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New Board of Pharmacy Regulations Significantly Narrow the Sole Proprietor Exemption and Impose New Compounding Standards

New regulations from the Ohio State Board of Pharmacy now require any prescriber who will possess, have custody or control of, or distribute dangerous drugs that are compounded or used for the purpose of compounding to be licensed as a Terminal Distributor of Dangerous Drugs (TDDD). This new requirement is particularly noteworthy for physicians, dentists, and others who have previously operated under the “sole proprietor” exemption from licensure as a TDDD. That exemption has been widely used in Ohio and has traditionally permitted practitioners who 1) operate as sole proprietor, sole shareholder of a corporation or professional association, or sole member of a limited liability company; and 2) are the sole authorized prescribers in the practice to be exempt from the TDDD licensure requirements. These new regulations narrow this exemption by now requiring that all prescribers who “compound” or use “compounded” drugs become licensed as a TDDD, even if those prescribers had previously qualified under the “sole proprietor” exemption.

The scope of what constitutes “compounding” is broad – likely broader than what is commonly believed. Ohio law defines “compounding” as the preparation, mixing, assembling, packaging, and labeling of one or more drugs and also includes the reconstitution of drugs in accordance with the manufacturer’s instructions.1 Under the new regulations, any “compounding” activity, possession, or administration of a compounded drug requires TDDD licensure, even by a previously exempt “sole proprietor.”

Additionally, these same new regulations impose new standards for compounding sterile products, non-sterile products, and hazardous drugs and more stringent rules governing purchase of compounded drugs from in-state pharmacies, out-of-state pharmacies, and outsourcing facilities.2 These regulations were imposed in order to bring Ohio into compliance with the 2013 Drug Quality and Security Act, a federal law passed in response to the deadly outbreak of fungal meningitis in 2012 that was linked to the New England Compounding Center.


1 Hazardous Drug Compounding by Prescribers

2 http://codes.ohio.gov/oac/4729-16

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About this Author

Eric J. Plinke, Dinsmore Law, Health Care Lawyer, Corporate Attorney
Partner

Eric Plinke is a Partner in the Corporate Department and Health Law Practice Group, and he routinely advises corporate and individual clients regarding a wide-range of health care industry legal issues. He has counseled clients in practice formation and acquisition, hospital and joint venture transactions, hospital and medical practice affiliations, contract review and preparation, compliance programs, HIPAA regulations, scope of practice issues, telemedicine and Stark law and Anti-kickback statutes, as well as significant experience counseling in ambulatory surgery centers and other joint...

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Sarah C. Persinger PharmD RPh, managed care lawyer & pharmacy benefits management attorney at Dinsmore Law Firm
Associate

Sarah is a member of our Health Care Practice Group. She holds a Doctor of Pharmacy degree and is a registered pharmacist with extensive pharmacy practice experience and a working knowledge of regulatory affairs. She has managed health system pharmacy compliance with Ohio State Board of Pharmacy, DEA, and CMS regulations, the federal 340B Drug Discount Program, USP 797 and FDA Sterile Compounding requirements, and Joint Commission and HFAP Accreditation standards. 

Sarah has a strong working knowledge of specialty pharmacy, managed care and pharmacy benefits management, HIPAA and healthcare information security, and trade association industry relations, as well as work experience in the retail, hospital, and long-term care pharmacy practice settings. 

Her experience enables her to provide comprehensive and strategic legal and compliance counsel to a wide variety of healthcare clients who operate in a complex and quickly-evolving regulatory environment. Sarah also provides legal services and advice throughout the lifecycle of complex healthcare transactions, and leverages her previous experience practicing pharmacy and managing health system pharmacy compliance, along with relationships she has developed with staff, members, and executive leaders of the Board of Pharmacy, to assist clients with obtaining licensure and navigating the board’s administrative hearing process.

Sarah has served as an adjunct professor at Ohio Northern University and visiting lecturer at Cedarville University, teaching about the legal and regulatory environment of the pharmaceutical industry and the profession of pharmacy.

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Daniel S. Zinsmaster, Dinsmore Law Firm, Health Care Lawyer
Partner

Dan provides trusted counsel and advocacy to health care clients on a variety of matters, such as corporate compliance, provider credentialing, administrative proceedings and litigation.  He also advises clients on practice formation and acquisition, as well as contract review and preparation.  In recent years, Dan has helped health care companies and providers navigate through fraud and abuse investigations, antitrust reviews, and other white collar criminal matters.  He is a frequent author and lecturer on telehealth and telemedicine issues.

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