Cases

Below are 3 pharmacy law cases I was involved with, to some degree.

Price Fixing

 

The independent pharmacies in Farragutt County were in trouble.  They faced problems with third party reimbursement, being underpriced by the chain pharmacies, as well as the $4 prescription programs.  So 8 of the 10 independent owners got together to discuss the problem.

 

First, they all agreed to join a buying group.  This would allow them to continue getting the same inventory they had been purchasing but now the prices of the drugs would be cheaper.  Strength through numbers.  However, the supplying wholesaler did require them to buy certain rarely used drugs in exchange for the lower prices.

 

Second, the owners decided that they would agree that none of them would raise prices more than 5% over the current monthly national inflation rate.  This would help them remain competitive.  Additionally, the owners decided to limit their free delivery to specific geographic areas in the county so that they competed with the chains but not each other.

 

When a chain pharmacist heard of this, she reported it to her corporate bosses.  They sent secret shoppers to the independents and made phone calls asking about prices.  Ultimately, the chain showed its findings to the county prosecutor as well as a federal attorney.  Both entities investigated and learned about the meeting and the agreements.

 

The 8 independent owners were charged with violations of the Sherman Anti-Trust Act, as well as collusion and conspiracy.

 

The essence of an independent pharmacy is that it is just that: independent.  That the market economy has evolved to favor pharmacy more in the chain setting is no excuse, the court held, for shedding independence in one guise—price fixing—while seeking to maintain it in another.  Price fixing is a per se violation of the Act.  That the independent owners sought to hold prices down was laudable, but even a laudable goal can be a conspiracy.  Similarly, geographic divisions of territory is another per se violation of the Act as it is a conspiracy not to compete.

 

The buying group has long been legitimized by the courts and legislatures, as a means of allowing independents a level playing field against the corporate chains.  Here the courts could not find anything detrimental to the free market economy.

 

Finally, there was an action against the wholesaler.  Forcing the purchase of a product to an unwilling buyer in exchange for lower prices is referred to as a “tying arrangement.”  This is also a per se violation of the Act and the wholesaler, as well as the independent owners for their price fixing, was forced to pay the consequences.

 

Negligence

 

Sam Pharmacist received a prescription from a local physician for Penelope Patient.  Sam checked the dose against the package insert’s dosing instructions and the recommended dose information in Facts And Comparisons.  Both indicated the prescribed dose was above the recommendation for the condition treated by the drug.

 

Sam turned to his fourth year rotation student, Irving Intern, who tried to check his Palm Pilot but his battery was too low.  Irving thought the dose was too high, but thought there might have been a recent article suggesting a new higher dose was safe.  Sam filled the prescription and did not counsel Penelope regarding the dose.

 

Of course, Penelope Patient was injured by the dose.  She missed several days of work and had to see her prescriber three times.  She sued Sam and her doctor.

Of course, her cause of action was negligence.

 

It has been a while, so let us review.  A negligence action is a civil court action.  To be successful, the plaintiff must prove four criteria: duty, breach of duty, damages, and causation.

 

Duty: a duty is an obligation to perform or not perform an act on behalf of another who cannot perform or not perform that act by him or herself.  Filling a prescription is something the uneducated unlicensed public cannot do for themselves.

 

The usual duty of a pharmacist is to correctly fill a prescription.  But over the years, this duty has evolved.  One of the first court holdings was that a pharmacist was trained well enough to determine if a prescription would be dangerous if used as directed.  This is the exact matter before us.

 

Breach of duty: the person who has a duty fails to meet the obligation to perform or not perform on behalf of another.

 

The breach here was pretty much explained two paragraphs above.  Sam had more than reasonable notice that the prescribed dose was dangerous if used as directed.  Were his actions to determine this reasonable?  He checked Facts And Comparisons as well as with his student and the package insert, both of which indicated the dose was too high.  Only Irving thought that the dose might be safe, but he was unable to confirm this.

 

Reasonableness is determined by what the reasonably prudent pharmacist with similar education, skills and experience would have done under similar circumstances.  It is no difficult decision to say that another pharmacist under like circumstances would have checked with the prescriber.  Sam was more than adequately placed on notice that Penelope was in danger.

 

Damages: these are monetary damages that are compensable—in other words, easily determinable.  The missed work and unexpected prescriber visits are prime examples of this.

 

Causation: this is the link between the breach of duty and the damages.  It is usually the hardest element of negligence to prove.  Generally, it is referred to as the “but for” test.  In this case, but for Sam refusing to check the high dose prescribed to Penelope more thoroughly, she would not have suffered the damages for which she seeks redress.

 

What about Irving?  There is no liability.  Like Kentucky, most states are clear in their law that preceptors are responsible for all acts of interns performed in the regular course of their duties, and this was well within the usual and customary regular course of duties.

 

Workplace punishment

 

I have hit on this topic once before but a new situation brings it back into the spotlight and it is worth going over again.  The scenario is actually based on two situations amalgamated into one.

 

Pharmacist Sally, nearing the end of a hectic trying day, was at her counter waiting to offer counseling to a young woman holding an infant.  This woman was talking to another young woman; it was obvious they had known each other in the past and were getting re-acquainted.

 

The first woman held up the infant and said, “You haven’t even seen my check baby.”

 

The second woman responded, “What a cute child!  But what do you mean, ‘check baby’?”

 

The second woman answered, “The state was about to cut off my welfare check so I had a baby to keep it coming.  So this is my check baby.”

 

Here Sally growled, “Another welfare baby I have to pay for.  Why didn’t you practice birth control and get a job?”

 

Of course the first young woman demanded to see the store manager and reported this “insult.”  A few days later Sally’s pharmacy supervisor showed up.  First, Sally was to be suspended a week without pay; second, she had to attend counseling on being more sympathetic; and third, she was told to apologize to the young woman or face termination.

 

Sally claimed that she had as much right to enter into the conversation as did the two women as they were in a public place.  Had another customer, Sally contended, said the same words, the employer could not have done anything.

 

The supervisor conceded the latter point but emphatically pointed out that Sally was not another customer, but a representative of the store.  As such, her words could be construed as a corporate attitude against the disadvantaged and needy.  Supervisor used as an example a case out of Illinois—the pharmacist at a store there was a fill-in and as such was unaware of how to process Illinois Medicaid prescriptions.  During a rush, pharmacist had shoved aside all the Medicaid prescriptions and handled everything he knew how to do in order to move along as many customers as possible.  Still, the Medicaid patients sued and won.  The drug store had not, the court held, prepared adequately for Medicaid patients and thus the pharmacist had acted in a discriminatory manner, even if not done purposely.

 

Based on this, supervisor had a legitimate basis for punishing pharmacist: to avoid future acts which could be construed as discriminatory.  Further, the supervisor would be able to show the aggrieved patient that remedial measures had been taken, a step in avoiding future discrimination and easing the patient’s “pain.”

 

Pharmacists do not have freedom of speech or opinion in their place of employment where their speech may be construed as the opinion of the employer, and drug stores that accept Medicaid and/or Medicare may not do anything that even has an appearance of discrimination.

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