3181-S2 AMH MORE H5671.1

2SHB 3181  - H AMD TO H AMD (H-5591.5/10)1587
     By Representative Morrell

NOT CONSIDERED 03/11/2010

     On page 2, line 7 of the amendment, after "(a)" insert "(i)"

     On page 2, after line 10 of the amendment, insert the following:
     "(ii) A tax is imposed on the privilege of manufacturing drugs for distribution in the state of Washington. The rate of the tax is seven-tenths of one percent multiplied by the wholesale value of the manufactured drug. This tax does not apply to drug manufacturers who participate in a product stewardship program for unwanted drugs from residential sources under section 7 of this act."

     On page 5, after line 30 of the amendment, insert the following:

"NEW SECTION.  Sec. 7   (1) Beginning January 1, 2012, every producer of drugs sold in or into Washington state must participate in a product stewardship program for unwanted drugs from residential sources.
     (2) Every producer must:
     (a) Operate, either individually or jointly with other producers, a product stewardship program; or
     (b) Enter into an agreement with a stewardship organization to operate, on the producer's behalf, a product stewardship program.
     (3) A product stewardship program must be licensed by the board of pharmacy prior to collecting unwanted drugs from residential sources.
     (4) A producer, group of producers, or stewardship organization must pay all administrative and operational costs associated with their product stewardship program, including the cost of the collection, transportation, and disposal of the unwanted products that are collected from residential sources and the recycling or disposal, or both, of its related packaging that is collected with the unwanted drugs.
     (5) A product stewardship program must be provided without charging any fee at the time of sale of the drug or at the time the unwanted drugs from residential sources are delivered or collected for disposal.
     (6) Unless otherwise approved by the board of pharmacy, each product stewardship program must accept all unwanted drugs regardless of who produces the unwanted drug.
     (7) A producer, group of producers, or stewardship organization operating or intending to operate a product stewardship program must submit a product stewardship plan to the board of pharmacy prior to engaging in the collection of unwanted covered drugs.

Sec. 8   RCW 82.21.020 and 2002 c 105 s 1 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Drugs" means (a) articles recognized in the official United States pharmacopoeia, the official national formulary, the official homeopathic pharmacopoeia of the United States, or any supplement of the formulary or those pharmacopoeias; (b) substances intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in humans or other animals; (c) substances, other than food, intended to affect the structure or any function of the body of humans or other animals; or (d) substances intended for use as a component of any substances specified in (a), (b), or (c) of this subsection, but not including medical devices or their component parts or accessories.
     (2)
"Hazardous substance" means:
     (a) Any substance that, on March 1, 2002, is a hazardous substance under section 101(14) of the federal comprehensive environmental response, compensation, and liability act of 1980, 42 U.S.C. Sec. 9601(14), as amended by Public Law 99-499 on October 17, 1986, except that hazardous substance does not include the following noncompound metals when in solid form in a particle larger than one hundred micrometers (0.004 inches) in diameter: Antimony, arsenic, beryllium, cadmium, chromium, copper, lead, nickel, selenium, silver, thallium, or zinc;
     (b) Petroleum products;
     (c) Any pesticide product required to be registered under section 136a of the federal insecticide, fungicide and rodenticide act, 7 U.S.C. Sec. 136 et seq., as amended by Public Law 104-170 on August 3, 1996; and
     (d) Any other substance, category of substance, and any product or category of product determined by the director of ecology by rule to present a threat to human health or the environment if released into the environment. The director of ecology ((shall)) may not add or delete substances from this definition more often than twice during each calendar year. For tax purposes, changes in this definition ((shall)) take effect on the first day of the next month that is at least thirty days after the effective date of the rule. The word "product" or "products" as used in this paragraph (d) means an item or items containing both: (i) One or more substances that are hazardous substances under (a), (b), or (c) of this subsection or that are substances or categories of substances determined under this paragraph (d) to present a threat to human health or the environment if released into the environment; and (ii) one or more substances that are not hazardous substances.
     (((2))) (3) "Petroleum product" means plant condensate, lubricating oil, gasoline, aviation fuel, kerosene, diesel motor fuel, benzol, fuel oil, residual oil, liquefied or liquefiable gases such as butane, ethane, and propane, and every other product derived from the refining of crude oil, but the term does not include crude oil.
     (((3))) (4) "Possession" means the control of a hazardous substance located within this state and includes both actual and constructive possession. "Actual possession" occurs when the person with control has physical possession. "Constructive possession" occurs when the person with control does not have physical possession. "Control" means the power to sell or use a hazardous substance or to authorize the sale or use by another.
     (((4))) (5) "Previously taxed hazardous substance" means a hazardous substance in respect to which a tax has been paid under this chapter and which has not been remanufactured or reprocessed in any manner (other than mere repackaging or recycling for beneficial reuse) since the tax was paid.
     (((5))) (6) "Producer" means the person who:
     (a) Has legal ownership of the brand, brand name, or co-brand of the drug or manufactures a generic drug sold in or into Washington state. "Producer" does not include a retailer who puts its store label on a drug or a pharmacist who compounds a prescribed individual drug product for a patient;
     (b) Imports a drug branded or manufactured by a producer that meets the definition under (a) of this subsection and where that producer has no physical presence in the United States; or
     (c) Sells at wholesale a drug, does not have legal ownership of the brand, and elects to fulfill the responsibilities of the producer for that product.
     (7)
"Wholesale value" means fair market wholesale value, determined as nearly as possible according to the wholesale selling price at the place of use of similar substances of like quality and character, in accordance with rules of the department.
     (((6))) (8) Except for terms defined in this section, the definitions in chapters 82.04, 82.08, and 82.12 RCW apply to this chapter.

NEW SECTION.  Sec. 9   Section 7 of this act constitutes a new chapter in Title 70 RCW."

     Renumber the remaining sections consecutively and correct any internal references accordingly.

EFFECT:  Requires drug manufacturers whose drugs are distributed in Washington State to pay a drug manufacturing tax on the wholesale value of the drugs manufactured unless they participate in a product stewardship program licensed by the Board of Pharmacy for unwanted drugs from residential sources. (The tax rate would be 0.7 percent, which is equivalent to the current hazardous substance tax rate.)

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