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Pharmacy Liability 101


To ensure that your pharmacy is compliant with all relevant regulations, you must acquire a deep understanding of pharmacy law. In addition, factors including pharmacy type and location add to the complexity of fully comprehending pharmacy compliance. This high-level guide to pharmacy law will help you avoid, or respond to, potential lawsuits. Keep in mind that this post is a starting point, and you should always consult with an expert attorney to address your specific needs and requirements.

a lawyer studying pharmacy regulations and compliance in front of pills

Which Organizations Govern Pharmacy Law?

Pharmacy law is governed by various organizations and institutions, depending on location. On a federal level, the Drug Enforcement Administration oversees pharmacies and enforces rules and regulations that they are required to follow to stay compliant.

In California, The California State Board of Pharmacy regulates pharmacy practice, as well as wholesalers or pharmacies that distribute prescription drugs. The purpose of the California State Board of Pharmacy is to promote the health and safety of individuals in that state. It evaluates complaints made against pharmacies or their employees and has the power to apply sanctions, including canceling, suspending, or revoking a pharmacy or pharmacist’s license.

Pharmaceutical Liability

In order to compete with the shrinking reimbursement rate for drugs, pharmacists are spread thin and often have large volumes of prescriptions. Though infrequent, pharmacists make mistakes, and the aftermath can have repercussions with regulatory agencies. Billing errors, prescription errors, and documentation errors could lead to serious legal challenges. If you find yourself on the end of a regulatory investigation, it is absolutely crucial that you contact an attorney to discuss your case.

Types of Conduct that Can Lead to a Pharmacy Investigation Regulatory Enforcement Action

Pharmacies must be extremely careful to avoid various forms of misconduct that can result in severe penalties and lawsuits. The following are the most common types of issues that pharmacies face.

taking a closer look at pharmaceuticals with a magnifying glass

Incorrect Drugs

Dispensing incorrect medication is the most prevalent type of error. This often comes in the form of giving a patient the wrong pills. Examples of incorrect drug distribution include:

  • Giving a patient a prescription with a similar but different name
  • Mixing up prescriptions between patients
  • Misreading a doctor’s written prescription

Incorrect Instructions

Medication labels are required to have specific instructions regarding when a drug can or cannot be taken. For example, pharmacists often print labels dictating whether a patient can take a specific drug while drinking alcohol or if a woman is permitted to take medication while pregnant. Placing incorrect directions on a medication label or failing to provide any instructions in the first place can result in severe consequences. Pharmacists should always be absolutely certain when applying new drug labels on medication.

Incorrect Dosage

Other times, a pharmacist may fill a prescription with the correct drug but provide the wrong dosage. Giving a patient the incorrect dosage can lead to extreme side effects for the patient and can even result in death.

Lack of Patient and Drug Review

One of the core responsibilities as a pharmacist is to ensure that patients are given the correct drugs, dosages, and instructions. It is equally as important that pharmacists check prescriptions for potentially dangerous interactions if combined with other prescribed drugs. Similarly, a pharmacist should be aware of the allergies the patient has revealed and ensure that the prescription is free of anything that may cause a dangerous reaction.

Pharmacists’ Legal Responsibilities

A pharmacist can breach their legal duty to a patient in myriad ways. Pharmacists responsibilities include:

  • Ensuring the quality of medicines supplied to patients is acceptable
  • Ensuring that the medicines prescribed to patients are suitable for them
  • Ensuring that the supply of medicines is within the law
  • Advising patients about medicines, including how to take them, what reactions may occur as a result, and answering patients’ questions about the medicine
  • Supervising the supply chain of certain medicines
  • Advising other healthcare professionals about safe and effective medicines use
  • Respond to patients’ symptoms and advising on medicines for sale in pharmacies
  • Supervise the production and preparation of medicines and assess the quality of medicines before they are supplied to patients from manufacturers

Pharmacists have the vital job of dispensing medicine to patients and must take into account any harmful interactions with other drugs the patient is currently taking. A pharmacist also must consider any allergies that the patient may have. Studies have shown various levels of success for pharmacists filling prescriptions correctly, with some showing between 1.7% – 22% medication error rates.

As there are numerous factors and responsibilities involved, pharmacists are not often held legally liable for a minor mistake. Pharmacists become liable for malpractice when serious errors and harm is proven. Pharmacists are also responsible for ensuring that medicine has been correctly prepared by technicians. However, cases have shown that pharmacists sometimes fail to consistently do this at busy and large pharmacies, leading to an estimated 1.3 million people being injured by medication errors annually in the U.S.

Billing Fraud and Mistakes

It is crucial for a pharmacy to bill accurately and honestly. Small independent pharmacies often find themselves barely able to keep their head above water with the current environment of low drop reimbursement rates. However, it is crucial that pharmacies still do everything they can to ensure that they are billing correctly.  Incorrect billing can lead to fraud investigations by private insurance companies, Medicare, and Medi-Cal. Even if the mistake was innocent, the pharmacy will still have to demonstrate that the mistake was not intentional and will likely have to repay any overpayments received as a result of the mistake. Fraud and overpayment reimbursement investigations must be handled very carefully and strategically. It is important to get a good understanding of what the potential risks and liabilities there are early on in the process to focus on how best to respond. Retaining an experienced attorney who understands how to navigate fraud investigations is crucial.

Audits and Investigations

undergoing an audit due to pharmacy liability claims

Audits and investigations can be initiated by different organizations and each could have different consequences. The Board of Pharmacy could conduct an audit and investigation, and the results of which could lead to an Accusation which may ultimately lead to license discipline and even license termination. Private insurance audits and investigations usually lead to recoupment actions in which the payor seeks repayment of money paid for erroneous billing. If the billing irregularities are sufficiently egregious, the insurance company may refer the matter to the Board of Pharmacy or the federal Department of Justice, or California Department of Justice.

When federal money is involved, such as with Medicare or Tricare, the audit and investigation may be conducted by CMS. Like insurance companies, CMS may seek to recoup incorrectly billed services that were paid by the federal government. The statute of limitations for CMS to seek recoupment is longer than the statute of limitations for private insurance companies, and therefore these types of audits often lead to more costly recoupment findings.

Billing mistakes are not by themselves sufficient to warrant criminal enforcement actions. However, if the pharmacy intentionally misbilled the insurance company or government payor, such as Medicare or Medi-Cal, this could lead to criminal enforcement. Therefore, any audit or investigation should be handled carefully and seriously at an early stage.

Fenton Jurkowitz Law Group represents pharmacies, including retail pharmacies, compounding pharmacies, and long-term care pharmacies, in business and regulatory matters. Our combined decades of experience in the pharmacy industry extends to a wide range of business, regulatory, and strategic challenges. If you have been accused of pharmaceutical malpractice, it is vital that you contact one of our expert attorneys with significant experience in defending pharmaceutical lawsuits. The above information does not construe legal advice.



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