Board of Pharmacy Authority Over an Out-of-State Pharmacy

ISSUE OF THE CASE

When a mail order pharmacy is subject to sanctions by a board of pharmacy in a different state, may the board of pharmacy in another state to which the mail order pharmacy distributes prescription medications apply sanctions?

FACTS OF THE CASE

A mail order pharmacy in an upper Midwestern state distributed prescription medications, some of which were controlled substances, to patients in a western state but failed to comply with the legal expectation that those transactions be reported to the western state’s prescription drug monitoring program. When challenged about this shortcoming, the pharmacy entered into a stipulation and final order with authorities in the western state, admitting that it had failed to properly comply with the reporting expectation regarding the distribution of controlled substances to patients, as required by local law.

Learning of this transgression, the board of pharmacy in a southern state issued a list of charges against the mail order pharmacy, which held a permit to distribute prescription medication to patients in that southern jurisdiction. Following a hearing on the matter, the board imposed a fine of $2000 and placed the state-issued pharmacy permits held by the mail order pharmacy company on probationary status for 1 year.

The out-of-state mail order pharmacy contested the authority of the state board of pharmacy to apply those sanctions, filing an action in state court seeking to have a judge review the administrative decision of the board and have the state agency’s ruling overturned. Attorneys representing the pharmacy filed a motion asking the court to grant summary judgment in its favor, in essence arguing that the facts were very clear and no trial was needed—the judge should decide this case. The attorneys for the board responded by filing their own motion for a summary judgment. The trial court granted the motion made on behalf of the board of pharmacy, upholding the ruling of the agency. In response, the pharmacy pursued an appeal with the state appellate court.

THE COURT’S RULING

The appellate court upheld the authority of the board of pharmacy to impose the sanctions on the out-of-state pharmacy.

THE REASONING

The pharmacy advanced 3 arguments on appeal: (1) the board lacked authority to discipline a nonresident mail order pharmacy, (2) it was not subject to discipline by the state because it did not operate within its borders, and (3) the sanctions were based on violations elsewhere, not in this state.

On the first point, the court pointed out that the pharmacy practice act had a specific provision stating that a mail order pharmacy located elsewhere, but serving state residents, needed a permit issued by the board. The permit issued to an out-of-state mail order pharmacy is identical to that issued to an in-state pharmacy. The plain language of the statute required a permit in order for a nonresident mail order pharmacy to be “qualified and authorized to transact such business” in the state.

The second point was handled when the appellate court pointed out that the relevant legislative statutes and board administrative regulations “contain specific provisions regarding mail order pharmacies that express no intent to exempt mail order pharmacies from compliance…” with the statutes and regulations applicable to all pharmacies. The court stated that the fact that the pharmacy is located out of state “does not negate the fact that it conducts pharmacy transactions in the state, and there is no indication in the statute that the legislature intended to leave the citizens of our state unprotected from violations committed by nonresident pharmacies.”

On the third point, the pharmacy practice act authorizes the board to impose discipline for “violation of the laws regulating the sale or dispensing of narcotics…” The court pointed out that attorneys representing the pharmacy had failed to demonstrate that the statutory phrase “the laws regulating the sale or dispensing of narcotics” plainly applied only to the law of this state. In fact, the court emphasized that “such an interpretation would render the statutory provision largely ineffectual because it would recognize violations of our state narcotics laws but not violations of federal law.”

The appeals court affirmed the trial court’s summary judgment.

Dr. Fink is professor of pharmacy law and policy and the Kentucky Pharmacists Association Endowed Professor of Leadership at the University of Kentucky College of Pharmacy, Lexington.