Unfair Trade Practices - Pharmacy - Business & Professions - CA

Section § 4380

This law says that you can't resell drugs bought at special low prices, meant for nonprofit use, except in a few cases: if you use them for yourself, sell them to another eligible nonprofit with the same ownership ties for their own use, or sell a tiny amount to walk-in customers via prescription. It also allows for reselling during emergencies when there's no other option for getting these drugs in the area.

(a) The resale, by any person, of drugs acquired at preferentially low prices permitted under federal law only because of the Nonprofit Institutions Act (15 U.S.C. Sec. 13c) is prohibited except in any of the following instances:

(1) When for the person’s own use, as defined by the federal courts in Abbott Labs. v. Portland Retail Druggists (425 U.S. 1, 47 L. Ed. 2d 537) and DeModena v. Kaiser Foundation Health Plan, Inc. (743 F. 2d 1388).

(2) When sold to a purchaser also eligible for those prices under the Nonprofit Institutions Act, that controls, is controlled by, or is under common control with, the seller, and that purchases the products for its own use, as defined in paragraph (1).

(3) When sold to a walk-in customer pursuant to a prescription, provided that those sales represent less than 1 percent of the drugs purchased by the seller for its own use in this state.

(b) Nothing in this article prohibits the resale of drugs to any person in the occasional emergency situation where no other sources are readily available in the community to meet the emergency need.

Nonprofit Institutions Act preferential drug prices resale restrictions

Section § 4381

This section of the law deals with unfair competition. If someone breaks this part of the law, it's considered unfair, and there are specific actions that can be taken. Besides governmental enforcement, businesses or individuals can take legal steps to stop the violation and ask for damages. They don't need to prove actual damage or injury to get an injunction, which is a court order to stop the violation. If successful, they can recover triple their losses and legal fees. The court can also enforce any measures it sees fit to prevent future violations, and proving malicious intent is not required for a lawsuit under this section.

(a) A violation of this article is an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200) of Part 2 of Division 7, and this article is enforceable as provided in that chapter.

(b) In addition thereto, any person or trade association may bring an action to enjoin and restrain any violation of this article and to recover actual damages, if any.

(c) In an action for injunctive relief under this article, it is not necessary to allege or prove actual damages or the threat thereof, or actual injury or the threat thereof, to the plaintiff. In addition to injunctive relief, the plaintiff in any action shall recover three times the amount of his or her actual damages, if any, as well as three times the actual damages, if any, sustained by any person who has assigned to the plaintiff a claim for damages resulting from a violation of this section. In any action under this article in which judgment is entered against the defendant, the plaintiff shall be awarded reasonable attorneys’ fees together with the costs of suit.

(d) In issuing an injunction against a violation under this article, the court may, in its discretion, include any other restraint it deems expedient in order to deter the defendant from and ensure against future violations of this article.

(e) Proof of malice or intent to harm competition is immaterial to sustain a cause of action under this article.

unfair competition injunctive relief treble damages

Section § 4382

This law allows the board to audit people to ensure they follow certain limits. However, if a facility or pharmacy mainly serves members of a prepaid group health plan, only the Department of Managed Health Care can audit them, based on its authority over those plans.

The board may audit persons for compliance with the limits established in paragraph (3) of subdivision (a) of Section 4380 except that in the case of a facility or pharmacy that predominately serves members of a prepaid group practice health care service plan, those audits may be undertaken solely by the Department of Managed Health Care pursuant to its authority to audit those plans.

audit compliance prepaid group practice health care service plan