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RULE §229.423Exemptions

(a) General. A person who engages in the wholesale distribution of prescription drugs in this state for use in humans is exempt from this subchapter if the person is exempt under:

  (1) the Prescription Drug Marketing Act of 1987 (Act), (21 U.S.C., §353(c)(3)(B));

  (2) the regulations adopted by the secretary to administer and enforce that Act;

  (3) the interpretations of that Act set forth in the compliance policy manual of the United States Food and Drug Administration; or

  (4) the Occupations Code, §562.154.

(b) Exemptions from licensing. Persons who engage in the following types of distribution of prescription drugs are exempt from the licensing requirements of this subchapter, to the extent that it does not violate provisions of the Texas Controlled Substances Act, Health and Safety Code, Chapter 481, or the Texas Dangerous Drug Act, Health and Safety Code, Chapter 483:

  (1) intracompany sales of prescription drugs, which means transactions or transfers of prescription drugs between a division, subsidiary, parent, or affiliated or related company that is under common ownership and control, or any transaction or transfer between co-license holders of a co-licensed product;

  (2) the sale, purchase, trade, or transfer of prescription drugs or the offer to sell, purchase, trade, or transfer a prescription drug for emergency medical reasons; including a transfer of a prescription drug by a retail pharmacy to another retail pharmacy to alleviate a temporary shortage;

  (3) the distribution of prescription drug samples by a representative of a manufacturer;

  (4) the return of drugs by a hospital, health care entity, or charitable institution in accordance with Title 21, Code of Federal Regulations, §203.23;

  (5) the sale of reasonable quantities by a retail pharmacy of a prescription drug to a licensed practitioner for office use;

  (6) the sale, purchase, or trade of a drug, an offer to sell, purchase, or trade a drug, or the dispensing of a drug under a prescription;

  (7) the sale, transfer, merger, or consolidation of all or part of the business of a pharmacy from or with another pharmacy, whether accomplished as a purchase and sale of stock or business assets;

  (8) the delivery of, or offer to deliver, a prescription drug by a common carrier solely in the common carrier's usual course of business of transporting prescription drugs, if the common carrier does not store, warehouse, or take legal ownership of the prescription drug; or

  (9) the sale or transfer from a retail pharmacy or pharmacy warehouse of expired, damaged, returned, or recalled prescription drugs to the original manufacturer or to a third-party returns processor in accordance with procedures set out in Title 21, Code of Federal Regulations, §203.23(a)(1) - (5);

  (10) 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 group purchasing organization or from other hospitals or health care entities that are members of such organizations;

  (11) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug by a charitable organization described in §501(c)(3) of the Internal Revenue Code of 1954 to a nonprofit affiliate of the organization to the extent otherwise permitted by law;

  (12) the sale, purchase, or trade of a drug or an offer to sell, purchase, or trade a drug among hospitals or other health care entities that are under common control; for purposes of this subchapter, common control means the power to direct or cause the direction of the management and policies of a person or an organization, whether by ownership of stock, voting rights, by contract, or otherwise; or

  (13) the sale, purchase, or trade of blood and blood components intended for transfusion.

(c) Applicability of other requirements. An exemption from the licensing requirements granted in subsection (b) of this section does not constitute an exemption from other applicable requirements for prescription drugs under this subchapter or under the Texas Food, Drug, and Cosmetic Act, Health and Safety Code, Chapter 431.

(d) Exemption from certain requirements for certain wholesale distributors.

  (1) A wholesale distributor that distributes only prescription drugs that are medical gases is exempt from the following requirements: §229.424(d) of this title (relating to Licensure Requirements), §229.425(b)(4) - (5), (c) and (d) of this title (relating to Licensing Procedures); and §229.424(n) and §229.425(h) of this title concerning bonds.

  (2) A wholesale distributor that is a manufacturer or a third-party logistics provider on behalf of a manufacturer is exempt from the following requirements: §229.424(d) of this title; §229.425(b)(4) - (5), (c) and (d) of this title; and §229.424(n) and §229.425(h) of this title concerning bonds.

  (3) A state agency or a political subdivision of this state that distributes prescription drugs using federal or state funding to nonprofit health care facilities or local mental health or mental retardation authorities for distribution to a pharmacy, practitioner, or patient is exempt from §229.424(d) and (n) and §229.425(d) and (h) of this title concerning bonds, and 229.429(f) of this title (relating to Minimum Standards of Licensure) concerning pedigree.

  (4) The Executive Commissioner of the Health and Human Services Commission by rule may exempt specific purchases of prescription drugs by state agencies and political subdivisions of this state if the Executive Commissioner determines that the requirements of this subchapter would result in a substantial cost to the state or a political subdivision of the state.

Source Note: The provisions of this §229.423 adopted to be effective February 1, 2007, 32 TexReg 315; amended to be effective December 9, 2010, 35 TexReg 10755

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