(a) General. Except as provided in §229.423 of this title (relating to Exemptions), a person may not engage in the wholesale distribution of prescription drugs in Texas, as defined in §229.421(28) - (29) of this title (relating to Definitions), unless the person has a valid license from the commissioner of the department for each place of business.
(b) Out-of-state place of business.
  (1) Except as provided by §229.423 of this title, a person who engages in the wholesale distribution of prescription drugs from outside this state may only engage in the wholesale distribution of prescription drugs in this state if the person holds a license as required in subsection (a) of this section.
  (2) The department may accept reports from authorities in other jurisdictions to determine the extent of compliance with the Act and these sections.
  (3) The department may issue a license to a person who engages in the wholesale distribution of prescription drugs outside this state to engage in the wholesale distribution of prescription drugs in this state if, after an examination of the reports of the person's compliance history and current compliance record, the department determines that the person is in compliance with the Act and these sections.
  (4) The department shall consider each license application and any related documents or reports filed by or in connection with a person who wishes to engage in the wholesale distribution of prescription drugs in this state on an individual basis.
(c) Combination product. If the United States Food and Drug Administration determines, with respect to a product that is a combination of a prescription drug and a device, that the primary mode of action of the product is as a prescription drug, a wholesale distributor of such a product is subject to licensure as described in this section.
(d) Applicant qualifications. To qualify for the issuance or renewal of a wholesale distributor license under this subchapter, the designated representative of an applicant or license holder must:
  (1) be at least 21 years of age;
  (2) have been employed full-time for at least three years by a pharmacy or a wholesale distributor in a capacity related to the dispensing or distributing of prescription drugs, including recordkeeping for the dispensing or distributing of prescription drugs;
  (3) be employed by the applicant full-time in a managerial-level position;
  (4) be actively involved in and aware of the actual daily operation of the wholesale distributor;
  (5) be physically present at the applicant's place of business during regular business hours, except when the absence of the designated representative is authorized, including sick leave and vacation leave;
  (6) serve as a designated representative for only one applicant at any one time, except in a circumstance, as the department determines reasonable, in which more than one licensed wholesale distributor is co-located in the same place of business at the same address and the wholesale distributors are members of an affiliated group, as defined by Internal Revenue Code of 1986, §1504;
  (7) not have been convicted of a violation of any federal, state, or local laws relating to wholesale or retail prescription drug distribution or the distribution of controlled substances; and
  (8) not have been convicted of a felony under a federal, state, or local law.
(e) Display of license. The license shall be displayed in an open public area at each place of business.
(f) New place of business. Each person acquiring or establishing a place of business for the purpose of wholesale distribution of prescription drugs after the effective date of these sections shall apply to the department for a license of such business prior to beginning operation.
(g) Two or more places of business. If the wholesale distributor of prescription drugs operates more than one place of business, the wholesale distributor of prescription drugs shall license each place of business separately.
(h) Pre-licensing inspection. The applicant shall cooperate with any pre-licensing inspection by the department of the applicant's place of business.
(i) Issuance of license. In accordance with §229.281 of this title (relating to Processing License/Permit Applications Relating to Food and Drug Operations), the department may license a wholesale distributor of prescription drugs who meets the requirements of these sections, and pays all license fees in compliance with §229.427 of this title (relating to Licensure Fees).
(j) Transfer of license. Licenses shall not be transferable from one person to another or from one place of business to another.
(k) License term. Unless the license is amended as provided in subsection (m) of this section or suspended or revoked as provided in §229.428 of this title (relating to Refusal, Cancellation, Suspension, or Revocation of License), the license is valid for two years.
(l) Amendment of license. A license that is amended, including a change of name, ownership, or a notification of a change in the location of a licensed place of business will require submission of an application as outlined in §229.425 of this title (relating to Licensing Procedures) and submission of fees as outlined in §229.427 of this title.
(m) Renewal of license.
  (1) The license application as outlined in §229.425 of this title and nonrefundable licensing fees as outlined in §229.427 of this title for each place of business shall be submitted to the department not later than the 30th day after the date the wholesale distributor receives a renewal notification form from the department. A person who files a renewal application after the expiration date shall pay an additional $100 as a delinquency fee.
  (2) A licensee who fails to submit a renewal application prior to the current licensure expiration date and continues operations may be subject to the enforcement and penalty provisions in §229.430 of this title (relating to Enforcement and Penalties), and/or the refusal, cancellation, suspension and revocation provisions in §229.428 of this title.
  (3) A renewal license shall only be issued when all past due license fees and delinquency fees are paid.
(n) Bond.
  (1) A wholesale distributor applying for or renewing a license shall submit payable to this state a bond or other equivalent security acceptable to the department, including an irrevocable letter of credit or a deposit in a trust account or financial institution, in the amount of $100,000 payable to this state.
  (2) The bond or equivalent security submitted under paragraph (1) of this subsection must secure payment of any fines or penalties imposed by the department or imposed in connection with an enforcement action by the attorney general, any fees or other enforcement costs, including attorney's fees payable to the attorney general, and any other fees and costs incurred by this state related to that license holder, that are authorized under the laws of this state and that the license holder fails to pay before the 30th day after the date a fine, penalty, fee, or cost is assessed.
  (3) The department or this state may make a claim against a bond or security submitted under paragraph (1) of this subsection before the first anniversary of the date a license expires or is revoked under this subchapter.
  (4) The department shall deposit the bonds and equivalent securities received under this section in a separate account.
  (5) A pharmacy warehouse that is not engaged in wholesale distribution is exempt from the bond requirement under paragraph (1) of this subsection.
  (6) A single bond is sufficient to cover all places of business operated by a wholesale distributor in this state.

Source Note: The provisions of this §229.424 adopted to be effective February 1, 2007, 32 TexReg 315; amended to be effective December 9, 2010, 35 TexReg 10755