New York Law Imposes Drug ‘Take Back’ Obligations on Manufacturers, Pharmacies, and Wholesalers, with Manufacturers Footing the Bill

The Act, which becomes effective January 6, 2019, “Effective Date” imposes significant requirements on drug manufacturers, wholesalers, pharmacies, and “drug take back organizations” and is intended to “reduce medication misuse[,] …save government and taxpayer money[,]” and “protect the state’s water supplies by preventing drugs from being improperly disposed of by flushing or other means.” The Act applies to all drug manufacturers, as defined in the Act, who manufacture covered drugs that are directly, or through a Wholesaler, sold, offered for sale, or dispensed in the state to licensed in-state pharmacies that are part of a group or chain of ten or more pharmacies that utilize the same name, are under common ownership or management, or are part of a franchise, as well as to registered out-of-state pharmacies that provide covered drugs to New York residents by mail (collectively, Pharmacies).

What Is Covered By the Act

Under the Act, the term “Covered Drug” means any drugs falling under the definition of “drug” under 21 USC § 321 (g) (1), and includes drugs contained in medical devices, although not the medical devices themselves, and veterinary drugs. The Act specifically excludes from the definition of Covered Drug items such as vitamins, herbal remedies, cosmetics, various personal care items, household products, drugs utilized only in clinical settings, biologicals already subject to a manufacturer take back program, and drugs already included in a take back program as part of an FDA managed risk evaluation and mitigation strategy.

Manufacturers, Wholesalers, and Drug Take Back Organizations Must Comply with Several Requirements

The Act has several elements that Manufacturers, Wholesalers, Pharmacies, and Drug Take Back Organizations must comply with. At its core, the Act requires that a Manufacturer provide for the “take-back” of Covered Drugs through one of the following methods:

1. The Manufacturer, individually or with other Manufacturers, can operate a New York State Department of Health (the Department)-approved drug take back program;
2. The Manufacturer can contract with a “Drug Take Back Organization” that operates a Department-approved drug take back program; or
3. The Manufacturer can contract with the Department to operate its drug take back program.

Within 30 days of the Effective Date, all Wholesalers who sell Covered Drugs in the state, while not subject to the Act’s take back requirements, are obligated to provide to the Department a list of Manufacturers that produce Covered Drugs.

Within 180 days of the Effective Date, all Drug Take Back Organizations contracted to provide take-back services on behalf of a Manufacturer, or the Manufacturer itself, are required to submit a proposed drug take back program to the Department that contains, at a minimum, the following elements:

• A certification that all Covered Drugs, regardless of manufacturer, will be accepted for take-back;
• The contact information for the individual responsible for submitting the Program and to whom the Department will submit inquiries;
• A detail of the system for collection of the Covered Drugs that is ongoing, convenient, and is distributed in a manner such that rural and underserved areas will have access to the Program;
• A description of other collection methods that may be utilized by Authorized Collectors and the policies that will be adopted or employed to ensure compliance with all applicable laws and regulations, including waste disposal requirements;
• An explanation of how the Manufacturer or Drug Take Back Organization will handle and track the Covered Drugs safely and securely from the time of collection through final disposal;
• A description of the public education and outreach activities to notify the public about the drug take back program, which must include website advertising of collection locations, other written materials, and signage. The Program must also include a description of how effectiveness of the public education and outreach will be evaluated; and
• Details regarding how the costs for the collections will be reimbursed retroactive to the Effective Date. If more than one Manufacturer is involved in the proposed Program, the Program must also include details of the “fair and reasonable manner of allocated costs” paid by each Manufacturer that is “reasonably related to the volume or value of Covered Drugs sold in the state.”

Department Review

The Department will review the submitted Program proposals, and will notify the Manufacturer or Drug Take Back Organization in writing within 60 days of receipt of the Program proposal whether the Program is approved. If the Department does not approve the Program, the Manufacturer or Drug Take Back Organization must submit a revised Program within 30 days. If the Department does not approve the revised Program, the Manufacturer or Drug Take Back Organization will be considered in violation of the Act and subject to enforcement (a potential fine of two thousand dollars per day of non-compliance). The Manufacturer or Drug Take Back Organization must submit an updated proposal to the Department at least every three years. Each Program must provide reports to the Department as set forth by the Department.

If a Manufacturer who has not been offering a Covered Drug prior to the Effective Date begins offering a Covered Drug after the Effective Date, the Manufacturer must either join an existing approved drug take back program or submit a Program to the Department within 90 days of the initial offer of sale. Any changes that a Manufacturer or Drug Take Back Organization wants to make to an approved Program must be approved by the Department prior to the Manufacturer or Drug Take Back Organization implementing any changes.

Pharmacies Also Have Obligations Under the Act

Pharmacies are required to collect Covered Drugs and must post a prominent sign to consumers indicating that the Pharmacy collects Covered Drugs. Pharmacies are permitted to collect Covered Drugs by one of several methods: (i) they must either offer on-site collection, or provide a drop box or receptacle that meets federal standards; (ii) drugs may be collected via mail-back by prepaid envelopes; or (iii) via other FDA-approved collection methods. If a Pharmacy provides mail-back collection, the Pharmacy must provide a voucher for a pre-paid envelope when the Covered Drug is dispensed. The voucher must include information regarding drug take back and methods of safe disposal.

All Costs To Be Borne By the Manufacturers

It is important to note that all operational and administrative costs for the Program, including costs for the administration and enforcement of the Program by the Department, are the responsibility of the Manufacturers (either individually or jointly if utilizing a common Program), and the costs are not permitted to be passed on to consumers via point of sale fees or otherwise. Manufacturers must also pay or reimburse Pharmacies and other Authorized Collectors for the costs associated with the collection activities.

Additional Guidance Forthcoming?

The Act imposes several administrative and operational requirements on Manufacturers, Pharmacies, and Wholesalers, and while the text of the Act does contain some pertinent details, participants in the pharmaceutical supply chain should be on the lookout for implementing regulations to be issued by the Department to further clarify program requirements. The process of formulating an acceptable Program will take some time and will require coordination with both free standing and mail-order pharmacies. Given the period of time between the date of the passage of the Act, its ultimate Effective Date, and the additional time provided to submit a Program to the Department, it is clear that the Department expects significant ramp-up time as well.

Arent Fox’s Health Care group regularly monitors the passage and implementation of laws and regulations imposing requirements on the pharmaceutical industry and participants in the pharmaceutical supply chain. For more information, please do not hesitate to contact Rachel Hold-Weiss in our New York office, Stephanie Trunk in our Washington, DC office, or the Arent Fox professional who regularly handles your matters.