Pharmacy and drugstore insurance: prescriptions filled, risks covered.

California Board of Pharmacy rules underwriters read

In California, these Board of Pharmacy rules shape your application.

• One license per location (B&P 4110): no one may run a pharmacy without a Board license, renewed every year, and each premises needs its own. A second store is a new location to the Board and on the policy.
• Pharmacist-in-charge (B&P 4113): the Board must approve a PIC before it issues or renews the license, and the PIC is responsible for the pharmacy's compliance with state and federal pharmacy law. When the PIC leaves, the pharmacy has 30 days to notify the Board and propose a replacement. An interim PIC can serve no more than 120 days.
• Sterile compounding (B&P 4127.1): sterile compounding needs its own license, renewed yearly, issued only to a licensed pharmacy location and its owner, after a Board inspection and a review of your written procedures, self-assessment and a list of sterile medications compounded since the last renewal. A recall notice for a sterile product you compounded goes to the Board within 12 hours, as does an adverse effect reported or potentially attributable to one, which must also be reported immediately to the FDA's MedWatch program.

Have your latest Board inspection report, PIC name and compounded-product list ready. Outside California, these rules vary by state; send me your state board's latest inspection report.

DEA and Board rules for missing controlled drugs

Federal and California rules set both the controls and the reporting clocks.

• DEA registration: 21 CFR 1301.12 requires a separate registration for each principal place of business where controlled substances are dispensed.
• Storage: under 1301.75(b), Schedule II to V drugs go in a securely locked, substantially constructed cabinet, though pharmacies may instead disperse them through noncontrolled stock in a way that deters theft or diversion.
• Who gets access: 1301.76(a) bars giving access to an agent or employee with a felony conviction related to controlled substances, or anyone whose DEA registration application was denied, or whose registration was revoked or surrendered for cause.
• Theft or significant loss: 1301.76(b) requires written notice to the local DEA Field Division Office within one business day of discovery, then a complete DEA Form 106 within 45 days. Filled prescriptions lost in transit are reported on Form 106 by the retail or central fill pharmacy that contracted the carrier (1301.76(d)).
• Board of Pharmacy: 16 CCR 1715.6 requires a report to the Board within 30 days of discovery once losses reach set thresholds (for oral tablets or capsules, 99 dosage units counted over the prior year). Any loss attributed to employee theft must be reported. Separately, B&P 4104 requires a report within 14 days of receiving an admission, video or documents showing theft, diversion or self-use by a licensed individual, or of a termination for it. The report includes the date of your last controlled-substance inventory.

Keep copies of those reports, inventory counts and any video; a crime underwriter or adjuster will ask for them too.

Your pharmacist's policy vs. the pharmacy's

IRMI describes druggist liability insurance as a form of professional liability insurance protecting the druggist against suits arising from filling prescriptions, misdelivery of drugs and other operations. The pharmacy's policy and a pharmacist's own policy are separate contracts. I compare:

• Who is an insured: check whether the entity policy names employed pharmacists, technicians, relief pharmacists and the PIC, and whether it applies to work done for another employer.
• Trigger: a claims-made policy is triggered by a claim made during the policy period; if it has a retroactive date, the wrongful act must have taken place on or after that date. An extended reporting period is a set time after a claims-made policy expires during which a claim can still be made as if during the policy period. Ask about both before changing carriers or closing a store.
• Consent and reporting: under B&P 801 (applied to Board of Pharmacy licensees by section 800), an insurer may not settle without the insured's written consent unless both waive it. The professional liability insurer must report a settlement or arbitration award over $3,000 for death or personal injury caused by the licensee's negligence, error or omission to the Board within 30 days after the settlement is signed or the award is served.

If a pharmacist carries their own policy, send me both declarations pages; whether either responds depends on its wording. For other healthcare entities, see medical malpractice insurance.

Official sources

• California B&P Code 4113 (pharmacist-in-charge)
• California B&P Code 4127.1 (sterile compounding)
• California B&P Code 4125 (quality assurance)
• 16 CCR 1711 (medication errors)
• 16 CCR 1715.6 (drug loss reports to the Board)
• 21 CFR 1301.76 (eCFR)
• 45 CFR Part 164 Subpart D, HIPAA breach notification (eCFR)
• California Civil Code 1798.82
• IRMI: druggist liability insurance
• California B&P Code 801 (insurer consent and reporting)