Title of Regulation: 18VAC110-20. Regulations Governing the Practice of Pharmacy (amending 18VAC110-20-25).

Statutory Authority: §§ 54.1-2400 and 54.1-3307 of the Code of Virginia.

Public Hearing Information:

December 12, 2016 - 9 a.m. - Perimeter Center, 9960 Mayland Drive, Suite 201, Board Room 2, Richmond, VA 23233.

Public Comment Deadline: February 10, 2017.

Agency Contact: Caroline Juran, RPh, Executive Director, Board of Pharmacy, 9960 Mayland Drive, Suite 300, Richmond, VA 23233-1463, telephone (804) 367-4416, FAX (804) 527-4472, or email caroline.juran@dhp.virginia.gov.

Basis: Regulations are promulgated under the general authority of § 54.1-2400 of the Code of Virginia, which provides the Board of Pharmacy the authority to promulgate regulations to administer the regulatory system.

The specific authority of the board to regulate the practice of pharmacy is found in § 54.1-3307 of the Code of Virginia

Purpose: In 2012, the U.S. Department of Justice resolved allegations against Walgreens Pharmacy with a $7.9 million payment because the chain offered beneficiaries of government health care programs (Medicare, Medicaid, TRICARE, etc.) inducements that are prohibited by law to transfer prescriptions to Walgreen pharmacies. Quotes from federal law enforcement illustrate the need to enact such a prohibition in Virginia. The U.S. Attorney for the Eastern District of Michigan said, "Continuity with a pharmacist is important to detect problems with dosages and drugs interactions.  Patients should make decisions based on legitimate health care needs, not on inducements like gift cards." The Inspector General for the U.S. Department of Health and Human Services said, “Violating Federal health care laws, as Walgreens allegedly did by offering incentives for new business, cannot be tolerated.”

As the Virginia Pharmacists Association stated in its letter of support for a regulatory change, "Transfer coupons and other transfer incentives fragment the medication records of patients which leads to inaccuracies in the medication records and is detrimental to patient care." The Board of Pharmacy has determined that there is a need to propose a regulation to protect the health, safety, and welfare of the citizens who count on Virginia pharmacies for accuracy and integrity in filling prescriptions.

Substance: The proposed amendment makes it unprofessional conduct to offer inducements or incentives, such as coupons or gift cards, for a patient to transfer a prescription, absent any professional rationale for such transfer. Customer rewards or affinity cards that encourage loyalty to a pharmacy would not be considered unprofessional.

Issues: The primary advantage to the public is improvement in the continuity of care in delivery of pharmaceutical services. There is a disadvantage for customers who use prescription transfer just as a means of obtaining gift cards and incentives. There are no advantages or disadvantages to the agency.

The Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board of Pharmacy (Board) proposes to add to the list of unprofessional conduct for pharmacists and pharmacies the following acts: "Advertising or soliciting in a manner that may jeopardize the health, safety and welfare of a patient, including incentivizing or inducing the transfer of a prescription absent professional rationale by use of coupons, rebates, or similar offerings."

Result of Analysis. There is insufficient data to accurately compare the magnitude of the benefits versus the costs. Detailed analysis of the benefits and costs can be found in the next section.

Estimated Economic Impact

Background. Pursuant to Virginia Code § 54.1-3316, the Board may revoke or suspend pharmacy permits or impose a monetary penalty when permit holders have engaged in unprofessional conduct. Thus the proposal to add inducements to transfer prescriptions by use of coupons, rebates, or similar offerings to the list of unprofessional conduct effectively bans the use of such incentives. According to the Department of Health Professions, only large chain drug stores have issued these inducements.

Benefits. According to the Virginia Pharmacists Association, "Transfer coupons and other transfer incentives fragment the medication records of patients which leads to inaccuracies in the medication records and is detrimental to patient care." Pharmacists are trained to understand and detect dangerous drug interactions. When individuals fill their prescriptions at multiple pharmacies,¹ the pharmacists at these pharmacies may not be aware of all the drugs being taken by the individual. This inhibits pharmacists' ability to catch and prevent dangerous drug interactions. Some drug interactions can potentially cause severe health problems. Other interactions reduce the effectiveness of one or both drugs.

Even with the proposed ban on inducements to transfer prescriptions, people remain free to fill prescriptions at multiple pharmacies and to transfer prescriptions. The proposed ban on inducements to transfer prescriptions would though very likely significantly reduce the frequency of prescription transfers. This would in turn reduce the number of occurrences where pharmacists are unaware of all the prescriptions being taken by a patient. Thus, the ban would likely reduce the frequency that patients suffer from adverse drug interactions in Virginia. Information is unavailable to forecast the magnitude of the reduction in adverse drug interactions.

Costs. Coupons, rebates and other incentives help consumers save money. Banning inducements to transfer prescriptions by use of coupons, rebates, or similar offerings increases the cost of prescriptions for people who would otherwise take advantage of such offerings.

It is indeterminate as to whether the large chain drug stores that offer the inducements are worse off or better off with the ban. Since they currently offer the inducements they presumably believe doing so maximizes their profits. Thus losing this marketing option may reduce net profits. On the other hand, the inducements reduce the ultimate price paid by the consumers utilizing the inducements. Banning the inducements can be seen as stopping competition between the drug stores and essentially enabling them all to charge a higher price.

Comparison. People who are meticulous about their records and wish to save money through use of coupons and rebates are worse off with the proposed ban. Such individuals do not put themselves at increased risk of adverse drug interactions since they keep their multiple pharmacists fully informed of all of their prescriptions. So the ban produces no benefit for them. The ban does increase their costs of obtaining prescriptions since they would no longer be able save money through use the coupons, rebates, and other incentives.

People who do not keep their multiple pharmacists informed of all their prescriptions are likely better off with the ban. Such individuals put themselves at increased risk of negative health outcomes due to their inhibiting their multiple pharmacists' ability to catch and prevent dangerous drug interactions. Given the potential severity of the increased health risks, the benefits of the proposed ban for people who do not keep their multiple pharmacists informed of all their prescriptions likely exceed the cost of paying somewhat more for prescriptions.

Businesses and Entities Affected. The proposed amendment potentially affects all pharmacies in the Commonwealth. According to the Department of Health Professions, only large chain drug stores have issued coupons, rebates, and other inducements to transfer prescriptions. Consumers who use inducements to transfer prescriptions are also affected.

Localities Particularly Affected. The proposed amendment does not disproportionately affect particular localities.

Projected Impact on Employment. The proposed amendment does not significantly affect employment.

Effects on the Use and Value of Private Property. The proposed amendment does affect how the large chain drug stores that have issued inducements to transfer prescriptions use their property. They will no longer be able to issue such inducements for their pharmacies. As discussed above, it is indeterminate as to whether this will be positive or negative toward their value.

Real Estate Development Costs. The proposed amendment does not affect real estate development costs.

Small Businesses:

Definition. Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Costs and Other Effects. The proposed amendment does not directly affect small businesses.

Alternative Method that Minimizes Adverse Impact. The proposed amendment does not directly affect small businesses.

Adverse Impacts:

Businesses. As discussed above, it is indeterminate as to whether the proposed amendment will be positive or negative for large drug stores.

Localities. The proposed amendment will not likely adversely affect localities.

Other Entities. As discussed above, the proposed amendment adversely affects people who are meticulous about their records and wish to save money through use of coupons and rebates.

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¹ Filling prescriptions at different locations of one drug store chain would presumably not leave the pharmacists unaware of all the prescriptions filled as they would have the same computerized information system.

Agency's Response to Economic Impact Analysis: The Board of Pharmacy does not concur with the economic impact analysis (EIA) of the Department of Planning and Budget on proposed amended regulations for 18VAC110-20, Regulations Governing the Practice of Pharmacy, relating to the prohibition on offering inducements to transfer prescriptions.

The EIA fails to note the high cost of adverse drug interactions, one of the problems associated with patients moving prescriptions from pharmacy to pharmacy, following inducements such as coupons and rebates. A learning module developed by the Food and Drug Administration on the Prevalence and Incidence of Adverse Drug Reactions (ADRs) uses research and statistics from the Institute of Medicine and other sources, such as the Journal of the American Medical Association. It reports that ADRs are one of the leading causes of morbidity and mortality in health care. The Institute of Medicine reported in January of 2000 that from 44,000 to 98,000 deaths occur annually from medical errors. Of this total, an estimated 7,000 deaths occur due to ADRs.

The exact number of ADRs is not certain, but whatever the true number is, ADRs represent a significant public health problem that is, for the most part, preventable.

When a patient requests transfer of a prescription, it is commonplace for prescriptions to be transferred verbally from one pharmacist to another, a process that can lead to transcriptions errors if the prescription information is communicated incorrectly or misunderstood by the receiving pharmacist. Inducing patients to transfer prescriptions would appear to unnecessarily increase risk associated with the transfer process which could lead to patient harm.

On page 2 of the EIA, the analyst makes the statement that "Banning the inducements can be seen as stopping competition between the drug stores and essentially enabling them all to charge a higher price." Apparently, the intent of the regulatory action has been misread, because it does not "ban inducements" that pharmacies can offer to their customers. Pharmacies may continue to advertise lower prices and offer affinity rewards for filling prescriptions; the ban would be on inducements to switch prescriptions from drug store to drug store. There are a variety of ways in which a pharmacy can lower the cost of prescription drugs (i.e., $4 antibiotics), so competition is not impeded by enactment of this regulation.

The EIA also fails to note that the issue of inducements to transfer has already been addressed by the U.S. Department of Justice. In 2012, the Department of Justice resolved allegations against Walgreens Pharmacy with a $7.9 million payment because the chain offered beneficiaries of government health care programs (Medicare, Medicaid, TRICARE, etc.) inducements that are prohibited by law to transfer prescriptions to Walgreen pharmacies. Quotes from federal law enforcement illustrate the need to enact such a prohibition in Virginia. The U.S. Attorney for the Eastern District of Michigan said, "Continuity with a pharmacist is important to detect problems with dosages and drugs interactions.  Patients should make decisions based on legitimate health care needs, not on inducements like gift cards." The Inspector General for the U.S. Department of Health and Human Services, said, "Violating Federal health care laws, as Walgreens allegedly did by offering incentives for new business, cannot be tolerated."

The proposal of the Virginia Board of Pharmacy follows the action of the Department of Justice for the reasons noted.

Summary:

The proposed amendments prohibit advertising or soliciting that may jeopardize the health, safety, and welfare of a patient, including incentivizing or inducing a patient to transfer a prescription absent professional rationale by use of coupons, rebates, etc.

18VAC110-20-25. Unprofessional conduct.

The following practices shall constitute unprofessional conduct within the meaning of § 54.1-3316 of the Code of Virginia:

1. Failing to comply with provisions of § 32.1-127.1:03 of the Code of Virginia related to the confidentiality and disclosure of patient records or related to provision of patient records to another practitioner or to the patient or his personal representative;

2. Willfully or negligently breaching the confidentiality of a patient unless otherwise required or permitted by applicable law;

3. Failing to maintain confidentiality of information received from the Prescription Monitoring Program, obtaining such information for reasons other than to assist in determining the validity of a prescription to be filled, or misusing information received from the program;

4. Engaging in disruptive or abusive behavior in a pharmacy or other health care setting that interferes with patient care or could reasonably be expected to adversely impact the quality of care rendered to a patient;

5. Engaging or attempting to engage in a relationship with a patient that constitutes a professional boundary violation in which the practitioner uses his professional position to take advantage of the vulnerability of a patient or his family, including but not limited to sexual misconduct with a patient or a member of his family or other conduct that results or could result in personal gain at the expense of the patient;

6. Failing to maintain adequate safeguards against diversion of controlled substances;

7. Failing to appropriately respond to a known dispensing error in a manner that protects the health and safety of the patient;

8. Delegating a task within the practice of pharmacy to a person who is not adequately trained to perform such a task;

9. Failing by the PIC to ensure that pharmacy interns and pharmacy technicians working in the pharmacy are registered and that such registration is current; or

10. Failing to exercise professional judgment in determining whether a prescription meets requirements of law before dispensing; or

11. Advertising or soliciting in a manner that may jeopardize the health, safety, and welfare of a patient, including incentivizing or inducing the transfer of a prescription absent professional rationale by use of coupons, rebates, or similar offerings.