In order to consider dispensing prescription medications in the office, a dermatologist must consider the legal framework of dispensing. In the May “Legal Ease” column, which was the first of a three-part series on dispensing prescription medications, I briefly visited some of the legal considerations to keep in mind when deciding to dispense prescription medications from your office. This month, I’ll give a broader look at the important legal aspects to consider regarding dispensing. Just as physicians are regulated by the state in which they practice, dispensing law is regulated slightly differently in each state.
This article will consider the following:
1. some basics on dispensing
2. some state restrictions on physician dispensing
3. malpractice and dispensing.
An important note: Restrictions on dispensing do not limit giving away medication samples. Many of the restrictions on dispensing apply to physicians who prescribe based on the authority of their medical licenses, so if the physician obtains an actual pharmacy license, the limitations on office prescribing do not apply.
1. Basics of Dispensing
Dispensing prescription medications is restricted by state governments, necessitating a strong system of inventory control and medication security to ensure that illegal activity or sloppy activity that is deemed to be illegal does not occur.
Storing prescription medications presents important considerations of which physicians must be aware. Compliance with FDA and DEA regulations requires having a locked cabinet or drawer. About 50% of physicians store the prescription medications they plan to sell in the same place where they currently keep their samples. If a physician plans on carrying controlled medication (for example, narcotics such as Valium, which many dermatologists give their patients prior to liposuction), such controlled medications must be stored in a double-locked storage area. A locked cabinet behind a locked door satisfies the double-lock requirement for controlled medications.
Accurately tracking inventory prevents legal problems. Inventory gaps, missing records and loose control can lead state or federal regulating agencies to impose fines and/or medical license sanctions, suspension or revocation. High-volume physician dispensing can be a red flag to Medicare and Medicaid, and prompt audits to investigate overcharging for prescription drugs.
Any system of dispensing also must ensure that physician self-referrals are within the law. Curbs on self-referral were contained in the Omnibus Budget Reconciliation Act of 1993. This law, commonly referred to as Stark II, applies to physician dispensing of outpatient prescription drugs that are reimbursable by Medicare or Medicaid. Stark II, however, includes an exception for the provision of in-office ancillary services, including physician dispensing of outpatient prescription drugs, provided that the physician meets the requirements of the exception.
Stark law, which prohibits self-referrals, grants a safe harbor if physicians are deemed to be doing the work themselves, and the latest changes of Stark have certain exceptions for group practices.
In most states, complying with prescription requirements is not arduous. Many of the states that allow physician dispensing for profit have regulations relating to licensure, storage, labeling, record-keeping and the degree of supervision required by the physician over support personnel who assist in the non-judgmental tasks associated with physician dispensing, such as retrieving medication bottles and affixing labels.
In North Carolina, physicians who dispense drugs for a fee or other charge (dispensing physicians) must annually register with the North Carolina Board of Pharmacy (NCGS 90-85.21[b]) and pay a fee of $75. This means that physicians who are dispensing only samples and not charging for them do not need to register with the North Carolina Pharmacy Board.
2. States Restricting Office Dispensing
Among the states, five major types of regulatory requirements exist to govern dispensing by physicians. These include requirements that:
1. permit dispensing only in limited situations
2. enable state agencies to identify dispensing physicians
3. limit profits on drugs dispensed by physicians
4. protect freedom of choice for consumers
5. impose procedural controls such as labeling and record-keeping.
While the Federal Trade Commission considers state restriction against physician dispensing as an illegal restraint of trade,1 six states — Massachusetts, Montana, New Hampshire, New Jersey, New York, and Texas — have important limitations on physician office dispensing. Utah bans physicians’ dispensing altogether. New Jersey (see Table 1) and New York (see Table 2) limit the supply that can be dispensed to 1 week and 72 hours, respectively; however, in New Jersey there are no restriction on topical medications. In Texas, doctors cannot dispense if a pharmacy is located within 35 miles. Other states drastically limit the mark-up of medication prices.
3. Malpractice and Physician Office Dispensing
The impact of dispensing on malpractice insurance premium is uncertain. Physicians’ medical licenses mandate that they may dispense medication, and they frequently pass out drug samples already. Dermatologists can read dermatopathology slides up to 10% of the time in many states and without incurring increased malpractice expenses. If dispensing is a large part of practice revenue or is done through a separate entity that is run by a physician but is licensed as a pharmacy, it is possible that malpractice insurance does not cover such activities. Before one starts dispensing, it is probably best to contact your malpractice insurance carrier.
Next month, in part three of this three-part series on physician dispensing of prescription medications, I will highlight dispensing in California, the most populous state in the Union, which often sets the pattern that other states follow.
In order to consider dispensing prescription medications in the office, a dermatologist must consider the legal framework of dispensing. In the May “Legal Ease” column, which was the first of a three-part series on dispensing prescription medications, I briefly visited some of the legal considerations to keep in mind when deciding to dispense prescription medications from your office. This month, I’ll give a broader look at the important legal aspects to consider regarding dispensing. Just as physicians are regulated by the state in which they practice, dispensing law is regulated slightly differently in each state.
This article will consider the following:
1. some basics on dispensing
2. some state restrictions on physician dispensing
3. malpractice and dispensing.
An important note: Restrictions on dispensing do not limit giving away medication samples. Many of the restrictions on dispensing apply to physicians who prescribe based on the authority of their medical licenses, so if the physician obtains an actual pharmacy license, the limitations on office prescribing do not apply.
1. Basics of Dispensing
Dispensing prescription medications is restricted by state governments, necessitating a strong system of inventory control and medication security to ensure that illegal activity or sloppy activity that is deemed to be illegal does not occur.
Storing prescription medications presents important considerations of which physicians must be aware. Compliance with FDA and DEA regulations requires having a locked cabinet or drawer. About 50% of physicians store the prescription medications they plan to sell in the same place where they currently keep their samples. If a physician plans on carrying controlled medication (for example, narcotics such as Valium, which many dermatologists give their patients prior to liposuction), such controlled medications must be stored in a double-locked storage area. A locked cabinet behind a locked door satisfies the double-lock requirement for controlled medications.
Accurately tracking inventory prevents legal problems. Inventory gaps, missing records and loose control can lead state or federal regulating agencies to impose fines and/or medical license sanctions, suspension or revocation. High-volume physician dispensing can be a red flag to Medicare and Medicaid, and prompt audits to investigate overcharging for prescription drugs.
Any system of dispensing also must ensure that physician self-referrals are within the law. Curbs on self-referral were contained in the Omnibus Budget Reconciliation Act of 1993. This law, commonly referred to as Stark II, applies to physician dispensing of outpatient prescription drugs that are reimbursable by Medicare or Medicaid. Stark II, however, includes an exception for the provision of in-office ancillary services, including physician dispensing of outpatient prescription drugs, provided that the physician meets the requirements of the exception.
Stark law, which prohibits self-referrals, grants a safe harbor if physicians are deemed to be doing the work themselves, and the latest changes of Stark have certain exceptions for group practices.
In most states, complying with prescription requirements is not arduous. Many of the states that allow physician dispensing for profit have regulations relating to licensure, storage, labeling, record-keeping and the degree of supervision required by the physician over support personnel who assist in the non-judgmental tasks associated with physician dispensing, such as retrieving medication bottles and affixing labels.
In North Carolina, physicians who dispense drugs for a fee or other charge (dispensing physicians) must annually register with the North Carolina Board of Pharmacy (NCGS 90-85.21[b]) and pay a fee of $75. This means that physicians who are dispensing only samples and not charging for them do not need to register with the North Carolina Pharmacy Board.
2. States Restricting Office Dispensing
Among the states, five major types of regulatory requirements exist to govern dispensing by physicians. These include requirements that:
1. permit dispensing only in limited situations
2. enable state agencies to identify dispensing physicians
3. limit profits on drugs dispensed by physicians
4. protect freedom of choice for consumers
5. impose procedural controls such as labeling and record-keeping.
While the Federal Trade Commission considers state restriction against physician dispensing as an illegal restraint of trade,1 six states — Massachusetts, Montana, New Hampshire, New Jersey, New York, and Texas — have important limitations on physician office dispensing. Utah bans physicians’ dispensing altogether. New Jersey (see Table 1) and New York (see Table 2) limit the supply that can be dispensed to 1 week and 72 hours, respectively; however, in New Jersey there are no restriction on topical medications. In Texas, doctors cannot dispense if a pharmacy is located within 35 miles. Other states drastically limit the mark-up of medication prices.
3. Malpractice and Physician Office Dispensing
The impact of dispensing on malpractice insurance premium is uncertain. Physicians’ medical licenses mandate that they may dispense medication, and they frequently pass out drug samples already. Dermatologists can read dermatopathology slides up to 10% of the time in many states and without incurring increased malpractice expenses. If dispensing is a large part of practice revenue or is done through a separate entity that is run by a physician but is licensed as a pharmacy, it is possible that malpractice insurance does not cover such activities. Before one starts dispensing, it is probably best to contact your malpractice insurance carrier.
Next month, in part three of this three-part series on physician dispensing of prescription medications, I will highlight dispensing in California, the most populous state in the Union, which often sets the pattern that other states follow.
In order to consider dispensing prescription medications in the office, a dermatologist must consider the legal framework of dispensing. In the May “Legal Ease” column, which was the first of a three-part series on dispensing prescription medications, I briefly visited some of the legal considerations to keep in mind when deciding to dispense prescription medications from your office. This month, I’ll give a broader look at the important legal aspects to consider regarding dispensing. Just as physicians are regulated by the state in which they practice, dispensing law is regulated slightly differently in each state.
This article will consider the following:
1. some basics on dispensing
2. some state restrictions on physician dispensing
3. malpractice and dispensing.
An important note: Restrictions on dispensing do not limit giving away medication samples. Many of the restrictions on dispensing apply to physicians who prescribe based on the authority of their medical licenses, so if the physician obtains an actual pharmacy license, the limitations on office prescribing do not apply.
1. Basics of Dispensing
Dispensing prescription medications is restricted by state governments, necessitating a strong system of inventory control and medication security to ensure that illegal activity or sloppy activity that is deemed to be illegal does not occur.
Storing prescription medications presents important considerations of which physicians must be aware. Compliance with FDA and DEA regulations requires having a locked cabinet or drawer. About 50% of physicians store the prescription medications they plan to sell in the same place where they currently keep their samples. If a physician plans on carrying controlled medication (for example, narcotics such as Valium, which many dermatologists give their patients prior to liposuction), such controlled medications must be stored in a double-locked storage area. A locked cabinet behind a locked door satisfies the double-lock requirement for controlled medications.
Accurately tracking inventory prevents legal problems. Inventory gaps, missing records and loose control can lead state or federal regulating agencies to impose fines and/or medical license sanctions, suspension or revocation. High-volume physician dispensing can be a red flag to Medicare and Medicaid, and prompt audits to investigate overcharging for prescription drugs.
Any system of dispensing also must ensure that physician self-referrals are within the law. Curbs on self-referral were contained in the Omnibus Budget Reconciliation Act of 1993. This law, commonly referred to as Stark II, applies to physician dispensing of outpatient prescription drugs that are reimbursable by Medicare or Medicaid. Stark II, however, includes an exception for the provision of in-office ancillary services, including physician dispensing of outpatient prescription drugs, provided that the physician meets the requirements of the exception.
Stark law, which prohibits self-referrals, grants a safe harbor if physicians are deemed to be doing the work themselves, and the latest changes of Stark have certain exceptions for group practices.
In most states, complying with prescription requirements is not arduous. Many of the states that allow physician dispensing for profit have regulations relating to licensure, storage, labeling, record-keeping and the degree of supervision required by the physician over support personnel who assist in the non-judgmental tasks associated with physician dispensing, such as retrieving medication bottles and affixing labels.
In North Carolina, physicians who dispense drugs for a fee or other charge (dispensing physicians) must annually register with the North Carolina Board of Pharmacy (NCGS 90-85.21[b]) and pay a fee of $75. This means that physicians who are dispensing only samples and not charging for them do not need to register with the North Carolina Pharmacy Board.
2. States Restricting Office Dispensing
Among the states, five major types of regulatory requirements exist to govern dispensing by physicians. These include requirements that:
1. permit dispensing only in limited situations
2. enable state agencies to identify dispensing physicians
3. limit profits on drugs dispensed by physicians
4. protect freedom of choice for consumers
5. impose procedural controls such as labeling and record-keeping.
While the Federal Trade Commission considers state restriction against physician dispensing as an illegal restraint of trade,1 six states — Massachusetts, Montana, New Hampshire, New Jersey, New York, and Texas — have important limitations on physician office dispensing. Utah bans physicians’ dispensing altogether. New Jersey (see Table 1) and New York (see Table 2) limit the supply that can be dispensed to 1 week and 72 hours, respectively; however, in New Jersey there are no restriction on topical medications. In Texas, doctors cannot dispense if a pharmacy is located within 35 miles. Other states drastically limit the mark-up of medication prices.
3. Malpractice and Physician Office Dispensing
The impact of dispensing on malpractice insurance premium is uncertain. Physicians’ medical licenses mandate that they may dispense medication, and they frequently pass out drug samples already. Dermatologists can read dermatopathology slides up to 10% of the time in many states and without incurring increased malpractice expenses. If dispensing is a large part of practice revenue or is done through a separate entity that is run by a physician but is licensed as a pharmacy, it is possible that malpractice insurance does not cover such activities. Before one starts dispensing, it is probably best to contact your malpractice insurance carrier.
Next month, in part three of this three-part series on physician dispensing of prescription medications, I will highlight dispensing in California, the most populous state in the Union, which often sets the pattern that other states follow.
