Community pharmacies have notably been one of the most accessible points of healthcare in the local community. However, the trend of pharmacies closing, especially among independent pharmacies (but even now, large pharmacy chains), has been on the rise as many are not faring well post-pandemic for reasons such as increasingly diminished reimbursement rates for prescriptions while financial challenges such as the cost of utilities, maintenance, and employee wages continue to rise. At the same time, many independent providers and small chains may also seek to close underperforming locations to consolidate service and dispensing out of a single location. In either case, when making the solemn decision of closing a pharmacy, an independent pharmacy must take into account a number of considerations to ensure proper compliance with legal and regulatory requirements associated within winding down and closing a pharmacy.
In order to properly effectuate the closing of a pharmacy, there are several key areas where a pharmacy needs to ensure proper procedures and notifications are followed, including with respect to state Board of Pharmacy rules, DEA requirements, payor requirements, and more. Following these respective requirements will not only ensure that the pharmacy (and its owners and employees) do not face discipline by regulatory agencies, but it will also help mitigate continuing liability and exposure.
State Board of Pharmacy Rules
When winding down a pharmacy, it is necessary to review the particular pharmacy closure notification requirements provided by the Board of Pharmacy where the pharmacy holds licensure. The state Boards of Pharmacy often have detailed procedures that must be followed when closing a pharmacy. For example, some state Board of Pharmacy rules entail written notification to the appropriate authorities within a prescribed period of the closing date, providing the name and address of the location to which pharmacy records, required to be maintained by law, have been transferred, and the name, address, and license (permit) number of the entity to which any of the drug stock/inventory will be transferred. Failure to adhere to these requirements can result in discipline against the pharmacy, its employees, and/or its owners.
DEA Requirements
Likewise, to the extent the pharmacy stocks and dispenses controlled substances, proper procedures must be followed relative to DEA notification and proper disposal/transfer of controlled substances. The DEA and its local DEA divisional office impose their own requirements on the proper procedure for closing of a pharmacy. These procedures include actions such as the proper disposal/transfer of controlled substances, the forfeiture of the DEA registration, and the completion of any DEA 222 Forms, etc. Failure to properly adhere to these requirements can result in administrative, civil or even criminal penalties.
Payor Requirements
Moreover, any payors or Pharmacy Benefit Managers (“PBMs”) with which the pharmacy may be contracted with, including Medicare and state Medicaid programs, likely will also require notifications of the closure of the pharmacy and the transfer of medications and/or prescriptions. Failure to properly notify these payors of a pharmacy closure could result in the payors ascribing liability to the pharmacy or its owners, especially if another provider takes over the pharmacy location, prescriptions or drug inventory.
Other Considerations
Finally, there are many considerations from a corporate/employer standpoint as well. This includes proper corporate wind down procedures, proper transfer and liquidation of assets, and avoidance of preferred or fraudulent transfer, especially in the case of insolvency or bankruptcy. With that said, it is important to follow the correct procedures in closing a pharmacy to avoid facing any potential liability, including piercing the “corporate veil” resulting in personal exposure.
Frier Levitt has successfully worked with numerous independent pharmacies in offering a variety of services and guidance aimed at helping pharmacy owners wind down their business properly. If you are a pharmacy owner considering closing a pharmacy, contact Frier Levitt today to speak to an attorney.
