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Cctober 8, 1986

Jerry Hodge, R.Ph. President opinionNo. JM-555

Texas StateBoard of Pharmacy 211 East 7th Street, Suite 1121 Austin,Texas 78701 Re: Whether the StateBoard of Pharmacy may license and regulate out-of-state mail-order pharmecies

Dear Dr. Hodge:

On behalf of the Tmas State Board of Pharmacy you ask the followingquestions:



### 1. Whether sections 18 and 29 of article 4542a-1, V.T.C.:., authorize the board to license out-of-state plwmacies or pharmacists which solicit mail-ord,ersales of prescriptions from Texas residents.

2. Whether requiring licensingby theboard of out-of-state pharmacies or pharmacists, whether pursuant to a specific statute or based on an implied legislative mandate, establishes an unconstitutionalburden on interstatecommerce.
3. If it ir;assumed that out-of-state pharmacies and phanmcists may dispense prescriptions by mail to Texm residentswithout being licensed by the board, :nhether] the pharmacies or pharmacists [must] nevertheless comply with other provisions of n-cticle4542a-1, V.T.C.S. (Texas Pharmacy Act), article 4476-15, V.T.C.S. (Texas Controlled Subs,:ances Act), and article 4476-14. V.T.C.S. (Texas Dangerous Drugs Act), regarding the dispensingcfprescriptionsdrugs.

As a fundamental rule. administrative agencies have only those powers granted by statute:and those powers necessarily implied from the statutoryauthority conferred or duties imposed. City of Sherman
v. Public Utility Commission, 643 S.W.2d 681, 686 (Tex. 1983); see also State ex rel. GrinzaCounty Taxpayers Association v. Texas Municipal Power Agency, 51?iS.W.2d 258 (Tex.Civ. App. - Houston [lst Dist.] 1978, no writ). You premise your first question specifically

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on sections 18 and 29 of the Texas Pharmacy Act, article 4542a-1, V.T.C.S. You also cite sections 17 and 19 of the act in your request letter.
Section 17 details c:kre board's responsibilities, in part, as follows:
(a) The board is responsible for the regulation of the practice of pharmacy in this state, includingthe fo:kowing:
(1) the :.J.censing by examination or by reciprocity OE applicantswho are qualified to engage in.the practice of pharmacy and the licensingofpharmaciesunder thisAct;
(2) the renewal of licenses to engage in the practice of pharmacy and licenses to operatepharmacies;

. . . . (4) the enforcement of those provisions of this Act relating to the conduct or competence ofpharmacistr;

practicing in this state and the conduct of phkacies operating in this state and the suspekon, revocation, fining, reprimanding, cancellation, or restriction of licenses to engage in the practice of pharmacy
or to operate a pharmacy;

. . . . (6) the enforcement of this Act and any rules adoptedunder thisAct.
(b) The board has the following responsibilitiesrelating 1:~thepracticeof pharmacy and to prescription drugs and devices used in this state in the diagnosis:,mitigation, and treatment or prevention of in:ury, illness,and disease:
(1) reguktion of the delivery or distribution of prem:ription drugs and devices, includina the r%zht to seize, after notice and hearing. any prescription drugs or devices posing a hazard to the public health and welfare,but theboardmay not regulate: [certain manufacturingandwholesale exceptions];

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(2) specification of minimum standards for professional environment, technical equipment, and security in the prescription dispensing area; and
(3) specification of minimum standards for drug storage,maintenance of prescription drug records, and procedures for the delivery, dispensing in a siuitablecontainer appropriately labeled, or providing of prescription drugs or deviceswithir.thepractice of pharmacy. (Emphasisadded).
Section 19 states, in part, that

(a) A person may not dispense or distribute prescription dru@ unless he is a licensed pharmacist or is autt.orized by thisAct to dispense or distributeprescriptiondrugs. (Emphasisadded).
Section 29provides Cat

(a) A pharmacy shall annually register with the board.

. . . . (d) The boa::dshall establish by rule the standards that each pharmacy and its employees or personnel involved in the practice of pharmacy shall meet to qualify for the licensing or relicensingas a pt.armacyin each classification.

. . . . (f) The board shall have the authority to inspect facilities licensed under this Act for compliancewith t:his Act.
Section 18 adds to section 29(f) by providing for extensive administrative inspections of the physical facilities of pharmacies under theboard's jurisdiction.

In light of theseprovisions, the context of your first question requires consideration 0:: regulation both of "the practice of pharmacy" and of "pharmacies." You do not present any specific administrativeruleswhich explainhow theboard plans to apply all of these provisions to out-o:i-state mail-order pharmacies. The legislature intended to grant theboard statutoryauthority,under sections 17 and 19, to regulate the practice of pharmacy by out-of-state

p. 2465Dr. Jerry Hedge - Page 4 (:JM-555)

pharmacists and pharmacies 'onlyto the extent they actually engage in business within the state of Texas. Although thismay include annual registrationof pharmaciesunder section 29(a), the legislature could not have intended the board to physically inspect, pursuant to sections 18 and 29(f), fac:il.ities located in other states. Thus, this statute permits the boar,d

### to require that persons who practice pharmacy in Texas be licensed; it does not allow the board to license pharmacies that are locatedoutside of Texas.
Section 17 authorize:3the board to regulate the "practice of pharmacy in this state." Section 19 authorizes the board to prohibit persons from engaging unlawfully in the "practice of pharmacy." The "practice of pharmacy" is defined in section 5 of article 4542a-1 as follows:
(29) 'Practiceof pharmacy'means interpreting

and evaluatinaur,escrintion or medication orders. dispensing and -labelingdrugs or devices, seleci ting drugs and r&ewing drugutilization, storing prescription drrgs and devices and maintaining prescription drug records in a pharmacy, advising
or consulting when necessary or required by law about therapeuti:value, content, hazard, or use of drugs or devices, or offeringor performing the services and transactions necessary to operate a pharmacy. (Emphas;is added).
Sections 17 and 19 also provide direct authority to regulate the dispensing, distributing, and delivering of prescription drugs. See 5517(b)(1)-(3); 19(a). These terms are defined in section 5z follows:
(14) 'Deliver'or 'delivery'means the actual,

constructive,or attempted transferof a prescription drug or device or controlled substance from
one person to ar,other, whether or not for a consideration.

. . . . (1’3) 'Dispense' means preparing, packaging, compounding, or labeling for delivery a prescription drug or devtce in the course of professional practice to an ultimate user or his agent by or pursuant to the lawfulorder of a practitioner.
(17) 'Distribute' means the delivery of a prescription dru(;or device other than by administering or dispersing. (Emphasisadded).

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Out-of-state mail-or&r pharmacists or pharmacies which fill prescriptions for Texas residents clearly deliver, dispense, or distribute those prescriptions in Texas. Consequently, the legislature granted authority in sections 17 and 19 of article 4542a-1 to regulate mail-order sales or transfers of prescription drugs from out-of-state pharmacists or pharmacies to persons within Texas with regard to the asvects of suchpractice thatmay directly affect users residing in Texas. See .sl& V.T.C.S. art..4476-14. §2(b); art. --- 4476-15, §1.02(8)-(13).

Your second question is whether such regulationwould create an unconstitutionalburden on interstate commerce. Because you do not present specific administrativerules detailing exactlywhich aspects of sections 17 and 19 ~11:.be applied to out-of-statepharmacies and pharmacistsand how those ~?::ovisions will be applied, this opinion can provide only the general principles of law established in similar
casesunder the Commerce Ctause of theUnited StatesConstitution.

The basic criteria for determiningthevalidity of state statutes and actionswhich affect interstatecommerce are set forth in Pike v. Bruce Church, Inc., 397U.S. 137, 142 (1970). **as** follows:

Where the statuteregulates evenhandedlyto effectuate a legitimate local public interest,and its effects on interstate commerce are only incidental, it wilt be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits. If a legitimate local purpose is found, then the questionbecomes tone of degree. And the extent of the burden that will be toleratedwill of course depend on the nature of the local interest involved, and on whether it could be promoted as well with a lesser impact on interstate activities. (Citationomitted).
Authorities in several jurisdictionsacross the countryhave considered the constitutionality of different statutory schemes which regulate out-of-state mail-order pharmacists or pharmacies with varying results. Some upheld the constitutionalityof their statutes under the Commerce Clause. See, e.g., Pharmaceutical Manufacturers Association v. New Mexico-Board of Pharmacy, 525 P.2d 931 (N.M. Ct. App. 1974); Wisconsin Attorney General Opinion No. 33-83 (August 23, 1983); See also 61 Op. Cal. Att'y Gen. 192 (No.CV 76-212,CV 77-236; May 2, 1978). Others have not. See, e.g., Iowa v. Rasmussen, 213 N.W.2d 661 (Iowa 1973); Nebraska Attorney General Opinion No. 57 (April 4, 1985); Ohio Attorney General Opinion No. 82-032 (May 4, 1982). All of these op:Lnionsagree, however, that regulation of prescription drugs meets the first part of the constitutional test

p. 2467Dr. JerryHedge - Page 6 1:JM-555)

under the Commerce Clause -- that the regulation must effect a legitimate local interest.

Article 4542a-1, in E,ection2. recognizes that the practice of pharmacy in this state affects the health, safety, and welfare of the public. The overallpurpose of the act is toprotect the consumers of prescription drugs. The State Board of Pharmacy also has regulatory duties with regard to cortrolling drug abuse and misuse under the Texas Controlled Substances Act, article 4476-15, V.T.C.S., and the Texas Dangerous Drugs Act, article 4476-14.V.T.C.S. The regulation of the delivery,distributi,on, and dispensingof prescriptiondrugs is well within the traditionaldefinitionof a state'spolicepower. See Head v. New Mexico Board of Examiners in Optometry 374.U.S. 424 (1963); PharmaceuticalYinFEacturers Association v. iew Mexico Boar: of Pharmacy, 525 P.2d at 9?i.

In Pike v. Bruce Churc&, Inc., 397 U.S. at 142, the Court stated that regulationmust be evenhanded. The Texas PharmacyAct is, on its face, even-handed. Under the Commerce Clause, application of the state statute must not discriminate aeainst nonresidents eneaeed in interstate commerce. fee Pike v. --- Bruce Church, supra; Hun;;. WashingtonAppleAdvertisingCommission, 432U.S. 333 (1977). Because article 4542a-1 applies to both in-state and out-of-statepharmacists and pharmacies, and does not authorize regulations for out-of-state pharmacistsand pharmacieswhichdo not apply to those in Texas, it is not per se unconstitutiona~l. See Iowa v. Rasmussen, 213 N.W.2d at 667; Nebraska Attorney Ger,eralTinion No. 57, at 4; Ohio Attorney General Opinion No. 82-032, at 5; Wisconsin Attorney General Opinion No. 33-83,at 4.
Nevertheless, even if sitate regulation of mail-order pharmacists and pharmacies serves a legitimate public interest and is applied evenhandedly,under the test set forth in Pike v. Bruce Church, the burden imposed on interstate: commerceby regulationmust not outweigh the benefits derived. As c,uotedabove, the court in Pike v. Bruce Church stated that the question is one of degree, depending on the nature of the local interest involved and on whether the interest could be promoted in a less burdensome way. 397 U.S. at 142. The extent of the burden imposed is the analytical point on which legal authoritiesdiverge.

The court in Pharmaceutical Manufacturers Association v. New Mexico Board of Pharmacy characterized the regulations and the licensing fee imposedby tt,e New Mexico statutes as a smallburden in relation-to the-state's ir,terestin drug control. 525 P.2d at 935. The regulations in question were similar to those at issue here insofar as they dealt with regulation of safe storage and labeling of drugs and with the registration or licensing of pharmacists. Similarly, the Wisconsin Attorney General determined that the primary purpose and effect of such regulation is to protect the public.

p. 2468Dr. Jerry Hodge - Page 7 (JM-555)

Because the effect on inixcstate commerce was merely incidental to this purpose, no undue br,rdenon interstate commerce was found to exist. OpinionNo. 33-83, at 4; see also 61 Op. Cal.Att'y Gen. 192.

In contrast, the court in Iowa v. Rasmussen, supra, struck down state regulations which, l.npractical effect, prohibited Iowa pharmacists from filling prescriptionswritten by nonresident physicians who were not registered by Iowa authorities. 213 N.W.2d at 663. Clearly, the issue involved here differs. Moreover, the court in Rasmussen declined to rule on whether the local interest involved outweighed the burden imposed, relying instead on a preemption argument. The court cited Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440 (1560), for the proposition that, under the Commerce Clause, state regulation must not disrupt "uniformity" in interstate commerce. 21:) N.W.2d at 667. The Rasmussen court concluded that state regulation would -preventuniformity in administering federal registration provisions enacted to control drug trafficking. See also Ohic' Attorney GeneralOpinionNo. 82-032,at 6.

The court's conclusiouwith regard to preemption,however, is no longer persuasive. Congres:sdid not intend to preempt the field of drug abuse control:

No provisionof t:his subchapter shallbe construed
as indicating z.n intent on the part of the Congress to occupy the field in which that provision operates, including criminal penalties, to the exclusion of any State law on the same subjectmatter whichwould otherwisebe within the authorityof the State,unless there is a positive conflictbetween thatprovisionof this subchapter and that State l&f so that the two cannot consistently stand togei%.er

--* (Emphasisadded).

21 U.S.C. 5903 (1982). The Texas PharmacyAct parallels, rather than conflictswith the federal sitatute. See, e.g., art. 4542a-1, 605 (lo)- (12); 6; see also arts. 44;'t1-14, 4476-15.

The Nebraska Attorner General stated that having to meet the licensing requirements of a number of states would impose a substantial burden on the pt.srmacies'ability to engage in interstate
commerce. OpinionNo. 57,pp. 4-5. The opinion stated that

[i]nsuch an instance.thepharmacy involvedwould be subject to ,multiple licensing procedures, including duplicative registrations, records requirements,and :.abeling requirements.
regulationswere also deemed to be unnecessarilyduplicative
-. Id. The : because they operated parallel to the federal statutes. The added

p. 2469Dr. JerryHedge - Page 8 (JM-555)

burden of complyingwith a duplicative statute regarding the practice of pharmacy,with the "burden" lying primarily in registrationand in additional reporting, lab~LLing, and record keeping functions, is not sufficient to outweigh tha state's interest in the control of potentially dangerousdrugs. ::fthe pharmacyhas already created records, it should not be a tremcrtdous"burden" to provide extra copies of those records.
This burden is substantially less onerous than the regulations which have been held unconstitutionalby the Supreme Court under the Commerce Clause. For example, in Pike v. Bruce Church, the Supreme Court struck down a statute which stated a primary purpose of promoting and preserving the reputation of Arizona cantaloupegrowers by prohibiting deceptive packaging and requiring a certain type of packagingprior to shipmertout of state. The parties stipulatedthat the practical effect of the statute was to compel the company in question to build a packir,g facility inArizona. The Court recognized that burdens on conrmercewhich require business operations to be performed in the home state that couldmore efficientlybe performed elsewheremust be viewed with particular suspicion. 397 U.S. at 145;
see alsoHunt v. WashingtcnAppleAdvertisingCommission, 432U.S. 333 (1977);DeanMilk Company ;,.City of Madison, Wisconsin, 340 U.S. 349 (1951). The Courthas uph;lda number of ordinancesand statuteswith burdens of the relativelyminor magnitude involved here. See, e.g., Exxon Corporationv. Governorof Maryland, 437U.S. 117 (1978);Breard
v. Alexandria, 341 U.S. 'f?2 (1951); Hartford Accident and Indemnity Co. v. Illinois, 298 U.S. 155 (1936);Asbell v. Kansas, 209 U.S. 251 (1908).

The argumenthas also been advanced that if a statute is, on its face. for the orotectioa of local economic benefit. then such a statute is per se unconst,itutional as an undue burden on interstate
commerce. SeemIowav. Rasmussen, 213N.W.2d at 666-67 (citingPike v. Bruce Church 397 U.S---

. at 145). As indicated, however, article 4542a-1 ap

-Fies to both in-state and out-of-state pharmacists and pharmacies with regard to the practice of pharmacy; it does not protect localpharmacists.

The purpose of the ac'tis to protect the drug-consumingpublic; thus the burden on interrtate commerce is merely incidental and is outweighedby Texas' interest in controllingthedispensing,distribution, and delivery of prescriptiondrugs. Because you do not present any specific administrati~~e rules which exlain how the board plans to regulate out-of-state mail-order pharmacies and pharmacists, we can only state that regulationby the board of out-of-statepharmaciesand pharmacists is not per se unconstitutionalunder the Commerce Clause. We emphasize that the law requires the least burdensome regulation which will effect the state’s objectives. The numerous cases cited in this opinion should provide guidance as to what sorts of regulation have been held tobe overlyburdensome.

p. 2470Dr. JerryHedge - Page 9 IJM-555)

In light of this rerponse to your first two questions, this opiniondoes not addressyour third question.

SUMMARY

The Texas Stat,e

Board of Pharmacymay regulate out-of-state mail-order pharmacists only to the extent that they .sctuallyengage in the practice of pharmacy or dispense, deliver, or distribute prescription drugs within the state of Texas. Such regulation is not Per se unconstitutional under the Commerce Clause of the United States Constitution.

JIM MATTOX Attorney General of Texas

JACK HIGHTOWER FirstAssistantAttorney Gen~eral

MARY KELLER ExecutiveAssistantAttorneyGeneral

RICK GILPIN Chairman,OpinionComittee
Preparedby JenniferRiggs AssistantAttorneyGeneral

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