Beware of drug transfer dealers that are not California-licensed Wholesalers

The following warning appeared in the March 2012 California Board of Pharmacy Newsletter:

Frequently, pharmacies find themselves with near-expired
drugs, partially full containers of drugs, and drugs that are
rarely dispensed and unlikely to be dispensed in the near
future. The pharmacies may return such drugs to the wholesaler
they purchased them from or to a reverse distributor, and less
frequently to the manufacturer itself. Sometimes a pharmacy may
be partially reimbursed for the cost of the drugs or charged a fee
for destroying the drugs.
Some California pharmacies, seeking to reduce their
inventory of such drugs have become involved with out-of-state
companies who solicit membership in their online business,
which allows members to post their requests to buy, sell, bid on,
or trade unwanted drugs to other members. One such company
assures that becoming a member and using their services will
increase the pharmacies’ profits by 50 percent. However, all
the parties to such transactions may be violating



California law if they are not Californialicensed
wholesalers and pharmacies.
Section 4043 of the Business and
Professions Code (B&PC) defines
wholesaler as a person who acts as a
wholesale merchant, broker, jobber,
customs broker, reverse distributor, agent,
or a nonresident wholesaler who sells for
resale, or negotiates for distribution,
or takes possession of any drug
requiring a prescription, pursuant
to B&PC section 4022. While
the online company may not be
selling for resale, negotiating
for distribution, or taking
possession of the drugs
being transferred, the
company is acting as
an agent and is the
means by which the
transfers occur.
Section 4169 prohibits the purchase, trade, sale, or transfer
of dangerous drugs at wholesale to a person or entity that is not
licensed by the California Board of Pharmacy as a wholesaler
or pharmacy. Section 4119.5(a) allows a pharmacy to transfer a
reasonable supply of dangerous drugs to another pharmacy and
section 4126.5(a) specifies to whom a pharmacy may furnish
dangerous drugs. This includes provision to another pharmacy
pursuant to a prescription; to another pharmacy under common
control; or to another pharmacy for alleviation of a temporary
shortage of a dangerous drug that could result in the denial of
health care; and then the pharmacy can transfer only enough to
alleviate the temporary shortage.
A transaction example: A California pharmacy buys a
quantity of unwanted drugs, through Cheap Drugs (the online
membership company) from a Kansas pharmacy:
• The California pharmacy is in violation if the Kansas
pharmacy is not licensed as a nonresident pharmacy in
California (B&PC sections 4161 and 4169[a][1]).
• Cheap Drugs, who is acting as wholesaler (agent), is
in violation if not a California-licensed wholesaler or
nonresident wholesaler (B&PC 4043, 4160, 4161).
• The Kansas pharmacy that sends the drugs into
California is in violation if not a California-licensed
nonresident pharmacy B&PC 4112(b).
Pharmacies that transfer dangerous drugs to other
pharmacies outside California shall not transfer, sell or deliver to
any person outside this state, unless they are in compliance with
California laws, United States laws, and the laws of the state or
country to which the dangerous drugs are to be delivered (B&PC
4059.5[e]).
If the lures of greater profits are tempting, before taking
action on the temptation, always research pharmacy law to
insure the compliance of everyone involved. Disciplinary action
may be taken and fines of up to $5,000 can be assessed for each
violation occurrence (e.g., invoice) (B&PC sections 4301[j] and
4126.5[b])