On November 15, 2024, the California Board of Pharmacy issued a public notice of its intent to modify Cal. Code Regs. tit. 16 § 1708.2, which governs the discontinuation of pharmacy businesses in California. The regulation currently states:

“Any permit holder shall contact the board prior to transferring or selling any dangerous drugs, devices or hypodermics inventory as a result of termination of business or bankruptcy proceedings and shall follow official instructions given by the board applicable to the transaction.”

The Board Identifies Continuity of Care Issues with §1708.2

The Board’s basis for the proposed amendment to §1708.2 traces back to ongoing concerns about the impact of pharmacy closures on patient care, which the Board’s Licensing Committee discussed during its October 18, 2022 meeting. During that meeting, Chairperson Seung Oh discussed two general areas of complaints that the Board held concerning pharmacy closures: (1) patients being unable to receive their prescription refills because they could not contact the pharmacy to request a prescription transfer prior to the pharmacy’s closure and (2) situations where a pharmacy has closed but transferred patient prescription refills to another pharmacy not of the patient’s choosing. Chairperson Oh noted that in both cases patient care was impeded. Patients were often required to obtain a new prescription from their prescriber, which caused delays in medication access. The Licensing Committee agreed that these complaints highlighted a need for regulatory changes that would ensure that patients are adequately informed of closures and that their prescriptions are managed appropriately during such closures.

In later discussions, the Board noted that its Disciplinary Guidelines which govern pharmacies involuntarily closed as part of disciplinary action, including license revocation or suspension, could serve as a guide to address continuity of care concerns. However, the Board stated that no such language existed for Board licensees voluntarily discontinuing business. Currently, the Board requires that pharmacies submit a signed Discontinuation of Business form prior to terminating business. Like §1708.2, the form is brief and silent on several critical issues, including continuity of patient care. The form only requires that pharmacies identify the licensed facility receiving prescription inventory, the location where drug acquisition and disposition will be retained post closure, and to submit a current copy of the drug inventory.

In its initial policy discussions, the Board addressed several topics: (1) establishing clear requirements to ensure continuity of patient care in the event of a pharmacy closure; (2) requiring written notice to patients in advance of a closure and a process to request a prescription transfer; (3) and requiring that licensees provide copy of the patient notice to the Board. On January 24, 2023, the Licensing Committee recommended that the Board initiate rulemaking to amend §1708.2, and on April 5, 2024, the Board published its proposed amendment to §1708.2.

Summary of the Proposed Regulation

As proposed, the new regulation would still require that licensees contact the Board of Pharmacy before transferring or selling inventory due to business closure. However, if the amended regulation becomes effective, the Board will require that pharmacies provide written notice to patients 30 days before closure, to reverse unclaimed prescriptions, and to certify compliance with these regulatory requirements. The scope of the regulation is broad: pharmacies are required to notify any patient that received a prescription within year prior to closure. The written notice must include the patient’s name, the name and address of the closing pharmacy, the name of the pharmacy where records will be transferred, and information on how to request a prescription transfer before closure. The pharmacist-in-charge or the owner must certify compliance with these steps.

Potential Questions that the Board Should Address

• Compliance: How will the Board ensure that pharmacy owners (who may not be Board licensees) comply with the new requirements?
  
• Pharmacy Closures: How will the Board reconcile §1708.2, as may be amended, with California Business and Professions Code § 4333 (c)(2) which states that the Board may grant a waiver of the requirement that records be maintained in a “board-licensed facility for at least three years” when the pharmacy discontinues business?
  
  The legislative purpose behind this exception is clear. Pharmacies that are discontinuing business (rather than selling their assets) often do not have another licensed facility to transfer patient records and no means to ensure ongoing compliance. Therefore, owners may not be able to comply with the subsection requiring that the written notice contain the “name of the pharmacy where patient records will be transferred and maintained.” §1708.2(b)(1)(C) (emphasis added).
  
  The Board’s discussions surrounding the amended text of §1708.2, the regulation governing offsite storage of records: 16 CCR §1707 (“Waiver Requirements for Offsite Storage of Records”), and the Board’s current application “for Waiver To Store Records Offsite” do not contemplate this circumstance.
  
• Official Instructions from the Board: The proposed regulations still do not clarify the scope of “official instructions” that the Board may provide upon notice of a pharmacy discontinuation. Often, pharmacies are provided contradictory or unclear instructions.

The public’s 45-day Comment Period runs through December 30, 2024.