EDU-27-14-00017-EP Outsourcing Facilities Engaged in the Compounding of Sterile Drugs

7/9/14 N.Y. St. Reg. EDU-27-14-00017-EP

NEW YORK STATE REGISTER

VOLUME XXXVI, ISSUE 27

July 09, 2014

RULE MAKING ACTIVITIES

EDUCATION DEPARTMENT

EMERGENCY/PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. EDU-27-14-00017-EP

Filing No. 557

Filing Date. Jun. 24, 2014

Effective Date. Jun. 29, 2014

Outsourcing Facilities Engaged in the Compounding of Sterile Drugs

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Proposed Action:

Amendment of sections 29.2, 29.7, 63.6 and 63.8 of Title 8 NYCRR.

Statutory authority:

Education Law, sections 207 (not subdivided), 212(3), 215 (not subdivided), 6504 (not subdivided), 6507(2)(a), 6509(1)-(11), 6802(1)-(23), 6808(1), (5), (6), (7), 6808-b(1), (4)(f), 6810(14), 6811(26), 6811-a(1), (2), 6812(1), 6817(1) and 6831(1)-(14); L. 2014, ch. 60, part D

Finding of necessity for emergency rule:

Preservation of public health and general welfare.

Specific reasons underlying the finding of necessity:

The purpose of this amendment is to implement Part D of Chapter 60 of the Laws of 2014, which becomes effective June 29, 2014. The amendments to the Education Law provide for the registration and regulation of outsourcing facilities, a new category of establishment recognized by the Federal Food and Drug Administration pursuant to the Drug Quality and Security Act (DQSA) of 2013. DQSA’s provisions are designed to ensure the safety of compounded drugs and our nation’s pharmaceutical supply chain in order to prevent a future public health crisis like the 2012 meningitis outbreak tied to the New England Compounding Center. DQSA, inter alia, provides for comprehensive oversight of outsourcing facilities, which seek to compound and distribute sterile drugs and products to hospitals and medical practices without first obtaining patient-specific prescriptions. Part D of Chapter 60 of the Laws of 2014 conforms the Education Law to the requirements of DQSA.

Because the Board of Regents meets at fixed intervals, the earliest the proposed amendment can be presented for adoption on a non-emergency basis, after expiration of the required 45-day public comment provided for in the State Administrative Procedure Act (SAPA) section 202(1) and (5), would be the September 15-16 Regents meeting. Furthermore, pursuant to SAPA section 203(1), the earliest effective date of the proposed amendment, if adopted at the September meeting, would be October 1, 2014, the date the Notice of Adoption would be published in the State Register. However, the provisions of Part D of Chapter 60 of the Laws become effective June 29, 2014.

Subject:

Outsourcing facilities engaged in the compounding of sterile drugs.

Purpose:

To implement L. 2014, ch. 60, part D by establishing criteria for registration of outsourcing facilities.

Substance of emergency/proposed rule (Full text is posted at the following State website: www.regents.state.ny.us):

The Commissioner of Education proposes to amend sections 29.2 and29.7 of the Rules of the Board of Regents and sections 63.6 and 63.8 of the Regulations of the Commissioner of Education, relating to the registration and regulation of resident and nonresident establishments seeking registration as outsourcing facilities. The following is a summary of the substance of the proposed amendment:

Subdivision (a) of section 29.2 of the Rules of the Board of Regents is amended to add a new paragraph (14) to include in the definition of unprofessional conduct the failure to adhere to applicable practice guidelines, as determined by the Commissioner, for the compounding of sterile drugs and products.

Paragraph (17) of subdivision (a) of section 29.7 of the Rules of the Board of Regents is amended to clarify that the term “beyond use date” means the expiration date of a drug. This clarification is needed to conform terms used in other federal and State provisions and to provide clarity to regulated parties.

Paragraphs (2) and (4) of subdivision (a) of section 63.6 of the Regulations of the Commissioner of Education are amended to add “outsourcing facilities” to the list of establishments that require a registration and to require such establishments to be equipped with proper sanitary appliances and kept in a clean and orderly manner.

Subdivision (c) of section 63.6 of the Regulations of the Commissioner of Education is amended to update and clarify the educational preparation needed for persons designated to supervise establishments that are registered as manufacturers or wholesalers, and to require that outsourcing facilities be under the supervision of a licensed pharmacist at all times. The amendment to subdivision (c) also defines the requirements for registration and renewal of registrations of outsourcing facilities that are located within New York State, including a requirement that each outsourcing facility must first become registered as such a facility with the federal Food and Drug Administration (FDA) under the provisions of the federal Food, Drug and Cosmetic Act and be subject to annual inspections. The amendment to this subdivision includes a requirement that, if the facility seeks to fill patient specific prescriptions, it must also be registered as a pharmacy; it defines record-keeping and reporting requirements to the Department, establishes the need to maintain registration with the FDA pursuant to the Food, Drug and Cosmetic Act for renewal of it registration. It also requires outsourcing facilities to comply with good manufacturing practices as specified in 21 CFR 210 and 211.

Section 63.8 of the Regulations of the Commissioner of Education is amended to add “outsourcing facilities” to the list of nonresident establishments that must be registered by the Department and sets forth the registration requirements for nonresident outsourcing facilities. The amendment to this section also requires that for a renewal of registration in New York State, such facilities must maintain both registrations with the FDA and with the state in which they are physically located/state of residence. The amendment to this section also subjects nonresident outsourcing facilities to annual inspections. Further, the amendment to this section provides that if the facility seeks to fill patient specific prescriptions, that it must also be registered as a pharmacy; it defines record-keeping and reporting requirements to the Department, and requires nonresident outsourcing facilities to comply with good manufacturing practices as specified in 21 CFR 210 and 211, and as enforced by the FDA for the preparation of compounded sterile drugs and products. In addition, the proposed amendment requires nonresident outsourcing facilities to notify the Department, on forms prescribed by the Department not less than 30 days prior to the expected relocation or discontinuance, and provide any information and/or reports to the Department upon the Commissioner’s request.

This notice is intended:

to serve as both a notice of emergency adoption and a notice of proposed rule making. The emergency rule will expire September 21, 2014.

Text of rule and any required statements and analyses may be obtained from:

Kirti Goswami, State Education Department, Office of Counsel, State Education Building, Room 148, 89 Washington Ave., Albany, NY 12234, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Office of the Professions, Office of the Deputy Commissioner, State Education Department, State Education Building 2M, 89 Washington Ave., Albany, NY 12234, [phone], email: [e-mail]

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. STATUTORY AUTHORITY:

Section 207 of the Education Law grants general rule-making authority to the Board of Regents to carry into effect the laws and policies of the State relating to education.

Subdivision (3) of section 212 of the Education Law authorizes the State Education Department (Department) to determine and set fees for certifications and permits.

Section 215 of the Education Law grants the Board of Regents, or the Commissioner of Education, or their representatives, the authority to require, any institution in the university and any school or institution under the educational supervision of the state, to submit reports giving such information and in such form as the Board of Regents or the Commissioner of Education shall prescribe.

Section 6504 of the Education Law authorizes the Board of Regents to supervise the admission to and regulation of the practice of the professions.

Subparagraph (a) of subdivision (2) of section 6507 of the Education Law authorizes the Commissioner to promulgate regulations in administering the admission to the practice of the professions.

Section 6509 of the Education Law authorizes the Board of Regents to promulgate rules regarding professional misconduct in certain professions.

Part D of Chapter 60 of the Laws of 2014 amends various provisions of the Education Law to implement Title I of the federal Drug Quality and Security Act. Part D of Chapter 60 of the Laws of 2014 provides for the Department’s registration and regulation of both resident and nonresident outsourcing facilities by the Department and includes several reporting and compliance requirements for outsourcing facilities.

2. LEGISLATIVE OBJECTIVES:

The proposed amendment implements Part D of Chapter 60 of the Laws of 2014 by establishing the registration and regulatory requirements for both resident and nonresident outsourcing facilities.

3. NEEDS AND BENEFITS:

The purpose of the proposed amendment is to ensure the safety of compounded drugs by establishing requirements for the registration and regulation of both resident and nonresident outsourcing facilities that seek to compound and distribute sterile drugs and products without first obtaining patient-specific prescriptions. The proposed amendment is necessary to conform the Regulations of the Commissioner of Education to Part D of Chapter 60 of the Laws of 2014, which implements the requirements of Title I of DSQA relating to the registration and regulation of outsourcing facilities.

4. COSTS:

(a) Costs to State government. The proposed amendment implements statutory requirements and establishes standards as directed by statute. The amendment will not impose any additional cost on State government, over and above the cost imposed by the statutory requirements.

(b) Costs to local government. There are no additional costs to local government.

(c) Cost to private regulated parties. A resident or nonresident establishment seeking registration as an outsourcing facility by the Department would be required to pay the Department a registration fee. Such fee would be paid once as part of the establishment’s application for initial registration, which, if granted, would be for a three-year period. After initial registration and once every three years thereafter, a resident or nonresident establishments seeking renewal of its registration would be required to pay the Department a fee of $520 to defray the cost of its review, upon submission of the establishment’s application. Therefore, the annualized cost for a facility’s initial registration is $275 and the annualized cost for a facility’s subsequent registration or registrations is $173.33.

The Department estimates that it would require a staff member to spend about eight hours to complete the initial and renewal of registration applications. Based on an hourly rate of $37 per hour (including fringe benefits), the Department estimates that the cost of completing either one of these applications to be $296. An application would have to be completed once every three years. Therefore, the annualized cost of completing the application is estimated to be $98.

The proposed amendment does not impose any costs beyond those imposed by Part D of Chapter 60 of the Laws of 2014; except the proposed amendment requires that outsourcing facilities submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. Regulated facilities will not be required to pay any additional fees for an inspection by the Department. To date, the Department has not approved any third parties to perform these inspections. Therefore, it does not have any estimate of costs for inspections performed by third parties.

(d) Cost to the regulatory agency. The proposed amendment does not impose additional costs on the Department beyond those imposed by statute and the Department estimates that any costs incurred by the Department to inspect these facilities will be absorbed by existing staff and the registration and renewal fees paid by the outsourcing facilities.

5. LOCAL GOVERNMENT MANDATES:

The proposed amendment implements the requirements of Part D of Chapter 60 of the Laws of 2014 relating to the registration and regulation of both resident and nonresident outsourcing facilities. It does not impose any programs, service, duty, or responsibility upon local governments.

6. PAPERWORK:

The proposed amendment requires outsourcing facilities to submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. The proposed amendment further requires outsourcing facilities submit a report, on a form prescribed by the Commissioner, to the Executive Secretary to the State Board upon initial registration and every six months thereafter, identifying the drugs compounded by the facility during the 6-month period and providing certain information relating to such drugs. It requires outsourcing facilities to maintain quality control records for determining beyond use dating and stability for five years and to make such records available to the Department for review and copying upon request. The proposed amendment also requires non-resident outsourcing facilities to notify the Department on forms prescribed by the Department at least 30 days prior to the expected date of relocation or discontinuance. However, the Department intends to accept electronic submissions for some or all of the above-referenced reporting requirements.

7. DUPLICATION:

The proposed amendment does not duplicate other existing state or federal requirements.

8. ALTERNATIVES:

The proposed amendment is necessary to implement Part D of Chapter 60 of the Laws of 2014, which in turn, implements the requirements of Title I of DSQA relating to the registration and regulation of outsourcing facilities that seek to compound sterile drugs and products without first obtaining patient-specific prescriptions. There are no viable alternatives to the proposed amendments and none were considered.

9. FEDERAL STANDARDS:

The proposed amendment implements Title I of the federal Drug Safety and Security Act.

10. COMPLIANCE SCHEDULE:

The proposed amendment is necessary to conform to the requirements of Part D of Chapter 60 of the Laws of 2014, which becomes effective on June 29, 2014. It is anticipated that outsourcing facilities that wish to compound sterile drugs and products in this State will be able to comply with the proposed amendment by the effective date. Therefore, no additional period of time will be necessary to enable regulated parties to comply.

Regulatory Flexibility Analysis

(a) Small Businesses:

1. EFFECT OF RULE:

The purpose of the proposed amendment is to implement the requirements of Part D of Chapter 60 of the Laws of 2014 by establishing registration and regulation requirements for both resident and nonresidents establishments seeking to compound and/or distribute sterile drugs and products in New York State, without first obtaining patient-specific prescriptions. Such establishments are referred to as outsourcing facilities.

The Department does not know the exact number of establishments that are small businesses that might potentially apply for registration as outsourcing facilities. However, the Department is aware of five resident establishments that have applied to the Federal Food and Drug Administration to be recognized by that agency as outsourcing facilities, which is a pre-requisite for New York State registration. Of these five establishments, it appears that four of them are small businesses.

2. COMPLIANCE REQUIREMENTS:

There are compliance requirements for resident and nonresident establishments seeking registration as outsourcing facilities. Among other requirements, the proposed amendment requires that outsourcing facilities submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. The proposed amendment further requires that a New York registered pharmacist be present at all times when an outsourcing facility is open for business and that outsourcing facilities submit a report, on a form prescribed by the Commissioner, to the Executive Secretary to the State Board upon initial registration and every six months thereafter, identifying the drugs compounded by the facility during the 6-month period and providing certain information relating to such drugs. It requires outsourcing facilities to maintain quality control records for determining beyond use dating and stability for five years and to make such records available to the Department for review and copying upon request. It further requires all outsourcing facilities to comply with the special provisions relating to outsourcing facilities set forth in Education Law § 6831 and to comply with good manufacturing practices as defined by the FDA for such facilities. The proposed amendment also requires nonresident outsourcing facilities to notify the Department on forms prescribed by the Department at least 30 days prior to the expected date of relocation or discontinuance.

The proposed amendment also provides that an outsourcing facility’s failure to adhere to applicable practice guidelines for the compounding of sterile drugs and products is unprofessional misconduct and clarifies that holding for sale, offering for sale, or selling any drug later than the beyond use date, which means the expiration date of the drug, constitutes unprofessional misconduct.

The proposed amendment is necessary to implement Part D of Chapter 60 of the Laws of 2014, which implements the requirements of Title I of DQSA.

3. PROFESSIONAL SERVICES:

No professional services are expected to be required by small businesses to comply with the proposed amendment. The regular staff of small businesses will be able to complete the application for registration as an outsourcing facility needed for review by the Department. The regular staff of small businesses will further be able to comply with the reporting and maintenance of quality control record requirements for such facilities.

4. COMPLIANCE COSTS:

A resident or nonresident establishment seeking registration as an outsourcing facility by the Department would be required to pay the Department a registration fee. Such fee would be paid once as part of the establishment’s application for initial registration, which, if granted, would be for a three-year period. After initial registration and once every three years thereafter, a resident or nonresident establishments seeking renewal of its registration would be required to pay the Department a fee of $520 to defray the cost of its review, upon submission of the establishment’s application. Therefore, the annualized cost for a facility’s initial registration is $275 and the annualized cost for a facility’s subsequent registration or registrations is $173.33.

The Department estimates that it would require a staff member to spend about eight hours to complete the initial and renewal of registration applications. Based on an hourly rate of $37 per hour (including fringe benefits), the Department estimates that the cost of completing either one of these applications to be $296. An application would have to be completed once every three years. Therefore, the annualized cost of completing the application is estimated to be $98.

The proposed amendment does not impose any costs beyond those imposed by Part D of Chapter 60 of the Laws of 2014; except the proposed amendment requires that outsourcing facilities submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. The Department estimates that any costs incurred by the Department to inspect these facilities will be absorbed by existing staff and the registration and renewal fees paid by the outsourcing facilities. Regulated facilities will not be required to pay any additional fees for an inspection by the Department. To date, the Department has not approved any third parties to perform these inspections. Therefore, it does not have any estimate of costs for inspections performed by third parties.

5. ECONOMIC AND TECHNOLOGICAL FEASIBILITY:

The proposed rule will not impose technological requirements on regulated parties. See above “Compliance Costs” for the economic impact of the regulation.

6. MINIMIZING ADVERSE IMPACT:

The Department believes that requirements for registration and regulation of resident and nonresident outsourcing facilities are reasonable, and that uniform standards should apply, regardless of the size of such facility, in order to ensure the safety of compounded sterile drugs and products and our state’s and nation’s pharmaceutical supply chain and to implement Part D of Chapter 60 of the Laws of 2014.

7. SMALL BUSINESS PARTICIPATION:

The Department has shared the proposed amendment with the Pharmacists Society of the State of New York and the New York State Council of Health System Pharmacists; which have members who work in small businesses. The Department has also shared the proposed amendment with the five establishments located in New York that are currently registered by the FDA as an outsourcing facility and who would be affected by this regulation if they seek registration in New York.

(b) Local Governments:

The proposed amendment establishes registration and regulation requirements for both resident and nonresidents establishments seeking to compound and/or distribute sterile drugs and products in New York State, without first obtaining patient-specific prescriptions. It will not impose any reporting, recordkeeping, or other compliance requirements, or have any adverse economic impact on local governments. Accordingly, a regulatory flexibility analysis for small businesses and local governments is not required and one has not been prepared. Because it is evident from the nature of the proposed amendment that it will not adversely affect local governments, no affirmative steps were needed to ascertain that fact and none were taken. Accordingly, a regulatory flexibility analysis for local governments is not required and one has not been prepared.

Rural Area Flexibility Analysis

1. TYPES AND ESTIMATED NUMBER OF RURAL AREAS:

The proposed amendment implements the provisions of Part D of Chapter 60 of the Laws of 2014, which establishes registration requirements for all resident and nonresident establishments seeking to prepare and/or distribute compounded sterile drugs and products in New York State. Such establishments are referred to as outsourcing facilities. Part D of Chapter 60 of the Laws of 2014, implements Title I of the Federal Drug Quality and Security Act of 2013, which provides for comprehensive oversight of such facilities. The proposed amendment applies to all resident and nonresident establishments seeking to prepare and/or distribute compounded sterile drugs and products, without receipt of patient-specific prescriptions, in the 44 rural counties with less than 200,000 inhabitants and the 71 towns in urban counties with a population density of 150 per square mile or less. To date, of the five resident establishments that have applied to the Federal Food and Drug Administration to be recognized as outsourcing facilities, which is a pre-requisite for New York State registration, none report their location as being in a rural county.

2. REPORTING, RECORDKEEPING AND OTHER COMPLIANCE REQUIREMENTS; AND PROFESSIONAL SERVICES:

The proposed amendment applies to all resident and nonresident establishments seeking to compound and/or distribute sterile drugs and products in New York State, without first obtaining patient-specific prescriptions. Among other requirements, the proposed amendment requires that outsourcing facilities submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. The proposed amendment further requires that a New York registered pharmacist be present at all times when an outsourcing facility is open for business and that outsourcing facilities submit a report, on a form prescribed by the Commissioner, to the Executive Secretary to the State Board upon initial registration and every six months thereafter, identifying the drugs compounded by the facility during the 6-month period and providing certain information relating to such drugs. It requires outsourcing facilities to maintain quality control records for determining beyond use dating and stability for five years and to make such records available to the Department for review and copying upon request. It further requires all outsourcing facilities to comply with the special provisions relating to outsourcing facilities set forth in Education Law § 6831 and to comply with good manufacturing practices as defined by the FDA for such facilities. The proposed amendment also requires nonresident outsourcing facilities to notify the Department on forms prescribed by the Department at least 30 days prior to the expected date of relocation or discontinuance.

The proposed amendment also provides that an outsourcing facility’s failure to adhere to applicable practice guidelines for the compounding of sterile drugs and products is unprofessional misconduct and clarifies that holding for sale, offering for sale, or selling any drug later than the beyond use date, which means the expiration date of the drug, constitutes unprofessional misconduct.

No professional services are expected to be required by entities in rural areas to comply with the proposed amendment.

3. COSTS:

A resident or nonresident establishment seeking registration as an outsourcing facility by the Department would be required to pay the Department a registration fee. Such fee would be paid once as part of the establishment’s application for initial registration, which, if granted, would be for a three-year period. After initial registration and once every three years thereafter, a resident or nonresident establishments seeking renewal of its registration would be required to pay the Department a fee of $520 to defray the cost of its review, upon submission of the establishment’s application. Therefore, the annualized cost for a facility’s initial registration is $275 and the annualized cost for a facility’s subsequent registration or registrations is $173.33.

The Department estimates that it would require a staff member to spend about eight hours to complete the initial and renewal of registration applications. Based on an hourly rate of $37 per hour (including fringe benefits), the Department estimates that the cost of completing either one of these applications to be $296. An application would have to be completed once every three years. Therefore, the annualized cost of completing the application is estimated to be $98.

The proposed amendment does not impose any costs beyond those imposed by Part D of Chapter 60 of the Laws of 2014; except the proposed amendment requires that outsourcing facilities submit, upon initial registration and at least annually thereafter, the results of an inspection by either representatives of the FDA, the Department or a third party acceptable to the Department. The Department estimates that any costs incurred by the Department to inspect these facilities will be absorbed by existing staff and the registration and renewal fees paid by the outsourcing facilities. Regulated facilities will not be required to pay any additional fees for an inspection by the Department. To date, the Department has not approved any third parties to perform these inspections. Therefore, it does not have any estimate of costs for inspections performed by third parties.

4. MINIMIZING ADVERSE IMPACT:

The Department believes that requirements for registration and regulation of resident and nonresident outsourcing facilities are reasonable, and that uniform standards should apply, regardless of the size of such facility, in order to ensure the safety of compounded sterile drugs and products and our state’s and nation’s pharmaceutical supply chain and to uniformly implement Part D of Chapter 60 of the Laws of 2014.

5. RURAL AREA PARTICIPATION:

The Department has shared the proposed amendment with the Pharmacists Society of the State of New York and the New York State Council of Health System Pharmacists; whom have members who live and/or work in rural areas of the State. The Department has also shared the proposed amendment with the five establishments located in New York who would be affected by this regulation.

6. INITIAL REVIEW OF RULE (SAPA § 207):

Pursuant to State Administrative Procedure Act section 207(1)(b), the Department proposes that the initial review of this rule shall occur in the fifth calendar year after the year in which the rule is adopted, instead of in the third calendar year. The justification for a five year review period is that the proposed amendment is necessary to implement statutory requirements of Part D of Chapter 60 of the Laws of 2014, and therefore the substantive provisions of the proposed amendment cannot be repealed or modified unless there is a further statutory change. Accordingly, there is no need for a shorter review period. The State Education Department invites public comment on the proposed five year review period for this rule. Comments should be sent to the agency contact listed in item 10 of the Notice of Proposed Rule Making published herewith, and must be received within 45 days of the State Register publication date of the Notice.

Job Impact Statement

Part D of Chapter 60 of the Laws of 2014 implements the requirements of Title I of the Federal Drug Quality and Security Act of 2013, which provides for comprehensive oversight of outsourcing facilities, which are establishments that are engaged in the compounding of sterile drugs. The proposed amendment implements Part D of Chapter 60 of the Laws of 2014 by establishing registration requirements for non-resident and resident outsourcing facilities that seek to compound drugs in this State and provides regulatory oversight over such facilities.

The proposed amendment also modifies certain regulatory provisions relating to supervision requirements for registered resident manufacturers and wholesalers.

Since the proposed amendment implements specific statutory requirements and directives, any impact on jobs and employment opportunities created by establishing requirements for the registration and regulation of outsourcing facilities is attributable to the statutory requirement, not the proposed amendment, which simply establishes standards that conform to the requirements of the statute.

The proposed amendment will not have a substantial adverse impact on jobs and employment opportunities. Because it is evident from the nature of the proposed amendment that it will have no adverse impact on jobs and employment opportunities, no affirmative steps were needed to ascertain these facts and none were taken. Accordingly, a job impact statement is not required and one has not been prepared.