United States: Protectionist Pharmacy Act Of Puerto Rico Not An Obstacle For Mail-Order Pharmacies

After years of uncertainty as to the legality of the mail-order pharmacy business in Puerto Rico, the United States Court of Appeals for the First Circuit finally put the issue to rest in National Pharmacies, Inc. v. Feliciano de Melecio, 221 F.3d 235 (1st Cir. 2000) (affirming National Pharmacies, Inc. v. Feliciano de Melecio, 51 F.Supp. 2d 45 (D.P.R. 1999).

National Pharmacies, a largescale mail-order pharmacy licensed under the laws of New Jersey and employing New Jersey licensed pharmacists, entered into an agreement with Cruz Azul de Puerto Rico ( Blue Cross ) to provide medication to Blue Cross insureds who wanted their prescription drugs covered by the health insurance plan to be mailed to them. National Pharmacies had no pharmacy in Puerto Rico; instead, it planned to mail all prescription drugs from New Jersey to its clients in Puerto Rico.

Perhaps prompted by opponents to National Pharmacies proposed endeavor, the Secretary of Health of Puerto Rico stated in a letter to the College of Pharmacists of Puerto Rico and the Association of Pharmacy Owners of Puerto Rico that the Pharmacy Act of Puerto Rico forbade mail-order services. Encouraged by the Secretary s letter, the College of Pharmacists and the Association of Pharmacy Owners filed a complaint in the Department of Health of Puerto Rico as well as a request for injunctive relief in the Commonwealth courts to prevent National Pharmacies from mailing prescription drugs to persons in Puerto Rico. National Pharmacies responded by filing suit in the United States District Court in Puerto Rico seeking declaratory and injunctive relief against the Secretary, the College of Pharmacists, and the Association of Pharmacy Owners.

National Pharmacies main argument was that the Pharmacy Act is an unconstitutional burden on interstate commerce because it requires Puerto Rico residents to obtain prescription drugs only from pharmacists licensed in Puerto Rico who reside in the town where the patient s pharmacy of choice is located; that a pharmacy dispatching medications to Puerto Rico residents must be managed by a pharmacist who also must be present at the pharmacy for a certain number of hours per week; and that any pharmacy dispatching medications to patients in Puerto Rico must be licensed by the Secretary and subject to inspections by the Department of Health.

The district court chose not to address the constitutional inquiry, but rather concluded that the provisions of the Pharmacy Act challenged by National Pharmacies were applicable only to pharmacies within Puerto Rico. Hence, National Pharmacies was not bound by those particular provisions of the Pharmacy Act because it was not located in Puerto Rico. As a consequence, National Pharmacies could not be denied a license from the Secretary and registration from the Board of Pharmacy based on the provisions of the Pharmacy Act being challenged.

The court of appeals affirmed making several cautioning remarks. First, the appellate court made it clear that it was not ruling on whether mailorder pharmacies sending medications from one location in Puerto Rico to another within the island were forbidden by the Pharmacy Act. Second, the court of appeals emphasized that National Pharmacies is not totally exempt from regulation. If the Department of Health were to enact as the overwhelming majority of the states have enacted regulations regarding mail-order pharmacies from outside of Puerto Rico, National Pharmacies would have to comply with them.

The National Pharmacies decision may have far-reaching implications for the regulatory framework of the Puerto Rico Health Department, in particular with regard to the issuance of Certificates of Necessity and Convenience ( CNCs ) currently required by law to open new pharmacies or relocate existing ones. Pharmacies in Puerto Rico will now face competition from any pharmacy in the United States (and perhaps even beyond) that is willing and capable of mailing prescription drugs to Puerto Rico residents. Thus, the Department of Health s regulations requiring an analysis of the viability of a new pharmacy if others already exist within a radius of one mile seem superfluous if not naive. Furthermore, although the court of appeals expressly refused to rule on whether intra-island mail-order service was covered by the Pharmacy Act, the eventual demise of any prohibition on such grounds seems inevitable primarily because it is difficult to conceive a justification for allowing mail-order services from pharmacies outside of Puerto Rico while not from pharmacies in Puerto Rico which would mail prescription drugs to customers in Puerto Rico.

The court of appeals willingness to overcome (or more accurately, circumvent) protectionist measures is an encouraging sign for mainland corporations attempting to do business in Puerto Rico that face hurdles such as the Pharmacy Act and the Dealers Act, known as Law 75. Nevertheless, those willing to take a step ahead of the pack, like National Pharmacies, should seek legal advice before attempting to swim in such uncharted waters.