Criteria

A historical timeline of Verified-Accredited Wholesale Distributors® (VAWD®) program criteria changes is presented here.

Select a topic to learn about each criterion.

Click on the links below to learn about each criterion.

Licensure
Facility
Virtual Manufacturers and Wholesale Distributors
Personnel
Record Keeping
Authentication and Verification
Returned, Damaged, and Outdated Drugs
Policies and Procedures
History of Criteria Revisions

Licensure

Qualifying wholesale distributors shall provide information to verify that:

  1. The wholesale distributor is engaged in the “wholesale distribution” of prescription drugs and/or devices which, for the purpose of these criteria, means distribution of prescription drugs and/or devices to persons other than a consumer or patient, or receipt of a prescription drug by a person other than a consumer or patient.
  2. The wholesale distributor that provides services within a state, whether the wholesale distributor is located within the state or outside of the state, is licensed or registered in good standing, or eligible to become licensed or registered, in wholesale drug distribution in all applicable jurisdictions. At least annually, a wholesale distributor and a third-party logistics provider (3PL) must report to United States Food and Drug Administration (FDA) pursuant to federal law.
  3. The wholesale distributor complies with all applicable statutes and regulations governing wholesale distribution where licensed or registered, and complies with the more stringent law or regulation as determined by conflicts of law rules.
  4. If the wholesale distributor is involved in the distribution of controlled substances, including product that has been identified as “listed chemicals” regulated under the Controlled Substances Act, it is duly registered with US Drug Enforcement Administration (DEA) and the appropriate state controlled substance agency and in compliance with all applicable laws and rules for the storage, handling, reporting, transport, shipment, and distribution of controlled substances and such precursor products.
  5. The wholesale distributor maintains sufficient liability insurance coverage and secured monetary funds to ensure payment in the event damages, fines, costs, and the like are assessed against the wholesale distributor.
  6. The wholesale distributor has a person to serve as the designated representative for the wholesale distributor facility who is actively involved in and aware of the actual daily operation of the wholesale distributor that engages in the distribution of drugs and devices and, if required, shall be licensed or registered with the board of pharmacy or appropriate state regulatory agency.
  7. The wholesale distributor does not engage in the wholesale distribution of Prescription drugs that are purchased or received from pharmacies or practitioners, or from wholesale distributors that obtained them from pharmacies or practitioners. The wholesale distributor may receive prescription drugs returned from pharmacies or practitioners that were distributed by the wholesale distributor. A wholesale distributor that operates solely as a reverse distributor may receive drugs from pharmacies and practitioners regardless of where they were obtained for destruction in accordance with applicable laws and regulations. Or, the drugs may be returned to the manufacturer or agent authorized by the manufacturer to accept returns on the manufacturer’s behalf. 

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Facility

Qualifying wholesale distributors shall provide information to verify that:

  1. The facility at which drugs and devices are received, stored, warehoused, handled, held, offered, marketed, displayed, or transported from shall:
    1. Be of suitable construction to ensure that all drugs and devices in the facility are maintained in accordance with the labeling of such drugs and devices or in compliance with official compendium standards such as the United States Pharmacopeia – National Formulary (USP-NF)
    2. Be of suitable size and construction to facilitate cleaning, maintenance, and proper wholesale distribution operations
    3. Have adequate storage areas to provide adequate lighting, ventilation, temperature, sanitation, humidity, space, equipment, and security conditions:
      1. All drugs and devices shall be stored at appropriate temperatures and under appropriate conditions in accordance with requirements, if any, in the labeling of such drugs and devices or in accordance with the requirements in the current edition of an official compendium such as the USP-NF;
      2. Documentation of facility assessments, such as temperature mapping, or alternative processes will be maintained by the wholesale distributor to demonstrate the ability to properly store prescription drugs in accordance with the labeling of the drug or the official compendium;
      3. If no storage requirements are established for a drug, the drug may be held at “controlled” room temperature, as defined in an official compendium such as USP-NF, to help ensure that its identity, strength, quality, and purity are not adversely affected; and
      4. Appropriate electromechanical, or electronic temperature and humidity recording equipment and/or logs, shall be utilized to document proper storage of drugs and devices. Temperature and humidity monitoring and recording systems will operate continuously.
    4. Have a quarantine area for storage of drugs and devices that are outdated, damaged, deteriorated, misbranded, adulterated, counterfeit or suspected of being counterfeit, otherwise unfit for distribution, or that are in immediate or sealed secondary containers that have been opened. Suspect product and illegitimate product, pursuant to the verification provisions under federal law, must:
    5. Be maintained in a clean and orderly condition;
    6. Be free from infestation of any kind; and
    7. Not be a personal residence.
  2. Appropriate inventory controls are maintained in order to detect and document any theft, counterfeiting, or diversion of drugs or devices.
  3. Controlled substance drugs are isolated from non-controlled substance drugs and stored in a secure area in accordance with DEA security requirements and standards.
  4. Adequate security for the facility has been provided for:
    1. All facilities used for wholesale drug distribution shall be secure from unauthorized entry;     
    2. Access from outside the premises shall be kept to a minimum and be well controlled;    
    3. The outside perimeter of the premises shall be well lighted;
    4. Entry into areas where drugs or devices are held shall be limited to authorized personnel;
    5. All facilities shall be equipped with an alarm system to detect entry after hours;
    6. All facilities shall be equipped with a security system that will provide suitable protection against theft and diversion. When appropriate, the security system shall provide protection against theft or diversion that is facilitated or hidden by tampering with computers or electronic records; and
    7. Verifying that all persons or entities who undertake, whether directly or by any other arrangement, to transport prescription drugs and devices for compensation, hereafter referred to as “common carriers,” used by the wholesale distributor ensures security via a verifiable security system.
  5. Wholesale distributor facilities co-located with another business shall maintain processes and systems for separating and securing all aspects of the operation. Co-location with another business authorized to purchase prescription drugs shall comply with federal and state licensing requirements and the records of wholesale distribution must provide a clear audit trail that distinguishes all purchases and distributions of the wholesale distributor from any other entity.

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Virtual Manufacturers and Wholesale Distributors

VAWD defines virtual wholesale distributors as applicants that sell a prescription drug or device but never physically possess the product. Any VAWD applicant or accredited facility whose business model falls within this definition, in full or in part, must utilize a warehouse and physical distribution facility that is VAWD accredited.

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Personnel

Qualifying wholesale distributors shall provide information to verify that:

  1. The wholesale distributor’s designated representative has not been enjoined, disciplined, fined, punished, or the like for violating any federal or state laws regulating prescription drugs or devices.
  2. The wholesale distributor’s designated representative has not been found guilty, pled guilty, or pled nolo contendere to any criminal offense.
  3. The wholesale distributor’s designated representative has a sound financial history.
  4. The wholesale distributor’s designated representative:
    1. Has a minimum of two years of verifiable full-time managerial or supervisory experience in a pharmacy or wholesale distributor where the designated representative’s responsibilities included, but were not limited to, record keeping, storage, and shipment of drugs or devices;
    2. Serves as the designated representative for only one prescription drug facility at any one time;
    3. Is actively involved in and aware of the actual daily operations of the wholesale distributor;
    4. Is employed full-time in a managerial position by the wholesale distributor;
    5. Is physically present at the wholesale distributor during normal business hours, except for time periods when absent due to illness, family illness or death, scheduled vacation, or another authorized absence. In the authorized absence of the designated representative, personnel employed by the wholesale distributor with knowledge of the operation and appropriate education and/or experience to assume responsibility for the duties of the designated representative will be present; and  
    6. Is aware of, and knowledgeable about, all policies and procedures pertaining to the operations of the wholesale distributor.
  5. All personnel actively engaged in or who directly supervise the operation and handling of prescription drugs or devices, including the owner(s) and/or chief executive officer, management, officers, and other key personnel, prior to their association, employment, or contracting and regularly thereafter have met the following qualifications:
    1. Appropriate local and national criminal background checks; and
    2. Initial and for-cause toxicology screening; and
    3. Appropriate education, experience, and training necessary to safely and lawfully engage in the wholesale distribution of prescription drugs and devices;
  6. All personnel with access to prescription drugs, including the owner(s) and/or chief executive officer(s), management, officers, and other key personnel, are subject to toxicology screenings prior to their association, employment, or contracting and are subject to for-cause and random toxicology screening as warranted.
  7. The wholesale distributor maintains and enforces policies and procedures requiring documentation of responsible persons and persons in charge, including such persons’ titles, duties, and qualifications.
  8. The wholesale distributor maintains and enforces policies and procedures that ensure the qualifications described in 5 and 6 above are documented and retained.
  9. Qualifying wholesale distributors shall provide information to verify that, prior to the initial wholesale distribution or acquisition of prescription drugs to or from any wholesale distributor, the distributing or acquiring wholesale distributor requires all common carriers contracted with or utilized by the wholesale distributor to require its employees whose responsibilities include the handling of prescription drugs to undergo criminal background checks, initial and random toxicology screenings, and security training.

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Record Keeping

Qualifying wholesale distributors shall provide information to verify that:

  1. The wholesale distributor is establishing and maintaining inventories and records of all transactions regarding the receipt and distribution or other disposition of all drugs and devices. These records shall include:
    1. Appropriate information and data to identify the source of the product and type of product being received or distributed; and
    2. All records related to the wholesale distribution of prescription drugs, including but not limited to, invoices of purchase, packing slips, shipping records, and sales invoices, which will accurately reflect the name of the wholesale distributor as it appears on the facility’s license issued by the state in which the wholesale distributor is engaged in wholesale distribution. Wholesale distributors to whom a license has been issued in the same name and at the same address as another licensee authorized to purchase prescription drugs must utilize a method to distinguish purchases and distributions that are specific to the wholesale distributor.
  2. Inventories and records shall be made available for inspection and photocopying by any authorized official of any state, federal, or local government agency for a period of three (3) years following their creation date, or as otherwise required by law.
  3. Manufacturers, wholesale distributors, and repackagers must pass, capture, and maintain (for 6 years) lot level documentation on transactions involving products in the form of transaction information (TI), transaction history (TH), and transaction statement (TS) as defined by federal law.
  4. Records described in this section are kept at the inspection site and readily available for inspection during the retention period. Records kept at a central location must be available for inspection within two working days of a request.
  5. An ongoing list of persons with whom the wholesale distributor conducts business is maintained.
  6. The wholesale distributor shall establish and maintain a system for mandatory reporting of the following:
    1. Prescription drug and device shortages or losses that exceed a reasonable level established by like persons to the board of pharmacy or appropriate state regulatory agency and FDA where it is known or suspected that diversion is occurring. 
    2. Manufacturers, wholesale distributors, and repackagers must provide illegitimate product notifications to FDA and trading partners, pursuant to federal law.
  7. The wholesale distributor has adequate processes in place for monitoring the purchase activity of customers and identifying ordering patterns that identify potential diversion or criminal activity in accordance with state and federal law for controlled substances and “listed chemicals.” This requirement also applies to other prescription drugs known by the wholesaler to be subject to diversion or criminal activity, such as non-controlled pain medication, lifestyle drugs, short supply drugs, and drugs with a high potential for diversion.
  8. Drug and device records, data, and documents are securely stored and access is restricted, and that policies and procedures have been implemented to protect the integrity of such records, data, and documents. 

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Authentication and Verification

Qualifying wholesale distributors shall maintain and enforce policies and procedures that:

  1. Ensure the integrity, legitimacy, and authenticity of prescription drug and device purchase orders and/or requests.
  2. Establish a process that ensures the verification of vendor and customer licenses using data from appropriate state and federal agencies, at least annually.
  3. Ensure the regular verification of the identity, legitimacy, and proper operation of entities seeking to sell or purchase prescription drug and device products, including the verification that trading partners are authorized pursuant to federal law.
  4. Ensure prescription drug suppliers are engaged in the lawful distribution of prescription drugs obtained from legitimate sources. This includes an understanding of the vendor’s sources of prescription drugs and assurance the vendor will provide prescription drugs obtained from lawful sources.
  5. Authorized trading partners are subject to the verification requirements under federal law, which include provisions for promptly investigating and validating any applicable TH and TI in the possession of the manufacturer, wholesale distributor, or repackager in response to a suspect product determination.
  6. Ensure that upon receipt, each shipping container shall be visually examined for identity and to determine if it may contain contaminated, contraband, counterfeit, suspected of being counterfeit, or damaged drugs or devices, or drugs or devices that are otherwise unfit for distribution, including examination for a suspect product pursuant to federal law. This examination shall be adequate to reveal container damage that would suggest possible contamination, adulteration, misbranding, counterfeiting, suspicion of being counterfeit, or other damage to the contents.
  7. Ensure that the drugs or devices found to be unacceptable under these criteria are quarantined from the rest of stock until it is determined that the drugs and devices are not outdated, damaged, deteriorated, misbranded, counterfeited, or adulterated and they are further determined to be fit for human use. This includes the quarantine and reporting of suspect and illegitimate product in accordance with federal law.
  8. Ensure that each outgoing shipment shall be carefully inspected for identity of the drugs or devices and to ensure that there is no delivery of drugs or devices that have been damaged in storage or held under improper conditions.

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Returned, Damaged, and Outdated Drugs

Qualifying wholesale distributors shall maintain and enforce policies and procedures that incorporate items 1 through 6 below and include provisions under federal law for manufacturers, wholesale distributors, and repackagers to quarantine suspect and illegitimate product, maintain records relating to illegitimate product determinations for not less than 6 years, and provide illegitimate product notifications to FDA and trading partners.

  1. Ensure that any drug or device that is outdated, damaged, deteriorated, misbranded, counterfeited, suspected of being counterfeited, adulterated, or otherwise deemed unfit for human use be quarantined and physically separated from other drugs and devices until it is returned to either the manufacturer or wholesale distributor from which it was acquired, or the destruction of the drug or device is authorized.
  2. Ensure that the disposition of prescription drugs sent for destruction is documented and proof of destruction, such as a certificate of destruction, is received and maintained by the wholesale distributor for inventory accountability, except when transferring drugs to the manufacturer of that product or to a reverse distributor at the direction of the manufacturer of that product.
  3. Ensure that when drugs and devices are adulterated, misbranded, counterfeited, or suspected of being counterfeit, notice of the adulteration, misbranding, counterfeiting, or suspected counterfeiting shall be provided to the board of pharmacy or appropriate state regulatory agency, FDA, and the manufacturer or wholesale distributor from which they were acquired within three (3) business days. Any prescription drug considered to be a suspect or illegitimate product shall be processed and handled in accordance with federal law, including quarantine, notice, sampling, records, release, and disposition.  Any drug or device returned to a manufacturer or wholesale distributor shall be kept under proper conditions during storage, handling, transport, and shipment, and documentation showing that proper conditions were maintained shall be provided to the manufacturer or wholesale distributor to which the drugs are returned.
  4. Ensure that when any drug or device whose immediate or sealed outer or secondary containers or labeling are adulterated, misbranded, counterfeited, or suspected of being counterfeit, it shall be quarantined and physically separated from other drugs or devices until it is returned to either the manufacturer or wholesale distributor from which it was acquired or destroyed. Any prescription drug considered to be a suspect or illegitimate product shall be processed and handled in accordance with federal law, including quarantine, notice, sampling, records, release, and disposition.  When the immediate or sealed outer or secondary containers or labeling of any drug or device are adulterated, misbranded, counterfeited, or suspected of being counterfeit, notice of the adulteration, misbranding, counterfeiting, or suspected counterfeiting shall be provided to the board of pharmacy or appropriate state regulatory agency, FDA, and the manufacturer or wholesale distributor from which it was acquired within three (3) business days, or as otherwise required by law.
  5. Ensure that when any drug or device that has been opened or used, but is not adulterated, misbranded, counterfeited, or suspected of being counterfeit, it shall be identified as such, and shall be quarantined and physically separated from other drugs or devices until it is returned to the manufacturer or wholesale distributor from which acquired or it is destroyed. Any prescription drug considered to be a suspect or illegitimate product shall be processed and handled in accordance with federal law, including quarantine, notice, sampling, records, release, and disposition.  
  6. Ensure that if the conditions under which a drug or device has been returned cast doubt on the drug’s or device’s safety, identity, strength, quality, or purity, then the drug or device shall be destroyed, or returned to the supplier, unless examination, testing, or other investigation proves that the drug or device meets appropriate standards of safety, identity, strength, quality, and purity. In determining whether the conditions under which a drug or device has been returned cast doubt on the drug’s or device’s safety, identity, strength, quality, or purity, the wholesale drug distributor shall consider, among other things, the conditions under which the drug or device has been held, stored, or shipped before or during its return and the condition of the drug and its container, carton, or labeling as a result of storage or shipping.

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Policies and Procedures

Qualifying wholesale distributors shall maintain, enforce, and adhere to written policies and procedures, which shall be followed for:

  1. The receipt, security, storage, inventory, transport,  shipping, and distribution of drugs, including policies and procedures for identifying, recording, and reporting losses or thefts  or for correcting all errors and inaccuracies in inventories, and for ensuring the oldest approved stock of a prescription drug product is distributed first.
  2. Wholesale distributors shall include in their written policies and procedures the following:
    1. A procedure to be followed for handling recalls and written withdrawals of drugs and devices.
    2. Any volunteer action by the manufacturer to remove defective or potentially defective drugs or devices from the market; or
    3. Any action undertaken to promote public health and safety by the replacement of existing merchandise with an improved product or new package design.
    4. In accordance with the Food Drug & Cosmetic (FD&C) Act
      1. Product tracing
      2. Authorized trading partners
      3. Verification
      4. Wholesaler and 3PL reporting
  3. To prepare for, protect against, and handle any crisis that affects the security or operation of any facility in the event of a strike, fire, flood, or other natural disaster, or other situations of local, state, or national emergency.
  4. To ensure that any outdated drugs shall be segregated from other drugs and either returned to the manufacturer or destroyed in accordance with federal and state laws, including all necessary documentation and the appropriate witnessing. This procedure shall provide for written documentation of the disposition of outdated drugs. This documentation shall be maintained for three (3) years after disposition of the outdated drugs.
  5. A procedure for disposing of and destroying containers, labels, and packaging to ensure that the containers, labels, and packaging cannot be used in counterfeiting activities, including all necessary documentation, maintained for a minimum of three (3) years, and the appropriate witnessing of the destruction of any labels, packaging, immediate containers, or containers in accordance with all applicable federal and state requirements.
  6. A procedure for investigating discrepancies involving:
    1. Counterfeit, suspected of being counterfeit, contraband, or suspected of being contraband prescription drugs or devices in the inventory and reporting such discrepancies within three (3) business days to the board of pharmacy or appropriate state regulatory agency and appropriate federal agency.
    2. Suspect product and conducting investigations.
    3. Notifications to FDA and trading partners of illegitimate product determinations pursuant to verification provisions under the FD&C Act.
  7. A procedure for reporting criminal or suspected criminal activities involving the inventory of drug(s) and device(s) to the board of pharmacy or appropriate state regulatory agency and appropriate federal agency within three (3) business days, or sooner if required by law.
  8. A procedure for verifying security provisions of common carriers.
  9. A procedure for maintaining a quality improvement program that monitors critical operations and tracks trends to improve processes.

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History of Criteria Revisions

August 2006: VAWD Criteria updated to reflect amendments to the NABP Model Rules for the Licensure of Wholesale Distributors.

April 2009: VAWD Criteria updated to reflect amendments to the NABP Model Rules for the Licensure of Wholesale Distributors, addressing use of common carriers.

February 2013: VAWD Criteria updated pursuant to the recommendations of the Task Force on Virtual Manufacturers and Virtual Wholesale Distributors.

June 2015: VAWD Criteria updated to reflect changes to Food and Drug Administration’s Drug Supply Chain Security Act.

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