Many independent pharmacies across the nation find themselves forced to shut their doors because of low reimbursements and DIR fees, aggressive PBM practices, and increased investigations and fines by state and federal agencies. In addition, pharmacies must comply with an ever-increasing number of regulations and many small pharmacies are not in position to follow and comply with all regulations and Board of Pharmacy’s opinions. Instead – they choose to close. Many have been serving their communities for decades. Often, shutting the doors means leaving the community without a pharmacy.

A number of pharmacy publications have been covering the issue of a rising number of pharmacies going out of business. The subject of this post is not to reiterate but to guide a pharmacy in legal compliance when closing its business.

Prior to closing, there are a few important issues that the pharmacy needs to address, such as:

  • where to store pharmacy records;

  • what to do with the controlled drug inventory and records;

  • who will take possession of the drug inventory;

  • how to return DEA registration and Forms-222;

  • whether pharmacy labels and prescription pads need to be destroyed.

Today we will focus on the subject that pharmacies are most concerned about –  compliance with DEA’s regulations and notifying the Board of the business closure.

            DEA’s requirements:

A pharmacy that discontinues business activities either completely or only regarding controlled substances must return its DEA registration certificate and unused official order forms (DEA Form 222) to the local DEA Registration Specialist (their address and contact information can be easily found online). In addition, DEA may ask for the location of where inventories, prescriptions, and other required controlled substance records will be stored during the requisite two-year retention period.

           Disposing of controlled substance inventory:

A pharmacy has several options when closing its controlled substances inventory:

  1. Transfer to Another Pharmacy. On the day the controlled substances are transferred, a complete inventory must be taken which documents the drug name, dosage form, strength, quantity, and date transferred. In addition, DEA Form 222 or the electronic equivalent must be prepared to document the transfer of schedule II controlled substances. This inventory will serve as the final inventory for the registrant going out of business and transferring the controlled substances. It will also serve as the initial inventory for the registrant acquiring the controlled substances. A copy of the inventory must be included in the records of each pharmacy.  It is not necessary to send a copy of the inventory to the DEA.  The pharmacy acquiring the controlled substances must maintain all records involved in the transfer of the controlled substances for two years.

   2. Transfer to the Original Supplier or Original Manufacturer. The pharmacist must maintain a written record  showing:

                          – The date of the transaction;

                          – The name, strength, dosage form, and quantity of the controlled substance;

                          – The supplier or manufacturer’s name, address, and registration number.

        The DEA Form 222 or the electronic equivalent will be the official record for the transfer of schedule II controlled substances.

   3.  Reverse Distributors Authorized to Dispose Controlled Substances. A pharmacy may forward controlled substances to a DEA registered reverse distributor who handles the disposal of controlled substances (for a list of such distributors, you may contact your DEA local branch).  When a pharmacy transfers schedule II controlled substances to a reverse distributor for destruction, the reverse distributor must issue an official order form (DEA Form 222) or the electronic equivalent to the pharmacy. When schedules III-V controlled substances are transferred to a reverse distributor for destruction, the pharmacy must maintain a record of distribution that lists the drug name, dosage form, strength, quantity, and date transferred. The DEA registered reverse distributor who will destroy the controlled substances is responsible for submitting a DEA Form 41 (Registrants Inventory of Drugs Surrendered) to the DEA when the controlled substances have been destroyed. A DEA Form 41 should not be used to record the transfer of controlled substances between the pharmacy and the reverse distributor disposing of the drugs.

        Compliance with the Board of Pharmacy regulations

When terminating a pharmacy business, you must notify the Board of Pharmacy of the:

  1. termination date;

  2. information on the transfer of the inventory (if applicable), such as the date of sale or transfer of such drugs, devices or appliances; name and address of purchaser; inventory of dangerous drugs and devices showing their disposition;

  3. location of records of manufacture, sale, purchase, and disposition of dangerous drugs and devices.

You must contact the Board prior to transferring or selling any dangerous drugs, devices or hypodermics inventory as a result of termination of business or bankruptcy proceedings and shall follow official instructions given by the Board applicable to the transaction.

In addition, there are other issues to handle with when closing a pharmacy, such as lease termination, balancing and closing business accounts, employment termination of pharmacy staff – just to name a few. It is important to close the pharmacy on a right note; otherwise, you might face state or government agencies (and even lawsuits) down the road, when you are least prepared.