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Friday, February 28, 2014

A Prescription that Works for Pharmacy Risks--Compounding Pharmacy Insurance

A Prescription that Works for Pharmacy Risks
by Dan Springman

Once upon a time insurers would jump at the chance to provide a neighborhood pharmacy with a Business Owners Policy that included professional liability coverage by endorsement. But as the extent of this sector’s professional liability exposures has become apparent, many carriers have come to view the class as unattractive. Beazley’s approach is different. Working closely with pharmacies and their brokers to identify pharmacies’ exposures and ensure that appropriate risk management procedures are in place, we continue to provide competitive coverage while minimizing claims.


All pharmacies, from the largest national chains down to Main Street mom-and-pop shops, have substantial professional liability risks. Opportunities for human error are abundant. Since many medicines look alike, a prescription container may be mislabeled, or the wrong capsules may be grabbed off a shelf. Improperly securing medicine (not using child-proof caps, for example) can put a pharmacist at risk. It can be as simple as a cashier accidentally handing over the wrong bottle to a customer. Or as monumental as a pharmacist erring in transcribing a prescription for 21 polo horses, resulting in a fatal overdose of the animals.

Compounding the exposure Compounding drugs involves combining, mixing, or reconstituting existing pharmaceuticals to meet the unique needs of a patient. It may mean suspending and flavoring an antibiotic to make it child-friendly, or altering the dosage of medication capsules to accommodate a doctor’s prescription. Compounding elevates exposures. Consider the recent, high-profile case of a meningitis outbreak sparked by a widely-given steroidal injection that was contaminated during the compounding process.

While specific pharmaceuticals are regulated by the US Food and Drug Administration, compounded drugs are not. Change is in the wind, with Congressional passage late last year of the Drug Quality and Security Act, which opens the door for the FDA to develop voluntary regulations on compounding and traceability of prescription drugs.

Smaller pharmacies are especially vulnerable to many professional liability claims since they are less likely than their larger counterparts to have extensive procedural checks

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