Issues with CMO State Licensing in Arizona

Arizona CMO State Licensing

There are over a dozen unique business models in the supply chain and each business model requires a unique set of license types across states. The Contract Manufacturer Organization (CMO) business model is particularly difficult for states to regulate because they typically don’t have ownership of the drug product, nor do they hold FDA approval for the drug. The license type for CMOs is typically falls under a Third Party Logistics or a Manufacturer license type.

However, the business model also gets a lot of attention by Boards of Pharmacy because CMOs are ultimately responsible for quality and access. As such, 17 states require CMOs to obtain a license, although a lack of licensure only creates problems for their Virtual Manufacturer trading partners in 5 of those states.

Arizona is 1 of the 5 states that requires Domestic CMOs to obtain a license in the state before a virtual manufacturer may obtain a license.

Arizona does not license foreign companies, so Foreign CMOs are ineligible for licensing. If a Virtual Manufacturers has a CMO that is foreign, they will award a license to the Virtual Manufacturer even if the CMO does not have a license – as long as they provide an FDA registration, Inspection and any 483s/responses, or a cGMP certificate. The Virtual Manufacturer additionally has to appear via teleconference at the Arizona Board of Pharmacy meeting and have someone attest that they have knowledge that the CMO facility is cGMP compliant.

Because Arizona does not license foreign companies, a Foreign CMO cannot ship directly into Arizona. As such, a Virtual Manufacturer can only obtain a license in Arizona if a Foreign CMO ships to a location outside of Arizona and the 3PL/WDD shipping into WDD is licensed.

These licensing discrepancies cause significant inefficiencies in the supply chain. State agencies tasked with regulating the drug supply chain should of course be focused on ensuring the quality and integrity; but must also balance regulation with efficiency.