United States: Compounding Pharmacies Protected By Medical Liability Act

In a court decision holding that a compounding pharmacy is entitled to certain protections against medical malpractice claims, the Supreme Court of Texas established a precedent that may well prove valuable to pharmacists facing lawsuits stemming from compounded drugs.

The court ruled that claims brought by a patient who allegedly suffered serious injuries as a result of a compounded drug are subject to the Texas Medical Liability Act (TMLA), which requires serving the complaint along with an expert report supporting the allegations. While the plaintiff tried to cast the allegations as a product liability case, the court determined they were, in essence, medical malpractice claims.

The case concerns an incident where a patient suffered a severe adverse reaction while receiving intravenous injections of lipoic acid, an antioxidant supplement, for treatment of hepatitis C. The product was administered by the plaintiff's doctor, who obtained it from a compounding pharmacy in Arlington, Texas. The compounding pharmacy did not receive a prescription for the patient when it compounded the product; it was part of an order the plaintiff's physician placed with the compounding pharmacy for lipoic acid for office use. The plaintiff alleged that as a result of the injection, she required hospitalization for several weeks and multiple blood transfusions, and that she ultimately became blind in both eyes. She sued the pharmacy and several individual pharmacists asserting "negligence in compounding, inadequate and inappropriate warnings and instructions for use," and that the product was "defective, ineffective and unreasonably dangerous." The plaintiff also alleged that the pharmacists, among other things, breached their implied warranties in the design, manufacture, inspection, marketing, and/or distribution of the product. The defendants moved to dismiss the complaint, arguing the plaintiff asserted medical malpractice claims that are governed by the TMLA, and that an expert report was required.

The court first considered whether the defendants were "health care providers" covered by the TMLA by determining whether they met the TMLA's definition for a "pharmacist," which limits qualifying activities to "the dispensing of prescription medicines that result in health care liability claims." Most cases against a pharmacy involve claims of misfilled prescriptions, and Texas courts generally agree that the TMLA applies in those circumstances. But the court went further to determine whether compounding the lipoic acid fell within the definition. It rejected the lower courts' holdings that the pharmacy's actions did not meet Texas Pharmacy Act's definition of "dispense," which means "to prepare, package, compound, or label, ... a prescription drug ... for delivery to an ultimate user or the user's agent under a practitioner's lawful order" because it was not compounded in connection with a prescription for a particular patient. The court noted that a pharmacist may "dispense ... a reasonable quantity of a compounded drug to a practitioner for office use," so compounding the product fell within the definition of "dispense." A "reasonable quantity" is an amount that the practitioner "anticipates may be used" before the drug's expiration date, so the Texas Pharmacy Act contemplates that a pharmacist may "dispense" a compounded drug to a physician without knowing the specific identity of the ultimate user, which may vary from requirements under the federal Drug Quality and Security Act (DQSA). The court also rejected the plaintiff's argument that the lipoic acid was not a prescription drug under the TMLA, noting that the Texas Pharmacy Act provides that only a "prescription drug or device" can be "dispensed."

The court also considered the plaintiff's argument that her claims were actually product liability claims, which are excluded from the TMLA. While the TMLA provides that pharmacists and pharmacies are healthcare providers for purposes of the TMLA with respect to "activities limited to the dispensing of prescription medicines which result in health care liability claims," the plaintiff argued it does not include other causes of action for the sale of mishandled or defective products, including the allegedly defective lipoic acid. The court concluded that the defendants were sued not simply for their roles as retailers of a potentially defective product, but also as manufacturers of that product. Because the Texas Pharmacy Act and its associated regulations distinguish between compounding and manufacturing, the compounding constituted "dispensing prescription medicines" under the TMLA rather than manufacturing, which can be subject to product liability claims.

Finally, the court rejected what it characterized as the plaintiff recasting her claims as breach of warranty and product liability claims to avoid the TMLA. The essence of the case was healthcare liability, the court concluded, and allowing a party to skirt the TMLA's requirements would undermine legislators' purpose for enacting it.

The court's decision is meaningful to pharmacies and pharmacists for a number of reasons. Clarifying that compounding falls under the auspices of the TMLA affords to them its multiple protections available to healthcare providers. Not only does it require a plaintiff to submit an expert report detailing the applicable standards of care, how the healthcare provider failed to meet those standards, and the relationship to the plaintiff's injuries, but this provision also stays discovery until the report has been served, and can entitle the healthcare provider to attorney's fees if the case is dismissed for failure to submit the report. Given the court's interpretation of what constitutes compounding, it appears the reasoning of the court's opinion would apply to compounding activities performed both under section 503A of the Federal Food, Drug, and Cosmetic Act as well as compounding performed by outsourcing facilities licensed under section 503B. While facilities operating under sections 503A and 503B may engage in other activities (e.g., repackaging), the opinion only discusses "compounding" as it is defined under the Texas Pharmacy Act, and "repackaging" is not included in that definition.

The TMLA also limits the damages and expenses a healthcare provider may be required to pay if a plaintiff prevails. First, it caps damages a plaintiff can recover. Damages for wrongful death are generally limited to $500,000, and noneconomic damages are typically capped at $250,000 for each claimant, adjusted for inflation. Texas does not require medical malpractice claims be referred to an arbitrator or screening panel, but counties are authorized to adopt alternative dispute resolution systems, and pretrial mediation is routine in many venues in Texas.

Finally, the case is notable for its conclusion that pharmacists are healthcare providers under the TMLA. Although opinions have been issued by Texas's Court of Appeals considering the TMLA's application to pharmacists, this case represents the Supreme Court of Texas's first opinion analyzing the issue in general, and considering its application to compounding pharmacists in particular. The court's analysis of the issues in light of the Texas Pharmacy Act's definition of various terms and phrases illustrates the importance of precision and specificity in crafting legislation that is designed to capture particular activities.

News reports indicate that the plaintiff plans to seek a rehearing, but parties generally must clear a high hurdle to succeed in a request that a court reverse its own decision. In the event the court's opinion stands, pharmacies and pharmacists – particularly those who compound drugs –have more assurance that certain of their activities are covered by the TMLA and the limits it places on medical malpractice claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions