Title of Regulation: 18VAC110-50. Regulations Governing Wholesale Distributors, Manufacturers, and Warehousers (adding 18VAC110-50-55).

Statutory Authority: §§ 54.1-2400 and 54.1-3307 of the Code of Virginia.

Public Hearing Information:

December 9, 2019 - 9:05 a.m. - Department of Health Professions, Perimeter Center, 9960 Mayland Drive, Suite 201, Board Room 2, Richmond, VA 23233

Public Comment Deadline: December 13, 2019.

Agency Contact: Caroline Juran, RPh, Executive Director, Board of Pharmacy, 9960 Mayland Drive, Suite 300, Richmond, VA 23233-1463, telephone (804) 367-4456, FAX (804) 527-4472, or email caroline.juran@dhp.virginia.gov.

Basis: Regulations are promulgated under the general authority of § 54.1-2400 of the Code of Virginia. The specific authority to promulgate regulations for delivery of medical devices is in Chapters 241 and 242 of the 2018 Acts of Assembly, which added § 54.1-3415.1 of the Code of Virginia.

Purpose: The primary purpose of the proposed action is to implement legislative action that allows a permitted manufacturer, wholesale distributor, warehouser, nonresident warehouser, third-party logistics provider, or nonresident third-party logistics provider, or registered nonresident manufacturer or nonresident wholesale distributor to deliver Schedule VI prescription devices directly to an ultimate user's or consumer's residence in accordance with an agreement signed with a medical equipment supplier or a medical director.

The goal is to facilitate provision of Schedule VI devices more economically and efficiently by allowing delivery to the ultimate user or consumer without a party in the middle of the transaction having to physically possess and store the devices and ensuring existence of an order or request from a prescriber for the safety and integrity of prescription devices and the protection of the patient or ultimate user. The medical equipment supplier may have a valid order from a prescriber that is conveyed to a wholesale distributor or other entity with whom there is an agreement. Before passage of Chapters 241 and 242 of the 2018 Acts of Assembly, the distributor or other entity did not have legal authority to deliver directly to the consumer. Likewise, the director of a home health agency may now request that oxygen be delivered directly to a consumer's residence, rather than the agency possessing and storing the oxygen with a subsequent delivery to the consumer or patient.

Substance: Board requirements for delivery of Schedule VI devices are intended to implement the provisions of § 54.1-3415.1 of the Code of Virginia, which requires an agreement between the delivering party and a medical equipment supplier or a medical director. The agreement can cover multiple entities under shared ownership so it does not become burdensome but does ensure existence of an order or request from a prescriber.

Issues: The advantage to the public is direct delivery of Schedule VI devices from an entity without delays and costs associated with interim deliveries. There are no disadvantages to the public. There are no advantages or disadvantages to the agency or the Commonwealth.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. Pursuant to Chapter 241 of the 2018 Acts of Assembly,¹ the Board of Pharmacy (Board) proposes to permanently allow certain regulated entities to deliver Schedule VI medical devices directly to a consumer on behalf of an equipment supplier. These changes have already been implemented under an emergency regulation.²

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. Pursuant to the 2018 General Assembly mandate, the Board proposes to permanently set out the requirements for delivery of Schedule VI devices directly to an ultimate user or consumer on behalf of a medical equipment supplier upon a valid order from a prescriber or upon request from the medical director of home health agency, nursing home, assisted living facility, or hospice.

Schedule VI devices are complex or invasive devices that have the potential for harm if incorrectly used (e.g., nebulizer, ostomy bags, catheters, etc.). Prior to the emergency regulation, direct delivery of these devices to the ultimate user was not permitted. A medical supplier would have to first obtain the possession of the device then deliver it to the ultimate user. Under the new language, a medical supplier can enter into agreements with its sources and have the device directly delivered to the patient. This change eliminates the need to store the equipment at the medical equipment supplier and an extra step in the purchase process. Thus, the change has the potential to reduce storage/delivery costs and speed up the delivery. However, according to the Department of Health Professions (DHP), some suppliers had already been facilitating direct delivery and are unlikely to be affected other than coming into compliance under the new language.

Businesses and Entities Affected. Currently, there are 28 manufacturers, 81 wholesale distributors, 98 warehousers, 5 third-party logistics providers, 134 nonresident manufacturers, 673 nonresident wholesale distributors, and 237 medical suppliers regulated by the Board. DHP has no estimate on the number of entities that may take advantage of the new delivery model permitted by the proposed changes.

Localities Particularly Affected. No locality is expected to be particularly affected.

Projected Impact on Employment. The proposed amendments eliminate the need to store Schedule VI devices at the medical suppliers' location and may reduce the demand for labor associated with that type of storage.

Effects on the Use and Value of Private Property. The proposed changes may benefit some medical equipment suppliers in terms of reduced storage/delivery costs which would positively affect their asset values.

Real Estate Development Costs. The proposed amendments do not affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. How many of the medical equipment suppliers are small business is not known. However, the proposed amendments may reduce the storage/delivery costs for some medical equipment suppliers as discussed above.

Alternative Method that Minimizes Adverse Impact. The proposed amendments do not adversely affect small businesses.

Adverse Impacts:

Businesses. The proposed amendments do not adversely affect businesses.

Localities. The proposed amendments do not adversely affect localities.

Other Entities. The proposed amendments do not adversely affect other entities.

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¹http://lis.virginia.gov/cgi-bin/legp604.exe?181+ful+CHAP0241

²https://townhall.virginia.gov/l/ViewStage.cfm?stageid=8333

Agency's Response to Economic Impact Analysis: The Board of Pharmacy concurs with the analysis of the Department of Planning and Budget.

Summary:

Chapters 241 and 242 of the 2018 Acts of Assembly, which enacted § 54.1-3415.1 of the Code of Virginia, establish the requirements for delivery of Schedule VI devices directly to an ultimate user or consumer on behalf of a medical equipment supplier upon a valid order from a prescriber or upon request from the medical director of a home health agency, nursing home, assisted living facility, or hospice. The proposed action adds 18VAC110-50-55 to implement Chapters 241 and 242.

18VAC110-50-55. Delivery of Schedule VI devices.

A. In accordance with the provisions of subsection A of § 54.1-3415.1 of the Code of Virginia, a manufacturer, nonresident manufacturer, wholesale distributor, nonresident wholesaler distributor, third-party logistics provider, nonresident third-party logistics provider, warehouser, or nonresident warehouser licensed, permitted, or registered in Virginia may deliver Schedule VI prescription devices directly to an ultimate user or consumer on behalf of a medical equipment supplier.

1. Such delivery shall only occur in accordance with an agreement between a delivering entity named in this subsection and a medical equipment supplier in compliance with law and regulation.

2. The agreement shall be between an individual delivering entity or multiple delivering entities under shared ownership and an individual medical equipment supplier or multiple medical equipment suppliers under shared ownership. The agreement shall be applicable to all ultimate users or consumers receiving services from the medical equipment supplier who require delivery of Schedule VI prescription devices.

3. The medical equipment supplier shall represent to the delivering entity that it has complied with the provisions of § 54.1-3415.1 of the Code of Virginia regarding the existence of a valid order from a prescriber for the delivery of a Schedule VI prescription device to an ultimate user or consumer. Validation of orders of prescribers shall be the responsibility of the medical equipment supplier upon request of the board or delivering entity.

B. In accordance with the provisions of subsection B of § 54.1-3415.1 of the Code of Virginia, a manufacturer, nonresident manufacturer, wholesale distributor, nonresident wholesaler distributor, third-party logistics provider, nonresident third-party logistics provider, warehouser, or nonresident warehouser licensed, permitted, or registered in Virginia may deliver Schedule VI prescription devices directly to an ultimate user's or consumer's residence to be administered by persons authorized to administer such devices, provided that (i) such delivery is made on behalf of a medical director of a home health agency, nursing home, assisted living facility, or hospice who has requested the distribution of the Schedule VI prescription device and directs the delivery of such device to the ultimate user's or consumer's residence and (ii) the medical director on whose behalf such Schedule VI prescription device is being delivered has entered into an agreement with the manufacturer, nonresident manufacturer, wholesale distributor, nonresident wholesale distributor, warehouser, nonresident warehouser, third-party logistics provider, or nonresident third-party logistics provider for such delivery.

1. Such delivery shall only occur in accordance with an agreement between a delivering entity authorized in this subsection and a medical director of a home health agency, nursing home, assisted living facility, or hospice and in compliance with law and regulation.

2. The agreement shall be between an individual delivering entity or multiple delivering entities under shared ownership and the medical director of an individual home health agency, nursing home, assisted living facility, or hospice, or multiple such entities under shared ownership. The agreement shall be applicable to all ultimate users or consumers of the home health agency, nursing home, assisted living facility, or hospice who require delivery of Schedule VI prescription devices.

3. The home health agency, nursing home, assisted living facility, or hospice shall represent to the delivering entity that it has complied with provisions of § 54.1-3415.1 of the Code of Virginia regarding the existence of a request from a prescriber for the delivery of a Schedule VI prescription device to an ultimate user or consumer. Validation of the request from a prescriber shall be the responsibility of the home health agency, nursing home, assisted living facility, or hospice upon request of the board or delivering entity.

C. The agreement, as required by subdivisions A 1 and B 1 of this section, shall be in written or electronic format and shall be retained in a format available upon request to the board at all times the agreement is in effect and for two years after the date the agreement is terminated or concluded.

D. An agreement shall not contain any patient specific or patient health information that would be subject to the provisions of the Health Insurance Portability and Accountability Act of 1996, P.L. No. 104-191.