Opinion ID: 2630324
Heading Depth: 1
Heading Rank: 18

Heading: Failing to provide accurate pedigrees

Text: Dutchess and Legend argue that the Board misinterpreted Nevada regulatory law when it determined that Dutchess and Legend violated NAC 639.603 by providing pedigrees on sales of Lupron that did not indicate from whom Dutchess and Legend purchased the drug. Dutchess and Legend contend that NAC 639.603(1) exempts wholesalers that have obtained authorized distributor status with the manufacturer from providing pedigrees with information about prior sales of the drug. The Board responds that NAC 639.603(1) exempts wholesalers from providing information of prior sales on pedigrees only if the wholesaler is an authorized distributor and did not purchase the drug from another wholesaler. We agree with the Board and conclude that Dutchess and Legend were properly found guilty of violating NAC 639.603. NAC 639.603(1) generally provides the following: [E]ach wholesaler shall provide a statement of prior sales identifying each sale of a prescription drug before the prescription drug is sold to another wholesaler or to a pharmacy when supplying prescription drugs if the wholesaler: (a) Has not established an ongoing relationship with the manufacturer from whom the prescription drug was purchased; or (b) Purchased the prescription drug from another wholesaler. The regulation is phrased somewhat awkwardly. It sets forth a requirement that wholesalers that are not authorized distributors, i.e., wholesalers that do not have an ongoing relationship with the manufacturer [32] or that purchased prescription drugs from other wholesalers, must provide pedigrees with all subsequent sales. If a wholesaler meets the description in either subsection (a) or (b), it must provide a pedigree. Dutchess and Legend argue that subsections (a) and (b) set forth two distinct exceptions to the pedigree requirement and that satisfaction of either subsection exempts a wholesaler from providing pedigrees on subsequent sales. We disagree. The language of the regulation makes clear that a wholesaler must provide a pedigree if it either is not an authorized distributor or if it purchased the drug from another wholesaler. The word `or' is typically used to connect phrases or clauses representing alternatives. [33] The regulation's use of or indicates that the descriptions in the subsections are in the alternative to, and [are] not conditioned by the other subsection. [34] If the regulation required all wholesalers to provide pedigrees unless either subsection applied, then both subsections would provide separate exceptions to the requirement. That is not the case here, contrary to Dutchess and Legend's argument. An exception exists only if the wholesaler is both an authorized distributor and purchased the drug from an entity other than another wholesaler. As indicated, testimony before the Board revealed that Dutchess and Legend were authorized distributors for TAP Pharmaceuticals, the manufacturer of Lupron. But, testimony and documentation also revealed that Dutchess and Legend purchased the Lupron in question from other wholesalers, and not from TAP, before reselling it. So, although Dutchess and Legend were authorized distributors, they were required to provide pedigrees under subsection (b) of NAC 639.603(1) because they purchased the prescription drug from other wholesalers. Therefore, the Board did not err when it concluded that Dutchess and Legend violated NAC 639.603(1) by failing to provide pedigrees on sales of Lupron disclosing the details of prior sales. Nevertheless, Dutchess and Legend further assert that NAC 639.603 is modeled after the federal statute that likewise sets forth a pedigree requirement. 21 U.S.C. § 353(e)(1)(A) exempts wholesalers who have obtained authorized distributor status from providing pedigrees: Each person who is engaged in the wholesale distribution of a drug subject to subsection (b) of this section and who is not the manufacturer or an authorized distributor of record of such drug shall, before each wholesale distribution of such drug..., provide to the person who receives the drug a statement ... identifying each prior sale, purchase, or trade of such drug. (Emphasis added.) However, the language in § 353(e)(1)(A) differs markedly from that in NAC 639.603(1). The federal statute clearly requires all wholesalers, except manufacturers and authorized distributors, to provide pedigrees. [35] In contrast to our above comparison of NRS 585.520(1) and its federal counterpart, section 331(a) of the Federal Food, Drug, and Cosmetic Act, here, the federal interpretation of an analogous provision is unpersuasive because the distinct language of the Nevada regulation indicates an intent to deviate from the federal provision. Indeed, the Board counters Dutchess and Legend's argument by stating that when enacting NAC 639.603(1), it intended to prevent the result obtained under the federal provision. The purpose of requiring a pedigree from wholesalers that meet the descriptions in either subsection (a) or (b) of NAC 639.603(1) is illustrated in a case such as this, when testimony before the Board revealed that Dutchess and Legend maintained authorized distributor status with TAP Pharmaceuticals so they could sell Lupron to other wholesalers without pedigrees, concealing the untrustworthy source of the drug. By requiring wholesalers to provide pedigrees unless they both are an authorized distributor and purchased the drug from an entity other than another wholesaler, NAC 639.603 serves the public policy interest in transparency in the wholesale prescription drug market.