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Behavioral Objectives

After completing this continuing education article, the pharmacist should be able to:

  1. Identify significant federal legislation affecting pharmacy practice.
  2. List specific mandates of federal law that require pharmacist actions and compliance.
  3. Explain how each law provides patient benefits and positive outcomes.
  4. Explain applicable provisions of federal pharmacy laws in order to avoid violations.
  5. Describe potential penalties for violations of selected federal pharmacy-related laws.

For almost 70 years, federal legislation has been impacting the practice of pharmacy. In almost every case, the purpose of this legislation has been to protect the health, safety, and welfare of the patient from the potential risks of drug use or misuse. Most of this federal legislation has been initiated in response to issues and concerns at a certain point in time. For example, the Federal Food, Drug, and Cosmetic (FDC) Act passed by Congress was done as a safety concern because of the deaths of over 100 individuals who consumed a drug product containing antifreeze.1 Other acts that followed also were the result of significant issues with national implications.

While defining pharmacy practice and regulating the profession has primarily been left to the individual states based on the Tenth Amendment to the Constitution, the federal government regulates drug distribution through the Interstate Commerce Clause. This regulation of drug distribution often results, either directly or indirectly, in the regulation of the profession of pharmacy as well. The federal government also has implemented legislation affecting pharmacy practice based on participation in such programs as Medicaid. The counseling provisions of the Omnibus Budget Reconciliation Act, while not directly requiring pharmacist actions, did require the individual state governments to establish expanded standards of practice or risk losing federal funding of their programs. In effect, a backdoor approach to regulating the profession was utilized.

Over the years, much of the federal legislation that has been passed by Congress has proven itself useful by providing the safety and security that our society has come to expect. Pharmacists have embraced this legislation, albeit sometimes reluctantly, as most legislation has imposed new requirements in such areas as record keeping, counseling, and packaging of pharmaceuticals.

Food, Drug, and Cosmetic Act of 1938

The FDC Act served as a replacement to the Pure Food and Drug Act of 1906.2 This earlier act prohibited interstate commerce in misbranded and adulterated foods, drinks, and drugs and was most concerned with purity, not safety, issues. In addition, the 1906 act did not prohibit false therapeutic claims and, in some cases, even protected those claims. Furthermore, the 1906 law did little to inform patients as it did not require the label to list ingredients, include directions for use, or provide warnings regarding the product.

Because of the shortcomings of the 1906 Act, the FDA petitioned Congress for a new act. Between 1933 and 1937, a legislative battle ensued to replace the 1906 law.3 Ultimately, it was a therapeutic disaster in 1937 that motivated Congress to act. A Tennessee company marketed a sulfa drug in an untested solvent that resulted in the death of over 100 people, many of whom were children. The public outcry not only reshaped the drug provisions of the new law to prevent such an event from happening again, but it propelled the bill through Congress. This new law also brought cosmetics and medical devices under control and required that drugs be labeled with adequate directions for use. This new law also mandated premarket approval of all new drugs, such that a manufacturer would have to prove that a drug was safe before it could be sold. Today, because of this law, pharmacists have the assurance that the pharmaceuticals they dispense are of the highest quality and safety of any drugs in the world.

Misbranding and Adulteration

The FDA is responsible for enforcing the provisions of the FDC Act.4 This is done by classifying offenses into 2 major categories: adulteration and misbranding. While many of the provisions of the FDC Act are directed toward manufacturers, pharmacists can violate this act in a number of ways.

Adulteration of a drug takes place if its strength, quality, or purity differs from those stated on the label.5 Again, while the FDC Act is most concerned with manufacturers of pharmaceuticals, pharmacists who compound products can be deemed by the FDA as having created a "new drug," thus giving the agency the authority to regulate the product. In 1997, a new law, the Food and Drug Administration Modernization Act (FDAMA), was enacted that reduced the FDA's authority to deem drugs compounded in pharmacies as new drugs. The FDAMA, however, has been ruled unconstitutional, resulting in the act being invalidated.6 While the FDA may exert little direct influence on pharmacies regarding adulteration, such influence may change depending on public health and safety as affected by pharmacy compounding.

Pharmacist dispensing of prescription medication is also regulated by the FDC Act, and subsequent legislation, known as the Durham-Humphrey Amendment, was enacted in 1951.7 Prescription medication from this time forward could only be legally dispensed based upon authorization from a prescriber granted prescriptive authority by a state. Today, any pharmacist who would provide a prescription medication without such authorization could be deemed in violation of the FDC Act and subject to misbranding penalties.

The FDC Act also provides for a number of penalties involving violations regarding drug products that could have an impact on pharmacists and pharmacies.8 One such violation deals with counterfeit drugs. The pharmacist or pharmacy that holds for sale or dispensing any counterfeit drug is in violation of the FDC Act.9 In addition, any pharmacist or pharmacy that even receives an adulterated or misbranded drug is in violation of the FDC Act. The provisions contained within the penalty section of the FDC Act impose on the pharmacist an obligation to take steps to ensure that the products received by the pharmacy are of such quality as to prevent such a violation. Pharmacists should be confident that the manufacturers and/or wholesalers used by the pharmacy have the highest standards in order to protect the pharmacy from these types of violations.

Controlled Substance Act of 1970

The Comprehensive Drug Abuse Prevention and Control Act of 1970, commonly known as the Controlled Substance Act (CSA), is the legal foundation of the government's fight against the abuse of drugs and other substances.10 While other federal legislation has an impact on pharmacy, the CSA exerts more of a direct impact, as the law requires registration, specific record keeping, and rules regarding the dispensing of controlled substances. Penalties for the violation of the CSA are significantly more severe than violation of the FDC Act.

Under the act, controlled substances are placed in one of 5 categories. Schedule I drugs cannot be handled by pharmacies. These pharmaceuticals have a great potential for abuse and currently have no recognized medical use.11 Any pharmacy found to possess a Schedule I drug is in violation of the CSA, even if the drug was formerly a Schedule II drug. In the early 1980s, the drug methaqualone (Quaalude) was rescheduled by the government from a Schedule II to a Schedule I drug. This reclassification required all pharmacies to properly dispose of the drug or face a penalty for violation of the CSA.

Schedule II drugs, which have a high potential for abuse but do have a currently accepted medical use, have several specific provisions relevant to pharmacists.12 One of the primary provisions is the requirement that prescriptions dispensed for Schedule II medications must be written and then signed by the individual practitioner. Exceptions to this rule do exist.

One exception deals with emergency prescriptions. In such an emergency, the pharmacist is permitted to dispense a Schedule II medication based on an oral authorization and compliance with several other guidelines (Table 1).13

Record Keeping

Every pharmacy must maintain complete and accurate records on a current basis for each controlled substance purchased, received, distributed, dispensed, or otherwise disposed of.14 These records must be maintained for 2 years. It is also required that records and inventories of Schedule II and Schedule III, IV, and V drugs must be maintained separately from all other records or be in a form that is readily retrievable from other records. The "readily retrievable" requirement means that records kept by automatic data processing systems or other electronic means must be capable of being separated out from all other records in a reasonable time. In addition, some notation, such as an asterisk, red line, or other visually identifiable mark must distinguish controlled substances from other items.15


Federal requirements are such that a pharmacy is required to take an inventory of controlled substances every 2 years.16 This inventory must be done on any date that is within 2 years of the previous inventory date. The inventory record must be maintained at the registered location in a readily retrievable manner for at least 2 years for copying and inspection by the Drug Enforcement Administration (DEA). An inventory record of all Schedule II controlled substances must be kept separate from those of other controlled substances. Submission of a copy of any inventory record to the DEA is not required unless requested.

When taking the inventory of Schedule II controlled substances, an actual physical count must be made.17 For the inventory of Schedule III, IV, and V controlled substances, an estimate count may be made. If the commercial container holds more than 1000 dosage units and has been opened, however, an actual physical count must be made.

State law may strengthen this requirement with annual actual physical counts of all controlled substances. It also may require such an inventory be submitted before reregistration by the board of pharmacy.

Computerization of Prescription Information

A pharmacy is permitted to use a data processing system for the storage and retrieval of prescription order refill information for Schedule III and IV controlled substances.18 The computer system must provide on-line retrieval of original prescription information, which will include the original prescription number and date of issuance; the full name and address of the patient; the prescriber's name, address, and DEA registration number; the name, strength, dosage form, and quantity of the controlled substance prescribed; and the total number of refills authorized by the prescriber.

In addition, the computer system must be able to provide on-line retrieval of the current refill history for the Schedule III and IV drug.19 Refill information history requirements include the name of the drug, the date of refill(s), the quantity dispensed, the dispensing pharmacist's identification code or name/initials for each refill, and the total number of refills dispensed to date for each prescription. These records must be maintained for a period of 2 years from the date of dispensing.

Refill Provisions

Schedule III and IV controlled substances may be refilled if authorized on the prescription.20 The prescription may be refilled up to 5 times within 6 months after the date of issue. These restrictions do not apply to a Schedule V prescription drug. Schedule II drugs may not be refilled.

Partial Fill of Prescriptions

Pharmacists often question the DEA rule regarding the partial refilling of Schedule III, IV, or V prescriptions.21 Confusion lies in whether or not a partial fill or refill is considered one fill or refill, or if the prescription can be dispensed any number of times until the total quantity prescribed is met or 6 months has passed. According to the DEA's interpretation, as long as the total quantity dispensed meets with the total quantity prescribed with the refills, and they are dispensed within the 6-month period, the number of refills is irrelevant.

The Code of Federal Regulations states that the partial filling of a prescription for a controlled substance listed in Schedule III, IV, or V is permissible, provided that:

1. Each partial filling is recorded in the same manner as a refilling.

2. The total quantity dispensed in all partial fillings does not exceed the total quantity prescribed.

3. No dispensing occurs after 6 months of the date on which the prescription was issued.

For a Schedule II drug, the pharmacist may partially dispense a prescription if he or she is unable to supply the full quantity in a written or emergency oral prescription, provided the pharmacist notes the quantity supplied on the front of the prescription.22 The remaining portion must be supplied within 72 hours of the first partial dispensing. Otherwise, the pharmacist is obligated to notify the prescribing physician of the shortage.

Electronic Transmission of Prescriptions

Electronic transmission of prescription information has always raised concern about legitimacy and security of patient information. Current DEA regulations permit faxed prescriptions for Schedule III, IV, and V, and for Schedule II drugs in limited situations.23 The following are examples of faxed Schedule II prescriptions that may serve as the original:

  • Patients undergoing home infusion/intravenous pain therapy
  • Patients in long-term care facilities
  • Patients in hospice care as certified by Medicare under Title XVIII

The current regulations do not provide for data transmission by means of modem and e-mail. That is about to change, though. Public meetings were conducted on July 11 and 12, 2006, by the DEA and Department of Health and Human Services in order to allow interested individuals, such as pharmacists, software/hardware vendors, and third parties, to provide input regarding the electronic transmission of controlled substance prescriptions. These meetings were viewed as an incremental approach to adopting final "foundation standards" consistent with the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which has as its objectives patient safety, efficiency, quality, and cost savings.24

Transferring of Prescription Information

The DEA allows the transfer of original prescription information for Schedule III, IV, and V controlled substances for the purpose of refill dispensing between pharmacies on a one-time basis.25 Pharmacies which electronically share a real-time, online database may transfer up to the maximum number of refills permitted by the law and authorized by the prescriber. In either type of transfer, specific information must be recorded by both the transferring and the receiving pharmacist.

Poison Prevention Packaging Act of 1970

Before the Poison Prevention Packaging Act (PPPA) was enacted in 1970, poisonings by common household substances, including medicines, had long been considered by pediatricians to be the leading cause of injuries among children under 5 years of age. After the PPPA and the implementation of standards to prevent poisonings, the Consumer Product Safety Commission (CPSC) reported that child-resistant packaging reduced the oral prescription medicine-related death rate by up to 1.4 deaths per million children under age 5 years. This represented a reduction in the rate of fatalities of up to 45% from levels that would have been projected in the absence of child-resistant packaging requirements, and equated to about 24 fewer child deaths annually.26

The purpose of the PPPA was to give to the CPSC authority to require "special packaging" of household products and drugs to protect children from serious injury or illness. Manufacturers are required to perform tests to ensure that children under 5 years of age would find the packaging significantly difficult to open.27 In these tests, pairs of children aged 42 to 51 months are selected and given 5 minutes in which to open the packages. If the children cannot open the package, they are then given a visual demonstration and another 5 minutes in which to open the package. The package is considered to be child-resistant if not more than 20% of the 200 children tested can open the package. Adults are also tested with the same packages.Adults are likewise given a 5-minute period to open and properly close the package. If 90% of the 100 adults tested can open and close the child-resistant package, it passes.

The PPPA affects pharmacy practice and manufacturing of OTC and prescription medications in many ways. Failure to comply with packaging requirements or any of the applicable regulations is considered a misbranding violation under the FDC Act. A pharmacist could be prosecuted and imprisoned for not more than 1 year or sentenced to pay a fine of not more than $1000, or both.

All legend drugs and controlled dangerous substances must be packaged in a child-resistant container, with limited exceptions (Table 2).28 Pharmacists should be familiar with their responsibilities under the PPPA (Table 3). OTC products also require child-resistant packaging, with one exception. Manufacturers may market one size of an OTC product for the elderly or handicapped in noncompliant containers, provided that the package states, "This Package for Households Without Young Children."29

Prescription Drug Marketing Act of 1987

The Prescription Drug Marketing Act (PDMA), which was incorporated into the FDC Act, was enacted to address certain prescription drug-marketing practices that have contributed to the diversion of large quantities of such drugs into a secondary gray market.30 These marketing practices—including the distribution of free samples and the sale of deeply discounted drugs to hospitals and health care entities—have helped fuel a multimillion dollar drug diversion market that provides a portal through which mislabeled, subpotent, adulterated, expired, and counterfeit drugs are able to enter the nation's drug distribution system.

The most simple and straightforward of the acts which severely impacts pharmacy and is prohibited by the PDMA is the act or offer of knowingly selling, purchasing, or trading a prescription drug sample. This offense is punishable by a fine of up to $250,000 and up to 10 years' imprisonment. What many pharmacists do not realize is that there is a "finder's fee" of up to $125,000 for individuals who provide information leading to the conviction of a violator of this portion of the PDMA.31

Another important portion of this extensive law that affects pharmacists prohibits the resale of any prescription drug that was previously purchased by a hospital or other "health care entity."32 This provision was intended to eliminate a major source of drugs in the diversion market—namely, drugs that were originally purchased by hospitals or health care entities at substantially discounted prices, as allowed by the Nonprofit Institutions Act of 1938, and then resold to the retail class of trade. Congress believed that the resale of such drugs constituted an unfair form of competition. Unfortunately, due to the host of exemptions found in the PDMA and the complexity and potential loopholes, prosecution of institutional diversion cases has been rare.

Omnibus Budget Reconciliation Act of 1990

While most federal laws provide the pharmacist with guidance on handling pharmaceuticals, the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) placed expectations on the pharmacist in how to interact with the patient.33 While the primary goal of OBRA-90 was to save the federal government money by improving therapeutic outcomes, the method to achieve these savings was implemented by imposing on the pharmacist counseling obligations, prospective drug utilization review (ProDUR) requirements, and record-keeping mandates.

The OBRA-90 ProDUR language requires state Medicaid provider pharmacists to review Medicaid recipients' entire drug profile before filling their prescription(s). The ProDur is intended to detect potential drug therapy problems.34 Computer programs can be used to assist the pharmacist in identifying potential problems. It is up to the pharmacists' professional judgment, however, as to what action to take, which could include contacting the prescriber.As part of the ProDUR, the following are areas for drug therapy problems that the pharmacist must screen:

  • Therapeutic duplication
  • Drug-disease contraindications
  • Drug-drug interactions
  • Incorrect drug dosage
  • Incorrect duration of treatment
  • Drug-allergy interactions
  • Clinical abuse/misuse of medication

OBRA-90 also required states to establish standards governing patient counseling. In particular, pharmacists must offer to discuss the unique drug therapy regimen of each Medicaid recipient when filling prescriptions for them. Such discussions must include matters that are significant in the professional judgment of the pharmacist. The information that a pharmacist may discuss with a patient is found in Table 4.

Under OBRA-90, Medicaid pharmacy providers also must make reasonable efforts to obtain, record, and maintain certain information on Medicaid patients.35 This information, including pharmacist comments relevant to patient therapy, would be considered reasonable if an impartial observer could review the documentation and understand what has occurred in the past, including what the pharmacist told the patient, information discovered about the patient, and what the pharmacist thought of the patient's drug therapy. Information that would be included in documented information may be found in Table 5.

While OBRA-90 was geared to ensure that Medicaid patients receive specific pharmaceutical care, the overall result of the legislation provided that the same type of care be rendered to all patients, not just Medicaid patients. The individual states did not establish 2 standards of pharmaceutical care—one for Medicaid patients and another for non-Medicaid patients. The end result is that all patients are under the same professional care umbrella requiring ProDUR, counseling, and documentation.

Health Insurance Portability and Accountability Act of 1996

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is the most significant piece of federal legislation to affect pharmacy practice since OBRA-90.

The Privacy Rule component of HIPAA took effect on April 14, 2003, and was the first comprehensive federal regulation designed to safeguard the privacy of protected health information (PHI).36 Pharmacies that maintain patient information in electronic format or conduct financial and administrative transactions electronically, such as billing and fund transfers, must comply with HIPAA.

Privacy Provisions

While HIPAA places stringent requirements on pharmacies to adopt policies and procedures relating to the protection of patient PHI, the law also gives important rights to patients. These rights include the right to access their information, the right to seek details of the disclosure of information, and the right to view the pharmacy's policies and procedures regarding confidential information.

HIPAA imposes 5 key provisions upon pharmacists. The first provision is the requirement that each pharmacy take reasonable steps to limit the use of, disclosure of, and the requests for PHI. PHI is defined as individually identifiable health information transmitted or maintained in any form and via any medium. To be in compliance, a pharmacy must implement reasonable policies and procedures that limit how PHI is used, disclosed, and requested for certain purposes. The pharmacy also is obligated to post its entire notice of privacy practices at the facility in a clear and prominent location and on its Web site (if one exists).

The second component of HIPAA requires that individuals be informed of the privacy practices of the pharmacy and that the pharmacy develop and distribute a notice with a clear explanation of these rights and practices. This notice must be given to every individual no later than the date of the first service provided, which usually means the first prescription dispensed to the patient. The pharmacist also is obligated to make a good-faith effort to obtain the patient's written acknowledgment of the receipt of the notice. Under the third component, pharmacies are required, as well, to select a compliance officer who will manage and ensure compliance with HIPAA.

As part of the fourth component of HIPAA, all employees working in the pharmacy environment in which PHI is maintained must receive training on the regulations within a reasonable time after being hired. This training necessarily includes pharmacists, technicians, and any other individuals who assist in the pharmacy.

Finally, in some situations, it is necessary for the pharmacy to allow disclosure of PHI to a person or organization that is known under HIPAA as a "business associate." Typically, business associates perform a function that requires disclosure of PHI such as billing services, claims processing, utilization review, or data analysis. Under HIPAA, a pharmacy is allowed to disclose PHI to a business associate if the pharmacy obtains satisfactory assurances, usually in the form of a contract, that the business associate will use the information only for the purposes for which it was engaged by the pharmacy.

Security Provisions

The HIPAA security provisions went into effect April 20, 2005, almost 2 years after the privacy provisions. These security standards were designed to protect the confidentiality of PHI that is threatened by the possibility of unauthorized access and interception during electronic transmission. Like the privacy provisions, any pharmacy that transmits any health information in electronic form is required to comply with the security rules.

In particular, the security standards define administrative, physical, and technical safeguards that the pharmacist must consider in order to protect the confidentiality, integrity, and availability of PHI.

A unique aspect of the security provisions is that they include both "required and addressable" implementation specifications. Required implementation specifications are those that must be met, whereas, in addressable specifications, the pharmacy must determine whether the suggested safeguards are reasonable and appropriate, given the size and capability of the organization as well as the risk.

While cost may be a factor that a covered entity may consider in determining whether to implement a particular specification, nonetheless a clear requirement exists that adequate security measures be implemented. Cost considerations are not meant to exempt covered entities from this responsibility.


Federal legislation has had a major impact on the practice of pharmacy for almost 70 years. These laws have provided accountability for drugs, safety for patients, and security for patient information. The effect future legislation may have on the world of pharmacy is yet to be seen, but we may rest assured that the pervasively regulated fields of drugs and pharmacy will continue to be areas that garner the attention of federal legislators.

Virgil Van Dusen, RPh, JD, Professor of Pharmacy Administration, Southwestern Oklahoma State University,Weatherford, Okla; Alan R. Spies, RPh, MBA, JD, PhD, Assistant Professor of Pharmacy Administration, Samford University, Birmingham, Ala

For a list of references, send a stamped, self-addressed envelope to: References Department, Attn. A. Rybovic, Pharmacy Times, Ascend Media Healthcare, 103 College Road East, Princeton, NJ 08540; or send an e-mail request to:


  1. Each participant achieving a passing grade of 70% or higher on any examination will receive a statement of credit giving the number of CE credits earned. This form should be safeguarded and may be used as documentation of credits earned.
  2. Participants receiving a failing grade on any exam will be notified and permitted to take 1 reexamination at no extra cost.
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