defined what a Third-Party Logistics (3PL) company should be.  Before the passage of DSCSA, 3PL companies could be licensed as a wholesaler. The Wholesale and 3PL business models are similar: both company types accept products from manufacturers into their warehouses and then distribute them to customers. However, there is one major difference: the 3PL does not own the products that they are distributing. 

Because the 3PL does not take ownership of the product, the FDA decided that the 3PL should have its own category and can no longer be licensed as a wholesaler. As Federal law supersedes any state requirement, all 305 Third-Party Logistics locations listed by the FDA had state licenses that were now considered nullified.  

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The big question is: How are the 3PLs able to continue to do business in a state when all their licenses are no longer valid? This is an issue plaguing the industry.  Even the National Association Boards of Pharmacy (NABP) has been trying to help clarify. Feel free to check out their November/December issue of their publication, Innovations, page 7 where NABP leads a discussion forum to provide guidance to the wholesale industry.

As of December 2017, there are only 14 states that have established a specific license for a 3PL. This means the 3PL may continue to do business in the other 36 states (in addition to Washington, D.C.) without the requirement of a license. The state legislatures must decide for themselves whether a state will require a 3PL to hold a license, what the requirements will be, costs, etc. That small number of 14 states will both continue to grow and continue to change the landscape of licensing for pharmaceutical distribution over the next few years as the states make these decisions

Which 14 States  Require a License?

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Topics: 3PL, PharmaLicense, DSCSA

The Basics of Licensing: In & Out, Drug, & Facility

Posted by Stephanie March on January 5, 2018

When you conduct a quick online search using the following phrases, a vast array of answers will cross your screen:

  • "License a Drug or Facility"
  • "Pharma Licensing"
  • "How to start my own Pharma Company"

The results of these searches tend to center around licensing: in-licensing, out-licensing, drug licensing, and facility licensing. How does all of this relate to launching a drug? Here are the basics:

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In-Licensing

When you hear the term "in-licensing," simply think of the word "investor". In-licensing is the process of creating a contract that allows another firm to provide capital to the development and launch process, thus taking on financial responsibility. This is a very popular licensing process for small bio-pharma start-ups to get their drug off the ground. There are pros and cons to this type of licensing; for example, it can provide the capital a company needs, but then the profits need to be shared once the drug enters the market.

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Out-Licensing

Out-licensing is more focused on opening up the delivery pipeline to assist you with getting your drug "out the door." Out-licensing encompasses finding a partnership, or partnerships, that will help identify your target market and assist you in getting your product into the right hands. This process may include working with marketing firms or legal firms. The financial relationship is very different in this type of licensing than the one outlined in the in-licensing section above.

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Drug Licensing

Only one entity in the United States "licenses" a drug, and that is the Food and Drug Administration (FDA). The FDA must approve all drugs before they can enter the market, and consequently, FDA approval is paramount before the drug actually leaves your facility and heads to the patient.

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Facility Licensing

Facility licensing may entail more than you would initially expect. Of course, if you are manufacturing your own drug, your facility must be inspected and licensed by the FDA. However, the state where your facility is located may also require a license which may or may not include an inspection. In addition to your resident state, there are other states that have requirements for a license, certification to do business, or deliver drugs within their borders. Each business location must have its own set of licenses. A company with multiple facilities may end up with dozens of facility licenses and only have one drug.

Do you have all the licenses you need?

Let Two Labs  Conduct an Analysis

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Topics: PharmaLicense

3 Entities That Can Change Your State Licensing Strategy

Posted by Stephanie March on November 9, 2017
Pharmaceutical State Licensing ChangesIn the Pharmaceutical industry, licensing is never a static process. There are many changes that can alter your licensing strategy: 
 

1. Your Company

This one is pretty obvious. There are a number of different business changes that could direct the strategy of your licensing, or the maintenance of your state licenses. Some of the most common occurrences are: a change of business entity (i.e. LLC to INC), a change of officers, or moving. These are the more common instances, but there is a wide variety of scenarios that may affect your company's licensing strategy.  Remember, each state interprets business changes differently according to its own statutes.
 
Are you making any strategic business changes? Fill out this form and let us check to see if it will affect your Licensing.
Fill Out the Form Here

2. Contract Manufacturing Organization (CMO)

If your CMO moves, it might affect your state licensing more than you would expect. States are now asking for your CMO's license number on applications, and to provide a copy of the FDA's inspection report. If any pharmaceutical manufacturer opens a new facility, they have to go through the rigmarole of an FDA inspection all over again to get an updated license. This can adversely impact your licensing if the required states aren't updated with the change.
 

3. Third-Party Logistics Provider (3PL)

Similar to the CMO, if a 3PL changes locations or opens up a new location, this may alter your state licensing. The states vary on the requirement of a 3PL's license: several states allow a company to piggyback off of its 3PL's license, a handful require your 3PL's state license to be listed, and a few print the 3PL's location on your license. In each scenario, your 3PL's business activities may adversely change your state licensing strategy and the process of maintaining your state licensing.
 
If any of these situations sounds like something your company is faced with now or potentially in the future, contact the Two Labs PharmaLicense team and let us determine if your future plans will alter your licensing strategy.
 
Fill Out the Form Here
 
For more information about Two Labs, visit www.twolabs.com
 

Topics: 3PL, PharmaLicense

Consequences Pharmaceutical Companies Can Face for not Carrying the Correct State License and Being Noncompliant

Posted by Stephanie March on October 20, 2017

Anyone who is engaged in manufacturing, preparing, propagating, compounding, processing, packaging, marketing, selling, shipping, repackaging, or labeling a prescription drug, or wholesale distribution of a prescription drug...must obtain a license/permit in certain states to be in compliance.

Discover the ins and outs  of State Licensing

"But I didn't know!"

This is a response that is never accepted by a government agency for a pharmaceutical company's inaction to remain in compliance with state licensing.

In analyzing the costs of being compliant, remember these consequences for not carrying the correct state licenses and being noncompliant:

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  1. If you are found to be noncompliant by your resident state licensing board, you may have your business license suspended or revoked.

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  1. The state board, depending upon the infraction, may also impose civil penalties ranging from a flat fine (up to $250,000 in some states, such as North Carolina¹) to charging your company per violation or per day. At worst, there could be misdemeanor or felony criminal charges that include jail time.
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  1. Being punished by your resident state board may only be the beginning:
    1. Once you have come to a resolution with your resident state board, it must then be reported to all of the other state licensing boards.
    2. Your company could then go through the same board actions with other states you are licensed with, and incur more license revocations, fines, and criminal charges.

Once the dust settles from all of the boards, there is still one final hurdle to face: how will your company recover from license revocation?

Every state board application asks if your company was ever denied a license or faced disciplinary action. This could potentially prevent your company from continuing to do business without expensive alternate strategies.

As you can see, in the pharmaceutical industry, falling out of compliance with state boards can be very costly. Consequences can include anything from license suspension by multiple states, up to felony charges and time spent in jail. Is running your own company's risk for noncompliance worth it?

Let the state licensing experts at Two Labs help! To learn more about licensing and other important topics related to launching a pharmaceutical drug, subscribe to our blog below or request a free consultation from the Two Labs PharmaLicense experts.

Request a Free Consultation Today!

¹North Carolina Wholesale Prescription Drug Distributor Laws: Chapter 106 Article 12 A § 106-145.6.  Denial, revocation, and suspension of license; penalties for violations. http://www.ncleg.net/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_106/Article_12a.html

Topics: PharmaLicense

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