FTC Staff Comment Before the Joint Secretary of the Georgia State Examining Boards Concerning Dispensing of Prescription Drugs by Physicians and Certain Other Health Practitioners

Ul'ITED STATES OF AMERICA
fEDERAL TRADE COMMISSIOS
WASHI!'OGTON. DC 20580
c ~r-.,r~ISSION
APPROVED 	>~	....
November 	26, 	1986
Mr. 	Will i am G. 	~.i i I I e r, 	Jr.
Joint 	Secretary 	of 	the 	State 	Examinin b 	Boards
l6C 	Pryor 	Street, 	SW
Atlanta, 	Georgia 	30303
Dear 	~Ir. 	:¥ii 11 er'
The 	Federal 	Trade 	Commission'f 	Bureaus 	of 	Competition,
Con s lime r 	Pro t e c t ion, 	and 	E con om i c s 	are 	pIe a sed 	to 	s u bm i t
comments 	regarding 	the 	rules 	proposed 	by 	the 	Georgia 	State 	Board
of 	Pharmacy 	("Board") 	with 	respect 	to 	the 	dispensing 	of
prescription 	drugs 	by 	physicians 	and 	certain 	other 	health 	care
practitioners. 	We 	offer 	these 	corrments 	because 	we 	believe 	that
dispensing 	by 	practitioners 	provides 	service 	and 	price
competition 	among 	practitioners 	and 	between 	practitioners 	and
pharmacists, 	to 	the 	benefi t 	of 	consumers. 	We 	are 	concerned 	that
the 	proposed 	regulations 	unjustifiably 	restrict 	dispensing 	by
practitioners, 	and 	may 	deprive 	consumers 	of 	these 	benefits.
Practitioner 	Dispensing
The 	dispensing 	of 	medication 	by 	practitioners 	of 	the 	healing
arts 	is 	a 	traditional 	part 	of 	medical, 	dental, 	and 	veterinary
practice. 	'~hile many 	consumers 	purchase 	prescription 	drugs 	from
a 	pharmacist 	pursuant 	to 	a 	prescription 	order 	issued 	by 	a
practitioner, 	others, 	most 	k'revalently 	but 	not 	exclusively 	in
rural 	areas 	not 	conveniently 	served 	by 	a 	pharmacy, 	purchase
medication 	from 	their 	practitioner. 	Indeed, 	until 	recently 	the
family 	physician 	who 	made 	house 	calls 	and 	dispensed 	medication
1~3S 	a 	familiar 	figure. 	As 	com~etition 	among- 	practitioners 	for
patients 	has 	increased 	in 	recent 	years, 	more 	pra~titioners have
beb~n 	to 	offer 	the 	additional 	service 	of 	dispensing 	prescription
drugs 	to 	patients. 	~ractitioner dispensing 	has 	long 	been
permitted 	by 	federal 	and 	state 	law. 	In 	Georgia, 	licensed
I
2
These 	comments 	represent 	the 	views 	of 	the 	Bureaus, 	and 	not
necessarily 	those 	of 	the 	Corrmission. 	The 	Corrmission,
however, 	has 	authorized 	submission 	of 	these 	comments.
Federal 	regulations 	~ermit 	practitioners 	to 	dispense
controlled 	substances 	listed 	in 	Schedules 	II 	through 	V (21
C.F.R 	SS1306.02(b), 	1306.II(b), 	1306.21(b), 	and
1306.31(b)(198G), 	subject 	to 	specific 	record-keeping
r e qui r erne n t s 	(2 I 	C. F . R S1 304. 03 ( b) 	and 	(d) ( I 986) ) •

\1 r. 	\\' i I I i am G. 	Mil 1 e r, 	Jr. 	-2-
practitioners 	inclUding 	physicians, 	dentists, 	podiatrists~ and
veterinarians 	have 	statutory 	authori ty 	to 	dispense 	drugs.
Dispensing 	by 	practitioners 	benefits 	consumers 	by 	maXimizing
the 	number 	of 	qual i fied 	sources 	from 	which 	they 	may 	purchase
prescription 	drugs, 	and 	by 	offering 	increase~ convenience 	to
consumers 	who 	may 	desire, 	when 	they 	are 	ill. 	to 	avoid 	making 	a
separate 	trip 	to 	a 	pharmacy 	to 	purchase 	prescription 	drugs. 	The
competition 	resulting 	from 	dispensing 	by 	practitioners 	may
enhance 	the 	incentive 	for 	pharmacists 	to 	offer 	lower 	prices 	anG
additionol 	services 	to 	consumers.
Oppone~ts of 	practitioner 	dispensing 	allege 	that 	it 	may
injure 	consu~ers by 	creating 	incentives 	for 	practitioners 	to
over-prescribe. 	or 	to 	limit 	product 	selection 	to 	those 	drugs
available 	in 	the 	practitioner's 	office. 	in 	order 	to 	increase
revpnues. 	But 	the 	desire 	to 	~aintain the 	reputation 	of 	being 	a
reliable 	practitioner 	should 	reduce 	such 	incentives. 	Even
assuming 	that 	such 	incentives 	exist. 	this 	wou'd 	not 	justify 	a
restraint 	on 	an 	entire 	category 	of 	transactions 	by 	practitioners.
jus t 	as 	the 	fa c t 	t hat 	s orne 	ph a rma cis t s 	ma y 	r e c omne nd 	the 	pur c has e
of 	vitamins 	or 	over-the-counter 	medications 	in 	part 	because 	of
the i r 	ret a i I 	ma r gin s 	doe s 	not 	jus t i f y 	are s t r a i n ton 	the 	s e I lin;;
of 	such 	items 	by 	011 	phar!T1acists. 	The 	incentive 	to 	abuse
dispensing 	authority 	for 	economic 	gain 	appears 	to 	be 	no 	greater
than 	the 	incentive 	to 	overuse 	any 	other 	services 	offered 	to
patients. 	including. 	for 	exam~le, 	follow-up 	visits. 	in-house
laboratory 	testin b 	or 	diagnostic 	imaging. 	If 	inappropriate
dispensing 	occurs. 	it 	may 	be 	dealt 	with 	by 	less 	restrictive
mea~s, 	such 	as 	peer 	review 	and 	law 	enforcement.
The 	Pro£osed 	Regulations
Recent 	amendments 	to 	the 	Georgia 	drug 	statutes 	(Act 	No.
1537. 	Acts 	1986, 	eff. 	Apr. 	17, 	1986) 	subject 	practitioners 	who
dispense 	drugs 	to 	much 	the 	same 	regulatory 	requirements 	as
pharmacists. 	For 	example. 	the 	amendments 	require 	practitioners
who 	dispense 	drugs 	to 	adhere 	to 	the 	same 	record-keeping.
labeling. 	packaging. 	and 	storage 	requirements 	imposed 	upon
pharmacists 	and 	pharmacies. 	The 	amendments 	also 	make 	it 	clear
that 	practitioners 	are 	subject 	to 	t1e 	same 	restrictions 	imposed
upon 	pharmacists 	with 	respect 	to 	the 	use 	of 	nonlicensed
assistants. 	both 	as 	to 	their 	number 	and 	their 	duties.
------~---------------------------------
3 	Under 	Georgia's 	pharmacy 	statutes. 	a 	practitioner 	has 	the
authority 	"to 	use. 	mix, 	prepare. 	dispense, 	prescribe. 	and
administer 	drugs 	in 	connection 	with 	medical 	tredtment 	to 	the
extent 	provided 	by 	the 	laws 	of 	this 	state" 	(Ga. 	Code 	Ann.
S79A-I02(l9) ).

~r. 	William G. 	Miller, 	Jr. 	-3-
The 	Board's 	proposed 	regulation, 	however, 	imposes
discriminatory 	restraints 	on 	practitioner 	dispensing 	without 	any
apparent 	justification. 	As 	we 	discuss 	below, 	the 	proposed
regulation 	would 	impose 	costs 	on 	prac~itioners 	that 	are 	not
imposed 	upon 	pharmacies, 	and 	would 	prevent 	ambulatory 	care
centers 	and 	other 	group 	practices 	from 	achieving 	efficienc:ts 	in
dispensing. 	Such 	restraints 	may 	unnecessarily 	deter
practitioners 	from 	offering 	prescription 	drug 	dispensing
services. 	This 	would 	deny 	to 	consumers 	the 	benefits 	of
competition 	and 	consumer 	choice 	now 	pro,ided 	by 	practitioner
dispensing.
Proposed 	regulation 	480-28-.06 	provides:
(a) 	The 	pract it i oner 	mus t 	personally
perform 	the 	complete 	act 	of 	dispensing 	drugs,
including 	drug 	~election, drug 	labeling, 	and
counseling 	of 	the 	patient 	f~~ 	whom 	the 	drug
is 	prescribed. 	The 	practitoner's 	assistant
may 	be 	permi t ted 	to 	type 	a 	label 	or 	count 	or
pour 	ingredients 	for 	medication 	only 	under
the 	direct 	supervision 	of 	the 	dispensing
practitioner.
(b) 	The 	practitioner 	may 	dispense 	only 	his
privately 	owned 	medication 	to 	his 	own
patients.
The 	requirement 	in 	subsection 	(a) 	that 	the 	practitioner 	must
personally 	perform 	the 	complete 	act 	of 	dispensing 	(except 	for
tho s eli mit e d 	s pee i fie d 	act s 	t hat 	ma y 	bed e 1 ega ted 	t 0 	a 	d ire c t I Y
supervised 	assistant) 	may 	frustrate 	efficient 	use 	of 	practitioner
time 	and 	ex~ertise in 	group 	practices. 	\\'e 	are 	aware 	of 	no 	reason
why 	it 	would 	be 	harmful 	for 	one 	practitioner 	to 	perform 	part 	of
the 	process, 	such 	as 	drug 	selection 	and 	labeling, 	and 	for 	another
p r act i t ion e r 	top e r form 	the 	co uns eli n g 	fun c t ion. 	The rei s 	no
corresponding 	requirement 	in 	the 	Board's 	regulations 	that 	d
pharmacist 	personally 	perform 	the 	complete 	act 	of 	dispensing.
Proposed 	subsection 	(a) 	also 	appears 	to 	require 	patient
counseling 	by 	dispensing 	practitioners. 	While 	the 	value 	oC
patient 	counseling 	is 	not 	in 	dispute, 	there 	is 	no 	apparent
justiCication 	Cor 	imposing 	a 	counseling 	requirement 	upon
dispensing 	practitioners 	while 	not 	imposing 	a 	similar 	counseling
requirement 	on 	pharmacists.
Subsection 	(b) 	of 	the 	proposed 	regulation 	could 	be
interpreted 	to 	require 	that 	each 	dispensing 	practitioner
individually 	own 	an 	inventory 	of 	prescription 	drugs. 	This 	would
impose 	th(. 	costs 	of 	duplicE.~ive inventories 	on 	group 	practices,
including 	not 	only 	the 	cost 	of 	the 	drugs 	but 	also 	space, 	storabe,

Mr. 	Wi Iii am G. 	!\! ill e r, 	Jr. 	-4-
and 	record-keeping 	costs. 	This 	requirement 	is 	not 	imposed 	upon
pharmacies 	that 	employ 	more 	than 	cIne 	pharmacist. 	The 	only
conceivable 	rationale 	for 	this 	requirement 	would 	be 	to 	facilitate
regulatory 	accountabi Ii ty. 	But 	it 	appears 	to 	be 	no 	more
difficult 	to 	audit 	individual 	practitioners 	using 	a 	central
inventory 	than 	it 	is 	to 	audit 	the 	activities 	of 	individual
pharmacists 	who 	use 	a 	single 	inventory 	at 	a 	pharmacy. 	Moreover,
we 	are 	not 	aware 	of 	any 	reason 	to 	require 	greater 	accountabili ty
for 	dispensing 	practitioners 	than 	for 	pharmacists.
The 	requirement 	in 	subsection 	(b) 	that 	a 	practitioner
dispense 	only 	to 	his 	own 	patients 	also 	may 	prevent 	more 	efficient
methods 	of 	group 	practice. 	A group 	practice 	miiht 	use 	the 	time
and 	expertise 	of 	its 	members 	more 	efficiently 	by 	allowing 	one
practitioner 	to 	dispense 	medication 	prescribed 	by 	another
practitioner, 	for 	example 	when 	a 	patient 	seeks 	a 	refill. 	There
is 	no 	apparent 	justification 	for 	regulations 	that 	permit 	a
practitioner's 	prescription 	to 	be 	dispensed 	by 	a 	pharmacist, 	but
not 	by 	another 	practitioner 	within 	the 	same 	group 	practice.
Actions 	that 	restrain 	competition, 	undertaken 	by 	a 	board
composed 	largely 	of 	competing 	professionals, 	raise 	serious
antitrust 	concerns. 	The 	proposed 	regulations 	impose 	restraints
on 	competition 	that 	do 	not 	appear 	to 	reflect 	a 	clearly
articulated 	and 	affirmatively 	expressed 	policy 	of 	the 	Geor 6 ia
legislature 	to 	deter 	practitioner 	dispensing 	or 	otherwise
restrain 	competition 	among 	practitioners 	or 	between 	practitioners
and 	pharmacists. 	An 	agreement 	by 	a 	group 	of 	competitors 	that 	has
the 	purpose 	or 	effect 	of 	excluding 	another 	group 	of 	competitors
from 	the 	market 	could 	constitute 	a 	violation 	of 	the 	feceral
antitrust 	laws.
Conclusion
The 	likely 	effect 	of 	the 	proposed 	regulation 	would 	be 	to
inhibit 	dispensing 	by 	practitioners, 	and 	thus 	to 	deny 	to
consumers 	the 	benefits 	of 	choice, 	convenience 	and 	price
competition 	that 	are 	now 	provided 	by 	such 	dispensing. 	The
Federal 	Trade 	C~ission has 	been 	actively 	seeking 	to 	encoura~e
increas~d competition 	in 	the 	health 	care 	sector 	as 	a 	mechanism
for 	lowering 	prices 	and 	increasing 	the 	range 	and 	quality 	of
services 	available. 	Adoption 	of 	the 	proposed 	regulation 	would
impede 	competition 	for 	patients 	among 	practitioners, 	and 	between
practitioners 	and 	pharmacists 	in 	the 	sale 	of 	prescription
drugs. 	Such 	a 	result 	would 	be 	harmful 	to 	consumers. 	Indeed,

Mr. 	William G. 	Miller, 	Jr. 	-5-
adoption 	of 	the 	proposed 	regulation 	~y 	agreement 	among 	the
practicing 	pharmacists 	who 	are 	members 	of 	the 	Board 	may 	place 	the
Board 	at 	risk 	under 	the 	federal 	antitrust 	laws.
Sincerely,
qjh~~ L-----
J'ffrey 	I. 	Zuc 	erman
Director
Bureau 	of 	Competition