Thursday, October 02, 2014

SC Administrative Law Court Decisions

CAPTION:
South Carolina Department of Labor, Licensing and Regulation

AGENCY:
South Carolina Department of Labor, Licensing and Regulation

PARTIES:
Petitioner:
South Carolina Department of Labor, Licensing and Regulation, Board of Pharmacy

In Re:
Proposed Regulation of the Board of Pharmacy, Document No. 1911
 
DOCKET NUMBER:
95-ALJ-11-0708-RH

APPEARANCES:
n/a
 

ORDERS:

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,

and Regulation

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 permit.

AGENCY POSITION

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 statutes.

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 setting.

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 patients.

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 parameters.

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 requirements.

FINDINGS AND CONCLUSIONS

Based upon the statements, testimony, exhibits, written comments, and applicable law, I find and conclude the following:

  1. 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).
  2. 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.
  3. The Notice of Drafting of the proposed regulation was published in the State Register on October 27, 1995.
  4. 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 regulation.
  5. 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.
  6. 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.


  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. The Board substantially complied with all notice and procedural requirements of the APA and Rules of the ALJD.
  12. 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).
  13. Oral testimony, exhibits, and written comments were received by the Court from the agency and interested persons at the January 4, 1996 hearing.
  14. 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.
  15. 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).
  16. 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).
  17. 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.
  18. 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.
  19. 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.
  20. 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).
  21. 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.
  22. 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 practitioner.
  23. It is not the Board's intention to affect the ability of a practitioner to dispense drug samples supplied by manufacturers' representatives.
  24. It is not the Board's' intention to attempt to restrict practitioners from administering medications in the regular course of patient treatment.
  25. 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.
  26. 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.
  27. 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.




RECOMMENDATION

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 regulation.

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 following:

For purposes of Chapter 43, Title 40, and the rules and regulations contained under this chapter,
(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 research subject.
(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 treatment.
(3) This definition shall not affect the authority of a physician, dentist, podiatrist, or veterinarian to dispense complimentary drug samples provided by manufacturers' representatives.

ORDER

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