President's Message
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Volume 41 Number 4 July/August 2014 AN OFFICIAL PUBLICATION OF THE AMERICAN SOCIETY FOR PHARMACY LAW President’s Michigan Supreme Court Holds Pharmacy Act Message Requirement to Pass on Generic Drug Cost Savings Only Applies to Transactions that Involve Generic Substitutions State ex rel. Gurganus v. CVS Caremark Corp., 2014 WL 2616577 (Mich. June 11, 2014) Laura Carpenter By Roger Morris and Christopher Dang ASPL President In June, the Michigan Supreme Court held that § 333.17755(2) of the Michigan Don’t Miss Pharmacy Practice and Drug Control Act requires pharmacies to pass on generic drug ASPL’s 25th Developments in cost savings to patients or third party payors only when a pharmacist substitutes a generic in lieu of a prescribed brand-name drug. State ex rel. Gurganus v. CVS Caremark Pharmacy Law Seminar Corp., 2014 WL 2616577 (Mich. June 11, 2014). In Gurganus, the Court reinstated the trial court’s grant of summary disposition in favor of the defendant pharmacies Have you registered yet? This year’s Fall Seminar because the plaintiffs failed to allege that the defendants violated § 333.17755(2). promises to be the best yet because it has been The central issue in Gurganus was the interpretation § 333.17755. Pertinently, expanded to include pharmacy law, regulatory, and § 333.17755(1) provides that when a pharmacist receives a prescription for a brand compliance topics. name product, the pharmacist may, or upon the request of the purchaser shall, dispense I look forward to seeing you between November a lower cost generically equivalent drug if available. § 333.17755(2) requires that “[i] 6 – 9, 2014 in sunny Indian Wells, California (just f a pharmacist dispenses a generically equivalent drug product, the pharmacist shall outside of Palm Springs). ASPL’s Fall Seminar is widely pass on the savings in cost to the purchaser or to the third party payment source...” known as the best, most informative pharmacy law The term “savings in cost” is defined as the “difference between the wholesale cost to educational conference – and our 25th Fall Seminar the pharmacist of the 2 drug products.” promises to follow suit. In addition to learning, you The consolidated plaintiffs brought actions against several defendant pharmacies will also enjoy staying at a beautiful resort, swimming (including CVS, Revco, Kmart, Rite Aid, Perry, Target, Kroger, and Wal-Mart) in in one of 7 pools, spending time at the spa, golfing at Michigan, alleging that the defendants violated § 333.17755(2) by charging prices one of many world-class golf courses, shopping on El for generic drugs that produced a higher profit margin than equivalent brand name Paseo Drive, or dining at top-rated restaurants. drugs and by failing to pass on the cost savings to purchasers whenever they dispensed You can earn 15 hours of continuing pharmacy generic drugs, regardless of whether or not the transaction involved a generic drug education credit and 15 hours of continuing legal substitution. education credit. These will include the annual To establish violations of § 17755(2), the plaintiffs relied on data from a single Legislative and Regulatory Update (by Mary Jo West Virginia Kroger pharmacy where one of the plaintiffs had been employed. The Carden, RPh, JD, Senior Director of Regulatory Affairs data revealed the wholesale costs and sale prices of brand name and generic drugs with the Academy of Managed Care Pharmacy), Case that had been sold in 2008 at that specific West Virginia pharmacy. The plaintiffs Law Update (Bill Stilling, RPh, MS, JD, Parsons argued that since the West Virginia Kroger and the Michigan defendants operate in Behle & Latimer, and Roger Morris, RPh, JD, Quarles substantially the same manner, the court could extrapolate the wholesale costs of each & Brady), and Ethics: A Case-Based Approach (Ken of the defendants based on the West Virginia data. Baker, BS Pharm, JD, Renaud Cook Drury Mesaros, Consequently, although the plaintiffs identified more than 2,000 transactions and Bruce White, DO, JD, Alden March Bioethics involving the various defendants, the plaintiffs did not identify transactions that Institute). involved drug substitutions. Instead, the plaintiffs raised transactions that simply This year ASPL has been fortunate to also have involved generic drug sales. The transactions raised lacked detail with respect to the booked many other highly-respected speakers, all of names of drugs prescribed, the actual generic drug dispensed, their costs, and cost whom are speaking on timely and relevant topics. differentials between brand names and generics. Given the lack of particularity, the These include: trial court granted the defendants’ motion for summary disposition. • Mitigating False Claims Act and Consumer The Court of Appeals reversed the trial court, interpreting § 17755(2) to apply Protection Exposure for Retail Pharmacies. This to all transactions in which a generic drug is dispensed and finding the plaintiffs’ Continued on page 7 Continued on page 7 From the States Federal preemption of Florida drug wholesaler laws under the Drug Quality and Security Act By Martin R. Dix After much congressional haggling and for drug wholesaling. In particular, there pharmacy warehouse if such transfers are as part of a compromise on the federal were certain federal exemptions from the intracompany sales: compounding legislation, the long awaited definition of drug wholesaling which were • is not the wholesale distribution of Federal drug track and tracing bill was enacted brought to life through the miracle of federal prescription drug; in November 2013 as “The Drug Quality preemption, including “intracompany sales” • does not require a Florida prescription and Security Act” (“DQSA”). One of the and “intracompany distribution of any drug drug wholesale distributor permit; and purposes of the law is to standardize the drug between members of an affiliate.” These • does not require prescription drug pedigree process so there is not a different federal exemptions preclude Florida from pedigrees to be provided at this time, pedigree type process as these drugs move regulating these activities as distributions. It While the declaratory statement applies across state lines. In order to standardize the is likely that the DQSA’s preemption will have to chain pharmacies such as Publix, we have process of wholesale drug distribution among a similar impact in other states. also seen Florida hospital systems that had the states, the DQSA preempts in very broad Florida allows affected persons to seek been previously required to obtain a state terms state laws governing drug wholesaling guidance on the interpretation of laws and permit to distribute drugs among the affiliated beginning on its enactment. rules through a declaratory statement process. hospital members avail themselves of the Specifically, Section 585 of the Act provides: In April 2014 the Florida Department federal preemption and begin distributing (b) WHOLESALE DISTRIBUTOR of Business and Professional Regulation drugs through the intracompany sales AND THIRD-PARTY LOGISTICS issued a declaratory statement clarifying exemption. Hospital systems should be PROVIDER STANDARDS.— the application of the exemption for the mindful of the Robinson-Pattman and intracompany sales of pharmaceuticals. (1) IN GENERAL.—Beginning on the contractual “own use” requirements if they Previously, if one retail pharmacy in Florida date of enactment of the Drug Supply engage in intracompany sales of drugs among wanted to send a bottle of prescription Chain Security Act, no State or political hospital pharmacies. Thus, sales of own use medicine to its sister pharmacy down the subdivision of a State may establish or drugs from an institutional pharmacy to street, it had to obtain a type of wholesale drug continue any standards, requirements, another and drugs sales from a community permit, as well as provide pedigree papers for or regulations with respect to wholesale pharmacy to another should be acceptable. the distribution of the drug. There was also prescription drug distributor or third- Additionally, certain of the large drug a question of whether a chain pharmacy had party logistics provider licensure that are wholesalers are taking the position that to provide a drug pedigree when it returned inconsistent with, less stringent than, they no longer need to provide a Florida a drug to its chain pharmacies warehouse. directly related to, or covered by the compliant drug pedigree and only the federal The Florida Department of Business and standards and requirements applicable pedigree is required, due to preemption. Professional Regulation, Division of Drugs, under section 503(e) (as amended by such Likewise, wholesalers are relying on the Devices and Cosmetics (“Department”) Act), in the case of a wholesale distributor, federal provisions exempting pedigree issued the declaratory statement in response or section 584, in the case of a third-party requirements for distributions from an to a request from Publix Super Markets, logistics provider. authorized distributor of record to determine Inc., a southern multi-state grocery store that Florida’s “direct purchase pedigree” is no This preemption of state laws includes chain that operates pharmacies at its grocery longer required in these instances. any state laws “directly related to” the stores. Florida requires wholesale distributors The broad federal preemption likely standards and requirements applicable under of pharmaceuticals to obtain a permit. §§ also applies