August 3, 2016
Monica Bharel, MD, MPH
Commissioner
Massachusetts Department of Public Health
250 Washington Street
Boston, Massachusetts 02108
RE:

Comments on Proposed Amendments to 105 CMR 700.000

Dear Commissioner Bharel:
Thank you for this opportunity to submit written testimony on the proposed amendments to
Department of Public Health (“Department”) Regulations 105 CMR 700.000,
Implementation of MGL c. 94C (“Proposed Regulations”). In this testimony, we describe a
matter of growing concern for many of our member pharmaceutical manufacturers that are
having difficulties obtaining necessary licenses for the distribution of their drug products in
states outside of the Commonwealth. This letter summarizes the issue these members
have raised, and offers language to be inserted in the Proposed Regulations that we believe
may resolve this problem (attached as Exhibit A).
Background on Virtual Drug Product Manufacturing and Issues Faced in Other
States
Our membership includes drug manufacturers that own and operate manufacturing
facilities in the Commonwealth and, as a result, are subject to the Department’s registration
requirements at 105 CMR 700.000. Many of our other member manufacturers, however, do
not themselves own or physically operate manufacturing or storage facilities for the drug
products that they distribute, even though they may own the products or have rights to
them by license. Rather, they may contract with a third party for the physical manufacture
of drugs for which may own the New Drug Application (“NDA”), Investigational New Drug
Application (“INDA”), abbreviated New Drug Application (“ANDA”), or Biologics License
Application (“BLA”) number assigned and approved by the Food and Drug Administration
(“FDA”). Or, they may instead hold the rights to such NDA, INDA, ANDA or BLA numbers
through licensing agreements with other manufacturers. Pharmaceutical manufacturing
companies that engage in such arrangements are officially recognized in certain
jurisdictions as “virtual manufacturers” (“VMs”). In Massachusetts, we understand that the
Department does not consider such entities drug product “manufacturers” for the purpose
of MGL c. 94C, §7 and its underlying regulations at 105 CMR 700.000. As a result, the
Department does not as a matter of course register them as “manufacturers.”
The lack of a clear registration pathway for Massachusetts VMs poses growing challenges
for our member VMs seeking to sell their products to pharmacies and hospitals across the

 country. An increasing number of states are imposing some home state licensure or
registration requirement on non-resident manufacturers seeking to distribute drug products
into their jurisdictions. In some states, applications for these licenses require the
Commissioner Bharel, MD, MPH
Page 2
manufacturer to produce documentary evidence of actual licensure or registration as a
manufacturer from its home state. In many cases, VMs are not exempt from this
requirement.
By way of just one example, all non-resident manufacturers engaged in “selling, shipping,
mailing, providing samples of, delivering or distributing prescription drugs” into New York
state must be registered by the New York State Board of Pharmacy without exceptions. The
registration application requires all applicants, including non-resident VMs, to submit a
“Letter of Certification/Verification of License/Permit/ Registration in [the] RESIDENT State
with Official Seal” [emphasis in the original]. We understand that other states have taken
similar positions in that they are beginning to require non-resident VMs to produce home
state manufacturer registrations as a condition for obtaining a distribution license in their
respective states.
The apparent lack of a home-state registration pathway for Massachusetts-based VMs
seeking to comply with distribution licensing requirements in other states has, in a growing
number of cases, complicated their ability to sell outside of the Commonwealth. This is
primarily because, without a home state VM registration option, these Massachusetts
entities find it difficult to obtain drug distribution approvals in states requiring such
documentation.
Regulatory Solution through the Proposed Regulations
We know it is not the policy objective of the Department or its laws and regulations to
restrict the ability of Massachusetts VMs to obtain distribution licenses in other states.
Indeed, on behalf of our members we commend the approach of under-regulation rather
than over-regulation of VMs unless explicitly required by law. However, in this limited
instance, we are concerned about the unintended consequences of a policy that, as noted
above, can hinder the ability of Massachusetts VMs to market their products nationwide.
To address this issue, we propose the insertion of language in the Proposed Regulations
authorizing the Department to issue a “virtual manufacturer” registration to entities
electing to submit documentation sufficient to demonstrate their legitimate status as VMs.
In our view, this approach is not inconsistent with the Department’s existing registration
authority. That is, M.G.L. c. 94C, § 7(a) requires registration of persons “manufacturing” or
“distributing” controlled substances “within the Commonwealth. ” All of our VMs’ drug
products are sold to customers in the Commonwealth, among other states. Moreover, while
these drug products may be manufactured by third parties, by either contract or license
between the VM and these manufacturing entities there should be a sufficient nexus
between the VM and the “manufacturing” process to authorize some limited form of
registration under Chapter 94C and 105 CMR 700.000.
That said, since VMs physically do not own or operate manufacturing or warehousing
facilities in the Commonwealth that otherwise may be subject to the Department’s
jurisdictional oversight, we propose that the VM registration process be tailored narrowly to
provide the Department with the necessary documentation to confirm that the applicant is

 legitimately and duly operating in the Commonwealth as a VM. Otherwise, we agree with
the Department that VMs, whether or not electing to register as such, should continue to be
exempt from actual regulation by the Department because they do not physically
manufacture or hold product in the Commonwealth.
Attached as Exhibit A is language we propose for inclusion in the Proposed Regulations that
would establish an application procedure for VMs seeking registration by the Department.
Required documentation would include a list of drugs owned and distributed by the VM,
verification that the VM has contracted for the manufacture of its drugs or has otherwise
obtained rights to them by license, verification of FDA registrations for contracted
manufacturing facilities, as applicable, and attestations that (1) the applicant is not
engaged in the manufacture or
Commissioner Bharel, MD, MPH
Page 3
distribution of drugs that it does not own in title or by license; and (2) that it does not itself
physically manufacture or distribute drugs in the Commonwealth. We submit that the
issuance of a VM registration to companies submitting this documentation would greatly
facilitate their ability to secure distribution licenses in the growing number of states that are
increasing the regulation of out of state manufacturers by requiring evidence of home state
licensure. As a result, the ability of our member VMs to effectively and fairly compete out in
the marketplace will be preserved.
On behalf of our membership, we thank you for your consideration of our testimony. Please
do not hesitate to contact me if you have any questions.
Sincerely,

Robert K. Coughlin
President & CEO
Attachment: Exhibit A, Proposed Regulatory Language

 EXHIBIT A
Insert the following definition in Section 700.001, Definitions
Virtual manufacturer means an entity that engages in the manufacture or distribution of
prescription drugs or devices for which it (1) owns the Investigational New Drug Application
(IND), New Drug Application (NDA), biologics license application (BLA) or Abbreviated New
Drug Application (ANDA) number(s) or the corresponding device approvals, or has licensed
the rights to the prescription drug or device from the IND, NDA, BLA or ANDA or device
approval holder; or (2) contracts with a manufacturing organization, or the approval holder,
for the physical manufacture of the drug or device product which is originally labeled for the
virtual manufacturer under its name and National Drug Code (NDC) number; and (3) at no
time takes physical possession of, or stores, commercial product in the Commonwealth.
Insert the following new Subsection (M) in Section 700.004, Registration
Requirements
(M) Registration of Virtual Manufacturers and Exemption from 105 CMR 700.000. The
Commissioner shall register as a virtual manufacturer any person complying with the
application requirements of 105 CMR 700.004(M).
(1) Any person may submit the following information to the Commissioner as part of
an application for registration as a virtual manufacturer on a form to be provided by the
Commissioner:
(a)

A list of the prescription drugs that it manufactures or distributes;

(b)
A list of the IND, NDA, BLA or ANDA or device approval numbers
associated with each prescription drug it manufacturers or distributes;
(c)
If the virtual manufacturer contracts with a manufacturing organization
or entity for the physical manufacture of the drug or device, the name, facility
address, and verification of the current FDA registration for each such
manufacturing organization or entity, and a description of the term of the
virtual manufacturer’s contract with each such organization or entity;
(d)
If the virtual manufacturer contracts with the IND, NDA, BLA or ANDA or
device approval holder for the physical manufacture of the drug or device
which is originally labeled for the virtual manufacturer under its name and NDC

 number: an attestation that the virtual manufacturer has licensed the rights to
the drug or device, as applicable;
(e)
An attestation that the virtual manufacturer does not contract for the
manufacture or distribution of drugs or devices other than those for which it
owns the IND, NDA, BLA, ANDA or device approval numbers or otherwise
licenses the rights to same; and
(f)
An attestation that the virtual manufacturer does not itself physically
manufacture or commercially distribute a controlled substance within the
Commonwealth, or possess a controlled substance for such purpose.
(2)
Any virtual manufacturer registration issued by the Commissioner shall be
effective one year from date of issuance. Any person who elects to be registered as a
virtual manufacturer may apply to be re-registered not more than 60 days before the
expiration date of his or her registration.
(3)
Any person registered by the Commissioner as a virtual manufacturer in
accordance with 105 CMR 700.004(M), or that otherwise does not itself physically
manufacture or distribute a controlled substance within the Commonwealth, or possess a
controlled substance for such purpose, is exempt from the provisions of 105 CMR 700.000.