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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” 707-000-04-001-H03
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In this lesson we review issues that impact upon the legal aspects of pharmacy practice. A contemporary matter is importation
of drugs into the U.S. Our goal is to describe dispensing of prescriptions to Americans by foreign pharmacies. This lesson
provides 3.0 hours (0.3 CEUs) of credit, and is intended for pharmacists in all practice settings.
The program ID # for this lesson is 707-000-04-001-H03.
Pharmacists completing this lesson by January 31, 2007 may receive full credit.
To obtain continuing education credit for this lesson, you must answer the questions on the quiz (70% correct
required), and return the quiz. Should you score less than 70%, you will be asked to repeat the quiz. Computerized records are
maintained for each participant.
If you have any comments, suggestions or questions, contact us at the above address, or call toll free 1-800-3234305. (In Alaska and Hawaii phone 1-847-945-8050). Please write your ID Number (the number that is on the top of the
mailing label) in the indicated space on the quiz page (for continuous participants only).
The objectives of this lesson are such that upon completion the participant will be able to:
1.
2.
3.
4.
5.
6.
Describe the evolution of international pharmacies that provide prescription medications to U.S. residents.
Discuss the legal framework under which international pharmacies operate.
Describe how an international pharmacy dispenses medications to an American patient.
List the regulatory requirements for international drug distribution.
Discuss the FDA Personal Importation Policy.
Describe the facts & implications of the Rx Depot case.
All opinions expressed by the author/authors are strictly their own and are not necessarily approved or endorsed by
W-F Professional Associates, Inc. Consult full prescribing information on any drugs or devices discussed.
January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
INTRODUCTION
American patients have for many years been able to acquire drugs from foreign pharmacies, but it has
been a cumbersome and very public process. So-called “offshore” pharmacies, located in the Caribbean
or on other continents, have advertised their drugs in newspapers or through direct mail solicitations, and
American patients have mailed in their international requests for pharmaceuticals. The difficulty of ink-onpaper communication between provider and recipient has kept this sort of business small. Most Americans
have been unaware that pharmaceuticals can be acquired in this way, and many who know this can be
done choose not to go to the trouble involved with ordering, paying, and waiting to receive the goods.
Regulators have had no difficulty identifying and taking action against these easy-to-find provider pharmacies because they are easily observed and they leave a very distinct paper trial. They have been put out of
business within months after they have begun business. The American market has not been a huge success for the international pharmacies, and it has not posed a significant threat to the public health, until
recently.
The development of the Internet has changed the way people do all kinds of business, and it has
greatly facilitated communication between patients and international pharmacies. No longer must international pharmacies rely on hard-to-find newspaper ads or mailed-in orders. They can make their products
available over the Internet and can easily accept electronic orders. Patients who use these pharmacies do
not know who the pharmacists are or where they are located. All they know is that they receive drugs at a
discount. The patients may not need the drugs they receive (no drug use review is done by offshore pharmacies), and the drugs may not actually be what they are purported to be (counterfeits are impossible to
distinguish from the genuine article unless one is trained to detect them), but at least they are cheaper than
those purchased from a domestic pharmacy, and to many patients low cost is all that matters. Regulators
have a verydifficult time finding Internet pharmacies and taking action against them. They leave no paper
trail and they disappear by the time regulators develop the solid leads necessary to find them. There is an
imminent threat to public health from international pharmacies. The physician-pharmacist-patient relationship is destroyed, and there is no regulatory assurance of product integrity.
The fact of this threat is not being consistently communicated to the American public. Elected officials
(some obviously grandstanding for votes) are strongly urging or actively facilitating citizens who break the
law by ordering drugs from Canada or other countries. This advice and assistance from elected officials is
based on the mistaken view that the acquisition of drugs from other countries is completely legal. The
reality is that drug importation is not permitted except under compassionate circumstances. A rule developed by the FDA years ago, when the United States was one of the slowest countries to approve new
drugs, permits patients to bring into the country drugs that have not been approved here but are considered necessary to the patient’s treatment, as determined by the patient’s physician. Because the United
States is now usually one of the first countries, rather than one of the last, to approve a new drug, there are
few situations today in which a novel therapy exists in the world but is not available in the United States.
Personal importation is now rarely necessary. But the narrow policy exception has erroneously become
viewed as a blank check to violate the law.
The subject of drug importation has become an economic issue as the prices of pharmaceuticals have
soared and as Americans find it more and more difficult to afford their pharmaceutical expenses. The
prospect of being able to buy “just as good but cheaper” drugs from Canada seems irresistible. The tempCE PRN® (ISSN 0199-5006) is owned and published by W-F Professional Associates, Inc.
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
tation to trick the drug companies into giving Americans the same discounts they give to Canadians is very
attractive. Never mind the reality that even if Americans were to buy all of the drugs Canada has, leaving no
drugs for Canadians to use, that would only supply less than ten percent of the U. S. market. Seldom do
simple solutions work well for complicated problems, and this complicated problem of high drug prices is
unlikely to be solved by the simple solution of buying drugs from Canada. The problem of high drug prices
is more likely to be solved through solid policy than through trickery. Nonetheless, as Americans look to
our northern neighbors for answers to the problem of high drug prices, they are increasingly looking to
their local pharmacist to explain the laws and regulations that apply to imported pharmaceuticals. This
lesson reviews those laws and regulations, and it summarizes the recent landmark case in which the FDA
successfully enforced the law against a “storefront pharmacy.”
THE BASIC LEGAL FRAMEWORK
The FDA is responsible for protecting the public from abuses by those who would threaten the quality
of drug therapy in this country. For this reason, businesses and individuals who are involved in shipping
prescription drugs to consumers must take many steps to ensure compliance with the Federal Food Drug
and Cosmetic Act (FDCA) as enforced by the FDA. If parties are found in violation of the FDCA, there are
many potential avenues of legal liability. A court can enjoin violations of the FDCA. A person who violates
the FDCA can be held criminally liable. Those who aid and abet a criminal violation of the FDCA, or conspire to violate the act, can also be found criminally liable. The FDA has been quite clear about this, and
has made this potential liability a reality.
THE TYPICAL SITUATION
Consider the following hypothetical situation: An American health plan amends its policy to allow
coverage of prescription drugs purchased outside the U. S. The health plan publicizes this change to its
members. A member obtains a valid prescription from a licensed U.S. physician and forwards the prescription to a technology company that performs technical services for a claims processor. The company
performs data entry services and forwards the prescription to a licensed Canadian pharmacy. In Canada, a
Canadian doctor rewrites the prescription. The Canadian pharmacy fills the prescription and ships the
drugs directly to the patient in the U.S. The technology company consolidates the plan payment and the
patient co-payment and forwards payment to the Canadian pharmacy. Is this practice legal?
LEGAL ANALYSIS
Even if a drug is approved in the U.S., and if it was originally manufactured in the U.S., it is a violation of
the FDCA for anyone other than the U.S. manufacturer to import the drug into the U.S. FDA believes that
virtually all drugs imported to the U.S. from Canada by or for individual U.S. consumers also violates U.S.
law for other reasons. Generally, such drugs are unapproved, labeled incorrectly, and/or dispensed without
a valid prescription.
The reason that Canadian or other foreign versions of U.S.-approved drugs are generally considered
unapproved in the U.S. is that FDA approvals are manufacturer-specific, product-specific, and include many
requirements relating to the product. These requirements include manufacturing location, formulation,
source and specifications of active ingredients, processing methods, manufacturing controls, container/
closure system, and appearance. Frequently, drugs sold outside the U.S. are not manufactured by a firm
that has FDA approval for that drug. Moreover, even if the manufacturer has FDA approval for a drug, the
version produced for foreign markets usually does not meet all of the requirements of U.S. approval; thus it
is considered to be unapproved.
Virtually all shipments of prescription drugs imported from a Canadian pharmacy will run afoul of the
FDCA, although it is theoretically possible that an occasional shipment will not do so. To assure compliance, when shipping prescription drugs to U.S. patients, a Canadian pharmacy must assure, among other
things, that it dispenses only FDA-approved drugs that are made outside the U.S. and that comply with the
FDA approval in all respects, including manufacturing location, formulation, source and specifications of
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
active ingredients, processing methods, manufacturing controls, container/closure systems, and appearance. The Canadian pharmacy would also have to assure that each drug meets all U.S. labeling requirements, including that it bears the FDA-approved labeling. Finally, the drugs would have to be dispensed by
a pharmacist pursuant to a valid prescription.
The U.S. Congress has passed legislation that would allow drug wholesalers and pharmacists to import
prescription drugs from certain countries under certain circumstances. However, this section of the law has
not yet gone into effect. That law will become effective only if the Secretary of Health and Human Services
certifies to Congress that the section’s implementation will “pose no additional risk to the public’s health and
safety” and will “result in a significant reduction in the cost of covered products to the American consumer.”
Thus far, the current HHS Secretary, Tommy Thompson, and his predecessor, Donna Shalala, have declined to make such findings.
FDA’S PERSONAL IMPORTATION POLICY
There has been confusion about whether the FDA Personal Importation policy changes the law with
respect to personal importation of pharmaceuticals. This policy is not a law, it is a guide to the agency on
the use of its enforcement discretion with respect to imports by individuals of drugs for their own personal
use. Under certain defined circumstances, as a matter of enforcement discretion, FDA allows consumers to
import otherwise illegal drugs. The policy permits individuals and their physicians to bring into the United
States small quantities of drugs sold abroad for a patient’s treatment of a serious condition for which effective treatment may not be available domestically. This approach has been applied to products that do not
present an unreasonable risk and for which there is no known commercialization and promotion to persons
residing in the U.S. A patient who imports such a product must also provide the name of the licensed
physician in the U.S. responsible for his or her treatment with the unapproved drug.
The FDA policy does not permit the importation of foreign versions of drugs that are approved in the
U.S., particularly when the foreign versions of such drugs are being “commercialized” to U.S. citizens. The
FDA has discovered that often the products being offered to U.S. citizens by Canadian pharmacies are
manufactured outside either the U.S. or Canada. This policy simply describes the agency’s enforcement
priorities. It does not change the law, and it does not give a license to persons to import or export illegal
drugs into the United States. Although the FDA has only rarely prosecuted those who import drugs into the
U.S. from Canada, it reserves the right to do so.
Thus, under the scenario described above, the law has been violated, and those involved with the
illegal importation can be exposed to civil and criminal liability under the FDCA. Those who can be found
civilly and criminally liable include all who cause a prohibited act to occur. Anyone who aids or abets a
criminal violation, or who conspires to violate the FDCA, can also be found criminally liable. However, the
agency has said that if it were to take enforcement action under a scenario such as this one, the highest
enforcement priority would not be actions against consumers.
THE Rx DEPOT CASE
The FDA’s interpretation of its enabling legislation and its policies was put to the test in a lawsuit
brought against two businesses, Rx Depot, Inc. and Rx of Canada. The case was filed in United States
District Court for the Northern District of Oklahoma. It was decided on November 6, 2003. The court issued
a temporary restraining order and enjoined the defendants from participating in any way with the dispensing of drugs to Americans by Canadian pharmacies.
The court noted that both Rx Depot, Inc. and Rx of Canada were businesses incorporated in Nevada,
and that both did business in Oklahoma. Rx of Canada’s website, www.rxofcanada.net, was substantially
similar to Rx Depot’s website, www.rxdepot.com. On the Rx Canada website, links to many purported Rx of
Canada store locations were actually links to Rx Depot stores located in Oklahoma and in other states.
Similarly, links to some purported Rx Depot locations on the Rx Depot website actually led to contact information for Rx of Canada stores.
The business plan of Rx Depot was to assist individuals in procuring prescription medications from
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
pharmacies in Canada. Each Rx Depot/Rx of Canada location had one or two employees who accepted
prescriptions from U.S. customers. Customers were also asked to fill out a medical history form and other
forms provided by Rx Depot. Customers could deliver these documents to the stores in person, or could
mail or fax them to the nearest Rx Depot/Rx Canada store.
Once an Rx Depot/Rx Canada customer had submitted the required forms and prescription to the
company, the papers and the customer’s credit card information or a certified check were transmitted to a
cooperating pharmacy in Canada. A Canadian doctor would rewrite the prescription and a Canadian
pharmacy would fill the prescription, shipping the prescription drugs directly to the U.S. customer and
billing the U.S. customer’s credit card.
The company received a 10 to 12 percent commission for each sale they facilitated for the Canadian
pharmacies. The company also received commissions on refill orders, which generally were arranged
directly between customers and the Canadian pharmacies. The company also actively sought other individuals to open affiliate stores by distributing promotional materials that described their business practices
and the potential profits to be made from opening a franchise. The company estimated that an affiliate
would receive an average 9% commission on each sale of Canadian prescription drugs. The net commissions for an affiliate in the first year would be an estimated $141,570, according to the company.
The court evaluated this business plan and noted that the amount of drugs shipped from a Canadian
pharmacy never exceeded a ninety-day supply. The company did not allow Canadian pharmacies to ship
temperature-sensitive drugs. The company did not deal with third party payers. The court concluded,
nonetheless, that because the drugs were not subject to FDA oversight and were not continuously under
the scrutiny of a U.S. manufacturer or authorized distributor, their quality was less predictable than drugs
obtained in the U.S. For instance, the drugs may be contaminated, counterfeit, or contain erratic amounts
of the active ingredient or different excipients. Also, the drugs may be held under uncertain storage conditions, and therefore be outdated or subpotent.
The court was concerned that drugs obtained through Rx Depot frequently were dispensed in greater
quantities than were prescribed by the patient’s physician. Despite the company’s policy not to dispense
more than a ninety-day supply of drug, the court concluded that the company would dispense a quantity
greater than that prescribed without informing the patient to only take the drug the number of days the
physician had prescribed for. American patients could, therefore, take a drug for many days more than
their physicians intended without supervision. The court held that this practice could be dangerous in
instances where drugs have potentially life-threatening side effects with continued use.
The prescription drugs obtained through Rx Depot also did not contain the FDA-approved package
inserts included with certain prescription drugs in the United States. Certain prescription drugs were not
dispensed in FDA-approved unit-of-use packaging, as they would be in the United States, to assure that
they are ingested at designated dosages and are accompanied by approved labeling.
Although the government could point to no evidence that any medication received by an American
patient as a result of using Rx Depot had ever been harmed, the court held that this absence of evidence did
not diminish the legitimate safety concerns of the FDA. It was nevertheless an unregulated commercial
reimportation of U.S. manufactured drugs by someone other than the manufacturer, and this is not approved by the FDA. Agencies that protect the public health are authorized to prevent harm, not just react to
it after it has occurred.
UNDERCOVER PURCHASE BY THE FDA
To illustrate the way in which drugs could be purchased from a Canadian pharmacy through the
company, the FDA made an undercover purchase. That purchase was described by the court in this way:
“In May 2003, FDA made an undercover purchase through Rx Depot. An FDA investigator in Maryland
downloaded the necessary Rx Depot order forms and related paperwork from the Rx Depot website and
filled them out as though he were a patient. The investigator also prepared a prescription for 60 pills, to be
taken twice a day for 30 days, of the FDA-approved drug Serzone, which is used to treat depression. The
prescription allowed one refill. On the Rx Depot form, the investigator ordered a 100-pill package offered on
the Rx Depot website rather than the 60 pills indicated on the prescription.”
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
“On May 10, 2003, a second FDA investigator in Oklahoma took the order forms and prescription to an
Rx Depot store located at 5801 N. May, Suite 101, Oklahoma City, Oklahoma. The investigator provided the
order forms and prescription to the store manager. The Rx Depot manager accepted the paperwork and
faxed or mailed the information to a Canadian pharmacy. The manager did not indicate that ordering a
greater number of pills than the prescription called for would be a problem. In fact, the manager stated that
drugs obtained through Rx Depot usually came in packages of 100 pills.”
“In late May 2003, FDA received a package from Pharmacy North, Inc., in Winnipeg, Manitoba,
Canada. The package contained 99 pills (and was labeled as containing 100) of a foreign-manufactured
version of Serzone, known as APO-Nefazodone. The labeling provided with the APO-Nefazodone did not
direct the patient to take the drug for 30 days or for any other specified period of time.”
“APO-Nefazodone does not have in effect FDA approval of any new drug or abbreviated new drug
applications. It does not have in effect a valid exemption from such approval requirements.”
“In the United States, Serzone is sold in ‘unit-of-use packaging’ designed to ensure, as much as
possible, that the patient receives a designated dose with an FDA-approved patient package insert. The
insert includes important information regarding the drug, such as warnings related to potentially serious side
effects. One potential side effect of Serzone, and generic versions of Serzone such as APO-Nefazodone,
involves increased risk of serious liver damage.”
“The labeling provided by the Canadian pharmacy with the APO-Nefazodone included fewer and far
less descriptive warnings regarding potential side effects than the FDA-approved patient package insert for
Serzone. For example, the Canadian instructions do not specify some of the liver failure symptoms listed on
the Serzone insert, do not mention drugs that should be avoided when taking APO-Nefazodone, and do
not convey the sense of urgency reflected in the Serzone insert. These substandard instructions could
increase the risk of adverse events, including life-threatening liver failure.”
Based on this incident, and on other similar incidents reported in the legal opinion, the court concluded that the issuance of a temporary injunction was appropriate. Although the case may be appealed,
the company is currently forbidden to provide prescription pharmaceuticals to Americans through Canadian pharmacies.
CONCLUSION
With so much conflicting information about the importation of drugs from Canada being provided to
American patients, it is inevitable that patients will seek guidance from their local pharmacist to explain how
international pharmacies work and how the traditional regulatory assurances of quality are absent when
products are provided by international pharmacies. Pharmacists should provide complete and accurate
information to patients, and then let patients decide for themselves whether they want to take the risk inherent in the acquisition of prescription medications from an international pharmacy. If patients make the
informed decision to save money through international pharmacies, it is not a failure of regulation or a
failure of practice if harm occurs due to this informed decision.
UPCOMING TOPICS 2004
Management of Geriatric Patient
Inflammatory Bowel Disease
Parkinson’s Disease
HIV/AIDS
Medication Errors
Cancer Chemotherapy
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
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Please Select the Most Correct Answer
1. For how many years has it been possible 6.Which of the following requirements applies
for American patients to acquire drugs
to FDA product approvals?
from foreign pharmacies, despite
A. Manufacturing location
regulations that forbid this activity?
B. Processing methods
A. Many years
C. The container/closure system
B. Only within the past year
D. All of the above
C. It is not physically possible for a
7.Which Secretary of HHS has found that drug
patient to do this
importation poses no additional risk to the
D. HIPAA regulations prevent this
public’s health & safety?
from ever occurring
A. Tommy Thompson
2. Which of these conditions accurately
B. Donna Shalala
describes the FDA policy on personal
C. Both Thompson & Shalala
drug importation?
D. Neither Thompson nor Shalala
A. It is based on compassion
8.Which of these conditions applies to the
B. It was established when drugs were
personal importation of drugs under
slow to be approved in the U.S.
the FDA policy?
C. Personal importation is now
A. The drugs must be imported in
rarely necessary
large quantities
D. All of the above
B. The drugs must be for treatment of
3. If Americans were to buy all of Canada’s
a serious condition
traditional drug supply, how much of the
C. The drugs must be prescribed by a
American market would that supply?
foreign physician
A. 100%
D. The drugs must be readily available
B. 75%
domestically
C. 50%
9.One of the problems the government noted with
D. Less than 10%
the Rx Depot business plan was that patients
4. A person who has violated the FDCA can
receive more medication than has been
be held criminally liable.
prescribed at one time.
A. True
A. True
B. False
B. False
10.All drugs obtained by Americans through
5. The FDA believes that virtually all drugs
Rx Depot contained the FDA-approved
imported to the U.S. from Canada by or
package insert.
for U.S. consumers violates U.S. law.
A. True
A. True
B. False
B. False
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January 2004 “Dispensing to Americans by Foreign Pharmacies:Legal & Regulatory Issues” Volume 26 Number 1
Contributing Author
David D. Brushwood, RPh, JD
Professor, Healthcare Administration
University of Florida College of Pharmacy
Gainesville, FL
Executive Editor
William J. Feinberg,
BS Pharm, MBA
CE PRN is a publication of W-F Professional Associates, Inc. This program is in
printed format.
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Pharmacists completing this course by January 31, 2007 may receive full credit.
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This lesson furnishes 3.0 hours (0.3 CEUs) of credit.
Program ID #707-000-04-001-H03.