PUBLIC HEARING REPORT OF THE ADMINISTRATIVE LAW JUDGE
This matter comes before me pursuant to S.C. Code Ann. § 1-23-111 (Supp. 1995), for the
purposes of conducting a public hearing regarding the promulgation of a proposed regulation and
determining the need and reasonableness of the proposed regulation. The proposed regulation is
intended to provide a definition for the term "his own," as used in S.C. Code Ann. §§ 40-43-100
and 40-43-430 (Supp. 1995), relating to exemptions for licensed physicians, dentists, podiatrists,
and veterinarians (hereinafter collectively referred to as "practitioners") who dispense their own
medicines. The public hearing was conducted on January 4, 1996, at the Administrative Law
Judge Division, in Columbia, South Carolina, and was attended by agency representatives and
members of the public. The agency and interested persons presented testimony and written
materials relating to the proposed regulation, all of which were incorporated into the record of the
hearing. In addition, the Court allowed written comments, filed with the Court no later than
January 18, 1996, to also be incorporated into the hearing record.
The following persons participated in the public hearing:
Joseph L. Mullinax, representing S. C. Board of Pharmacy
Jayne Gayman, representing S. C. Society of Hospital Pharmacists
Bobby Bradham, representing Board of Pharmacy
C. E. Reeder, Ph.D., representing USC College of Pharmacy
C. Wayne Weart, Pharm.D., representing Medical University of South Carolina
Pamela W. Tribble, representing SCPLA
Charles Turner, representing Board of Pharmacy
Sharon Dantzler, Attorney, representing South Carolina Department of Labor, Licensing,
Ron Teichman, M.D., M.P.H., representing Worksite Partners/Lowcountry Health System
Coleman Legerton, Attorney, representing Worksite Partners/Lowcountry Health System
Mary Rau-Foster, Attorney, representing Dialysis Clinics, Inc. (of S.C.)
Steve Williams, Attorney, representing South Carolina Medical Association
Nelson Lacy, representing BMA of S.C., Inc.
Dene E. McCain, RN, representing Health Systems Management, Inc.
David B. Summer, Jr., Attorney, representing Doctors Care, P.A.
Anne Q. DuRant, representing Kidney Centers
Sherry Medford, representing Southpoint Business Service
Sara S. Rogers, Attorney, representing S. C. Academy of Family Physicians
Audrey B. Rhodes, M.D., representing S. C. Academy of Family Physicians
S.C. Code Ann. § 40-43-20 (1986) provides that the Board of Pharmacy may adopt regulations
needed for the proper administration and enforcement of Chapter 43, Title 40, so long as the
regulations do not conflict with the provisions of the chapter and are in compliance with the
Administrative Procedures Act.
PURPOSE OF THE PROPOSED REGULATION
The proposed regulation is intended to define and clarify the term "his own medicines" as used in
Chapter 43, Title 40 of the Code, The Pharmacy Practice Act ("hereinafter referred to as the
"Pharmacy Act"), which provides:
"His own medicines", referred to in Section 40-43-100 of the South Carolina Pharmacy
Practice Act, means medicines that are the personal property of a licensed individual
physician, dentist, podiatrist or veterinarian. This exemption to allow such practitioners to
dispense their own medicines cannot be delegated or transferred.
The Pharmacy Act regulates the dispensing of prescription medicines. S.C. Code Ann. §
40-43-100 (Supp. 1995) sets forth which persons are allowed to fill prescriptions:
It is unlawful for the permit holder of any drug outlet to allow any person not qualified in
accordance with the provisions of this chapter to dispense prescriptions of licensed
practitioners authorized to prescribe, except under the personal supervision of a licensed
pharmacist. Nothing in this chapter may be construed as intending to hinder or
prohibit any physician, dentist, podiatrist, or veterinarian lawfully engaged in the
practice of his profession anywhere in this State from dispensing his own medicines.
Physicians who are in charge or who directly supervise the operation of emergency rooms
shall dispense legend drugs in order to meet the immediate needs of the patient. The
amount dispensed shall not exceed an amount equal to a seventy-two hour supply. Records
of drugs dispensed shall be maintained. (emphasis added).
S.C. Code Ann. § 40-43-430 (1986) sets forth, inter alia:
Nothing in §§ 40-43-360 to 40-43-460 shall be construed as preventing any duly licensed
physician, dentist, podiatrist or veterinarian from dispensing his owndrugs in the regular
course of his professional practice.... (emphasis added).
S.C. Code Ann. § 40-43-360 (Supp. 1995) requires all drug outlets which sell, distribute, or
dispense legend drugs in this State to obtain a drug outlet permit. Practitioners dispensing drugs
in the treatment of patients in the course of practice or research and pharmacists are not
considered drug outlets. The distribution of complimentary drug samples by manufacturers'
representatives to practitioners and licensed pharmacists likewise does not require a drug outlet
In its Statement of Need and Reasonableness filed prior to the hearing, the Board of Pharmacy,
Department of Labor, Licensing and Regulation (hereinafter referred to as "the Board"), set forth
its reasons for promulgating the proposed regulation. The Board stresses that in the area of drug
therapy, there should be a separation of professional responsibilities. While physicians necessarily
provide diagnosis and prescription services, pharmacists should actually dispense medications to
assure that a double check exists to protect patients from inaccurate or inconsistent treatment.
The Board cites as reasons in support of its proposed regulation, the pharmacist's use of computer
technology, familiarity with individual patient's drug profile and
allergy history, knowledge of the results and side effects of various drug interactions, training in
patient counseling, and access to a vast inventory of medications.
The Board indicates that the primary purpose of the proposed regulation is to prevent large
corporately managed medical practices from dispensing drugs to their patients without having the
prescriptions filled by a licensed pharmacist. Without the adoption of the proposed regulation,
and with the maintenance of the status quo, the Board perceives the following scenario (as
stated,inter alia, in its January 11, 1996 letter to the Court): "This would produce two classes of
pharmacies. One operated by pharmacists and the other, because it is located within the environs
of a corporate medical practice, would be operated without a pharmacist." While some
opponents argue that the distinction between private and corporate medical practitioners is
arbitrary and unfair, the Board takes the position that the enabling statutes make that distinction,
not the proposed regulation. The regulation merely clarifies the intent and application of the
The Board asserts that the proposed regulation would have no impact upon the practice of
physicians distributing drug samples to patients. The Board considers sample medications
supplied directly to physicians by pharmaceutical representatives as the personal property of the
physician who receives and signs for the drug samples.
Throughout the hearing, it was apparent that some persons used the terms "administer" and
"dispense" interchangeably, while others applied the terms in different contexts. Neither word is
defined by statute or regulation. The Board interprets the terms as follows (as stated, inter alia,
in its January 11, 1996 letter to the Court): "Dispensing consists of supplying a patient with 'take
home' supplies of medicine. Administering is the direct application of a drug to the body of a
patient by injection, inhalation, ingestion, or any other means." Based upon that interpretation,
the Board does not intend to affect a practitioner's ability to administer medications in an office
COMMENTS BY INTERESTED PERSONS
Several persons testified in favor of the proposed regulation. Many offered statements that
support the Board's contention that the proposed regulation is reasonable and needed. Those and
others offered their opinions of the expected impact upon drug therapy in South Carolina if the
regulation is ultimately adopted. Those testifying in favor of the proposed regulation emphasized
the importance of having licensed pharmacists, who are professionals specifically trained in the
fields of drug interaction and therapy, dispense medications. They also expressed concern with a
drug therapy system which would allow a person with diagnosis and prescriptive authority to also
possess unchecked dispensing authority.
Opposition to the proposed regulation came from three general constituencies of the medical
community: dialysis centers, family physicians, and corporately managed health providers.
Dialysis facilities provide in-center outpatient dialysis treatment to renal failure patients as
prescribed by a nephrologist. Dialysis patients receive multiple daily medications at the centers.
The dialysis centers fear that adoption of the proposed regulation will require that they obtain and
maintain a drug outlet license to continue their current practice, even though adequate
governmental and internal regulation and oversight is already in place.
Private family physicians are concerned that the adoption of the proposed regulation would
effectively prevent any physician from providing medications to their patients in an office setting.
Most private physicians, whether in a single or group practice, operate their practice as some form
of corporate entity. Therefore, all assets of the practice, including medications (whether
purchased or received as samples) are also the legal property of the corporate entity rather than
the individual practitioner.
In her testimony at the public hearing and in her letter to the Court dated January 11, 1996, Dr.
Audrey Rhodes, President of the South Carolina Chapter, American Academy of Family
Physicians, pointed out that the Pharmacy Act does not include definitions for "administer" and
"dispense," but the Narcotics and Controlled Substances Act, at S.C. Code Ann. § 44-53-110,
does. Under her cumulative interpretation of those provisions and the proposed regulation, she
believes that physicians would be prohibited from providing take-home sample medications to
Larger, more corporate-oriented medical practices also assert that the "personal property
ownership" requirement for physicians to dispense medications in the regular course of patient
treatment is an unlawful restriction upon the practice of medicine, citing S.C. Code Ann.
§40-43-360 (exempting physicians dispensing drugs in the treatment of their patients from the
requirement of establishing a licensed drug outlet). Representatives for Worksite Partners and
Doctor's Care, P.A., corporate entities which employ physicians, complain that to make a
distinction between self-employed and corporately-employed physicians is arbitrary and capricious
and in violation of equal protection. They also question the authority of the Board to promulgate
any regulation which infringes upon the rights of a physician to practice medicine and/or are in
conflict with the Medical Practices Act which sets forth physicians' legal authority and practice
Also raised as issues in opposition to the proposed regulation are: whether the Board has the
authority to promulgate a regulation which purportedly alters or amends a statute; and whether
the proposed regulation was promulgated pursuant to applicable procedural and notice
FINDINGS AND CONCLUSIONS
Based upon the statements, testimony, exhibits, written comments, and applicable law, I find and
conclude the following:
- The State Board of Pharmacy, a component of the South Carolina Department of Labor,
Licensing and Regulation, is authorized to promulgate regulations for the proper
administration and enforcement of the Pharmacy Act, under the auspices of S.C. Code Ann. §
40-43-20 (1986) and pursuant to § 1-23-10, et seq. (1986 & Supp. 1995).
- By Document No. 1911, the Board seeks to amend Chapter 99 of the S.C. Code Regs.,
relating to the authority to dispense prescription drugs.
- The Notice of Drafting of the proposed regulation was published in the State Register on
October 27, 1995.
- The Board filed an Agency Transmittal Form with the Administrative Law Judge Division on
November 7, 1995, for the purpose of having a public hearing conducted on the proposed
- The Notice of Proposed Regulation was published in the State Register on November 24,
1995, which included a synopsis of the proposed regulation and the Notice of Opportunity for
Public Comment and Hearing.
- The synopsis of the proposed regulation appearing in the State Register on November 24,
1995, states, inter alia:The Board proposes to amend Sections 40-43-100 and 40-43-360....
The regulation shall be amended by defining his own as those medicines that are the personal
property of a licensed physician, dentist, podiatrist, or veterinarian.
- Interested persons opposed to the proposed regulation assert that an agency's attempt to
amend a statute by the adoption of a regulation is an ultra vires act. While the synopsis may
be somewhat confusing, it is readily apparent from reading the synopsis and the text of the
proposed regulation itself, that the Board seeks to merely define a statutory term through
adoption of a regulation, not amend the statute.
- Pursuant to S.C. Code Ann. § 1-23-111 (Supp. 1995) and ALJD Rule 45, the promulgating
agency is required to file with the Court its Statement of Need and Reasonableness and other
documents at least ten (10) days prior to the public hearing.
- The Board filed its Statement of Need and Reasonableness with the Court on December 28,
1995, less than ten (10) days prior to the hearing.
- Pursuant to ALJD Rule 46, the administrative law judge is authorized to do all things
necessary and proper to ensure the fairness of the proceedings and to promote justice and
economy. Accordingly, since interested persons were allowed to testify at the hearing and
allowed to file written comments up to fourteen (14) days subsequent to the hearing, I find that
no person was prejudiced by the late agency filing and that any defects in notice or procedure
were inconsequential and harmless.
- The Board substantially complied with all notice and procedural requirements of the APA and
Rules of the ALJD.
- A public hearing to allow agency presentation and public comment was conducted before the
Hon. Stephen P. Bates at the Administrative Law Judge Division in Columbia, South Carolina,
on January 4, 1996, pursuant to S.C. Code Ann. § 1-23-111 (Supp. 1995).
- Oral testimony, exhibits, and written comments were received by the Court from the agency
and interested persons at the January 4, 1996 hearing.
- As provided at the January 4, 1996 hearing, subsequent written comments and responses were
received by the Court no later than January 18, 1996, at which time the record of the hearing
was officially closed, with all materials received by the Court incorporated into the record.
- An agency is implicitly authorized to interpret, clarify and explain statutes by prescribing
regulations "to fill in the details" for the complete and consistent operation and enforcement of
the law within its expressed general purpose. A regulation is valid as long as it is reasonably
related to the purpose of the enabling legislation. Young v. SCDHPT, 287 S.C. 108, 336
S.E.2d 879 (Ct. App. 1985).
- A regulation which is beyond the authorization of the agency's enabling legislation or which
materially alters or adds to the law is invalid. Society of Professional Journalists v. Sexton,
283 S.C. 563, 324 S.E.2d 313 (1984); Banks v. Batesburg Hauling Co., 202 S.C. 273, 24
S.E.2d 496 (1943).
- Since the term "his own medicines" as used in the Pharmacy Act has been the subject of
conflicting interpretation, a clear and precise definition is needed to facilitate the complete and
consistent operation and enforcement of the code sections using that language.
- The question of whether a regulation is reasonable should focus on whether it has a rational
basis or is rationally related to the end sought to be achieved. Hunter & Walden Co. v. S.C.
State Licensing Board for Contractors, 272 S.C 211, 251 S.E.2d 186 (1978). Given the
Pharmacy Board's authority to promulgate regulations to provide detail and clarity to its
legislative purpose, a regulation to define the statutory term "his own medicines," as used in
S.C. Code Ann. § 40-43-100, is reasonable.
- The text of the proposed regulation does not provide the desired detail and clarity and does not
provide uniformity of construction or application. Merely defining "his own medicines" as
"those medicines that are the personal property of" does not sufficiently resolve the conflict in
interpretation. The effect is, rather, to further confuse the issue, not clarify it.
- It is in the public's best interest to have licensed pharmacists, those professionals specifically
trained in the fields of drug interaction and therapy, primarily responsible for dispensing
medications; however, it is an unlawful restriction upon the practice of medicine to prohibit
practitioners from dispensing medications in the regular course of patient treatment. See S.C.
Code Ann. §§ 40-43-100, 40-43-360, and 40-43-430 (1986 & Supp. 1995).
- Statutory change, rather than regulatory clarification, is necessary to prohibit or hinder a
practitioner from dispensing his own medicines in the regular course of patient treatment, as
such a change would materially alter or add to the law. See Society of Professional Journalists
v. Sexton, supra; Banks v. Batesburg Hauling Co., supra.
- Most private physicians, whether in a single or group practice, operate their practice as some
form of corporate entity, with all assets of the practice, including medications (complimentary
or purchased) being the legal property of the corporate entity rather than the individual
- It is not the Board's intention to affect the ability of a practitioner to dispense drug samples
supplied by manufacturers' representatives.
- It is not the Board's' intention to attempt to restrict practitioners from administering
medications in the regular course of patient treatment.
- The Pharmacy Act does not include definitions for "administer" or "dispense." Those terms
are defined in the Narcotics and Controlled Substances Act, at S.C. Code Ann. § 44-53-110.
- Pursuant to S.C. Code Ann. § 1-23-111(B) (Supp. 1995), this Court must make findings as to
the need and reasonableness of the proposed regulation and may include modifications to the
proposed regulation in the absence of either.
- Pursuant to S.C. Code Ann. § 1-23-111(C) (Supp. 1995), if the presiding administrative law
judge determines that the need for or reasonableness of the proposed regulation has not been
established, the agency must elect to:
(a) follow the suggested modifications of the
administrative law judge and submit the modified proposal for legislative approval;
(b) not modify the proposed regulation but submit the proposed regulation as originally
drafted for legislative approval;
(c) withdraw the proposed regulation.
I find that the Board is within its authority to promulgate this regulation and that the purpose of
the proposed regulation is reasonable and needed; however, I also conclude that the actual
language of the proposed regulation does not adequately interpret, clarify or explain the statutory
language in issue. Therefore, it is recommended that the proposed regulation should be modified
by the Board prior to submission to the General Assembly. Modification of the text of the
proposed regulation may not quell all opposition to the adoption of the proposed regulation, but it
should at least confine the debate to substantive issues rather than matters of interpretation. The
wisdom of approving the proposed regulation is not a matter for this Court to decide. That issue
is one reserved for consideration by the General Assembly. This Court is concerned only with
ensuring that the meaning and import of the regulatory language is clear enough to provide the
legislature with a rational basis to make its determination.
It is my recommendation that the Board of Pharmacy modify its proposed regulation so as to
more clearly define the term "his own medicines" as used in S.C. Code Ann. § 40-43-100 and
applied throughout the Pharmacy Act. A number of questions were raised during the public
hearing by interested persons concerned about the application of the proposed regulation and its
affect upon their businesses or professional practices. While agency representatives answered
many of those questions, several legitimate issues either could not be adequately addressed or
relied upon assumptions that could not be extracted from an objective reading of the proposed
I also recommend that the proposed regulation be modified to include definitions for the terms
"administer" and "dispense." The definitions found in the Narcotics and Controlled Substances
Act, at S.C. Code Ann. § 44-53-10, with slight alteration, provide sensible descriptions of those
terms for application to the Pharmacy Act.
For the following reasons, I recommend that Document 1911, the proposed regulation proposed
by the Board of Pharmacy, South Carolina Department of Labor, Licensing and Regulation, to
amend Chapter 99 of the S.C. Code Regs., relating to the authority to dispense prescription
drugs, be modified by striking the existing language in its entirety and replacing it with the
For purposes of Chapter 43, Title 40, and the rules and regulations contained under
(A) "Administer" means the direct application of a prescription drug, whether by
injection, inhalation, ingestion, or any other means, to the body of a patient or
(B) "Dispense" means to deliver a prescription drug to an ultimate user by or
pursuant to the lawful order of a physician, dentist, podiatrist, or veterinarian ,
including the prescribing, packaging, labeling, or compounding necessary to prepare
the medicine for such delivery, but does not include the administering of the drug to
the ultimate user.
(C) "His own medicines," and "his own drugs," as used in §§ 40-43-100 and
40-43-430, respectively, mean medicines or drugs that are the lawful property of a
licensed physician, dentist, podiatrist, or veterinarian, or of a partnership or
corporate entity of which the dispensing physician, dentist, podiatrist, or veterinarian
has an ownership interest.
(1) The authority of a licensed physician, dentist, podiatrist, or veterinarian to
dispense his own medicines must not be delegated or transferred.
(2) This definition shall not affect the authority of a physician, dentist, podiatrist, or
veterinarian to dispense a prescription drug which is being legally administered by
that physician, dentist, podiatrist, or veterinarian in the regular course of patient
(3) This definition shall not affect the authority of a physician, dentist, podiatrist, or
veterinarian to dispense complimentary drug samples provided by manufacturers'
IT IS THEREFORE ORDERED that the Board shall consider the findings and
recommendations contained herein and elect a course of action as specified in S.C. Code Ann.
§ 1-23-111(C) (Supp. 1995). It is further ordered, pursuant to S.C. Code Ann. § 1-23-630
(Supp. 1995), that if the Board elects to submit the proposed regulation for legislative approval as
originally drafted, a copy of this Order must also be submitted to the General Assembly.
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE
February ___, 1996
Columbia, South Carolina