Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
 State of Arkansas
 94th General Assembly                        A Bill
 Regular Session, 2023                                                             SENATE BILL 274
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 By: Senator J. Petty
 By: Representative Gazaway
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                                   For An Act To Be Entitled
                 AN ACT TO RESTRICT WHOLESALE DISTRIBUTORS OF
                 CONTROLLED SUBSTANCES AND LEGEND DRUGS FROM LIMITING
                 OR TERMINATING SALES OF CONTROLLED SUBSTANCES TO
                 CERTAIN LICENSED PROFESSIONALS; TO DECLARE AN
                 EMERGENCY; AND FOR OTHER PURPOSES.
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                                               Subtitle
                         TO RESTRICT WHOLESALE DISTRIBUTORS OF
                         CONTROLLED SUBSTANCES AND LEGEND DRUGS
                         FROM LIMITING OR TERMINATING SALES OF
                         CONTROLLED SUBSTANCES TO CERTAIN LICENSED
                         PROFESSIONALS; AND TO DECLARE AN
                         EMERGENCY.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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         SECTION 1.       DO NOT CODIFY.      Legislative intent.
         It is the intent of the General Assembly to:
                 (1)     Provide clarity and data transparency requirements to the
 pharmaceutical wholesaler distributors who reduce or eliminate distribution
 of controlled substances to providers or pharmacies in this state,
 particularly in the case of pharmaceutical wholesaler distributors subject to
 federal injunctive relief that became effective on July 1, 2022;
                 (2)     Ensure that the Arkansas State Board of Pharmacy, as the
 licensing, regulatory, and oversight entity for pharmaceutical wholesalers in
 this state, is involved in and understands business practices and specific
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 data elements that cause the pharmaceutical wholesaler distributors to desire
 to reduce or eliminate distribution of controlled substances to providers or
 pharmacies in this state; and
            (3)    Protect the providers and pharmacies by providing a
 complaint-driven process with their respective licensing boards that provides
 the provider or pharmacy with data, an opportunity to respond, and a known
 administrative process that must be followed before any reduction or
 termination of distribution of controlled substances to the provider or
 pharmacy by the pharmaceutical wholesaler distributor.
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      SECTION 2.     Arkansas Code § 20-64-506, concerning whole distributors of
 controlled substances and legend drugs and shipments to certain licensed
 professionals, is amended to add additional subsections to read as follows:
      (c)   A wholesale distributor shall not limit or terminate the sale of
 controlled substances, or materially alter pricing of any items or services
 intended to limit or terminate sale of controlled substances, to any entity
 identified in subsection (a) of this section except if:
            (1)(A)     The wholesale distributor:
                            (i)    Suspects purchasing or dispensing behavior that
 is an aberration compared to similar providers or pharmacies in the same
 geographic region within this state; and
                            (ii)   Files a written, formal complaint against the
 provider or pharmacy with its licensing board containing specific allegations
 and prescription-level details, such as National Provider Identifier numbers
 of prescribers and dispensers, against the provider or pharmacy.
                     (B)   Once a complaint is filed by the wholesale distributor
 with a licensing board, the licensing board takes administrative action
 against the licensee as a result of complaint filed by the wholesale
 distributor;
            (2)    The provider or pharmacy voluntarily terminates the
 relationship with the wholesale distributor and provides the wholesale
 distributor with a minimum one hundred twenty (120) day written notice of
 intent to terminate the distribution relationship;
            (3)    A wholesale distributor voluntarily terminates the
 relationship with the provider or pharmacy and provides the provider or
 pharmacy with a minimum one hundred twenty (120) day written notice of intent
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 to terminate the distribution relationship; or
               (4)(A)     The wholesale distributor may flag specific items on an
 individual order as suspicious if the order exceeds clearly identified
 thresholds and if the order is reported to the Arkansas State Board of
 Pharmacy on the day the suspicious order is flagged stating the specific
 reason the order is deemed suspicious.
                        (B)   Subdivision (c)(4)(A) of this section may be used only
 to limit the sale of controlled substances, and may not be used as a
 rationale for terminating the distribution relationship.
                        (C)   All standards and metrics that are used by a wholesale
 distributor related to the duties, interpretation, or compliance with the
 terms of the federal injunctive relief shall be communicated in writing to
 the Arkansas State Board of Pharmacy every three (3) months or sooner if the
 standards are changed by the wholesale distributor or upon request by the
 Arkansas State Board of Pharmacy.
      (d)(1)     A violation of subsection (c) of this section shall be a
 violation of this subchapter.
               (2)   The Arkansas State Board of Pharmacy shall take disciplinary
 action against a wholesale distributor that violates subsection (c) of this
 section with a minimum fine of one hundred thousand dollars ($100,000) per
 violation and may include revocation of a wholesale distributor license.
      (e)   The Arkansas State Board of Pharmacy shall adopt rules to
 implement and clarify this section.
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      SECTION 3.        DO NOT CODIFY.   Rules.
      (a)   When adopting the initial rules required under this act, the
 Arkansas State Board of Pharmacy shall file the final rules with the
 Secretary of State for adoption under § 25-15-204(f):
               (1)   On or before January 1, 2024; or
               (2)   If approval under § 10-3-309 has not occurred by January 1,
 2024, as soon as practicable after approval under § 10-3-309.
      (b)   The board shall file the proposed rules with the Legislative
 Council under § 10-3-309(c) sufficiently in advance of January 1, 2024, so
 that the Legislative Council may consider the rules for approval before
 January 1, 2024.
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       SECTION 4.    EMERGENCY CLAUSE.       It is found and determined by the
 General Assembly of the State of Arkansas that the whole distribution of
 controlled substances in this state is of critical importance to the citizens
 of this state to maintain their health and safety; that wholesale
 distributors must follow certain practices before making any changes in the
 distribution of controlled substances in this state; that the changes in the
 distribution of controlled substances should be done only with the
 involvement of state licensing boards when a wholesale distributor suspects
 purchasing or dispensing behavior is an aberration compared to similar
 providers or pharmacies in the same geographic region within this state; and
 that this act is immediately necessary to ensure the safe distribution of
 controlled substances and legend drugs in this state and to protect the
 health and safety of the citizens of this state. Therefore, an emergency is
 declared to exist, and this act being immediately necessary for the
 preservation of the public peace, health, and safety shall become effective
 on:
            (1)     The date of its approval by the Governor;
            (2)     If the bill is neither approved nor vetoed by the Governor,
 the expiration of the period of time during which the Governor may veto the
 bill; or
            (3)     If the bill is vetoed by the Governor and the veto is
 overridden, the date the last house overrides the veto.
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Statutes affected: 
SB 274: 20-64-506