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A Guide to Opening a Retail Pharmacy in New York (By Alec Sauchik, Esq.)

Posted by attorney Alec Sauchik

A GUIDE TO OPENING A RETAIL PHARMACY IN NEW YORK

Pharmacy ownership is many pharmacitsts' ultimate goal. Done right, it can be a lucrative, satisfying and pleasantly challenging endeavor. However, registering a new retail pharmacy establishment in New York is a nuanced and, at times, very frustrating process. Make one simple mistake, and you might run out of operating funds before you get a chance to to correct it. Some errors cannot be fixed. For example, unless you own the building where the pharmacy will be located, the registration process cannot begin until you sign a lease. But if the building does not have the appropriate certificate of occupancy, your application will be rejected. You might not learn about the unsuitability of your proposed location until it’s too late. There are a myriad other reasons why a pharmacy application could be rejected or delayed. With this in mind, it is very important to consult a professional very early in the process to avoid potential pitfalls. This guide is designed to broadly outline the steps involved in the process and highlight major areas of concern.

Who Can Own and Operate a Pharmacy?

In New York, an individual or a business entity, such as a corporation, partnership, or limited liability company, may own a pharmacy. New York does not require that one or more of the owners be a registered pharmacist, nor is it required that the entity be a professional corporation or professional limited liability company. The business entity can be either a “for profit" one, or a “not-for-profit." Deciding whether the prospective pharmacy will be operated as a business entity or in the individual capacity is the first step in the application process. It is generally preferable that a pharmacy be organized as a business entity. The preferred form of operation (corporation, LLC, or LLP) depends on many factors, and is something you should always discuss with a legal or tax professional.

Corporate Structure

The entity operating a pharmacy can be either a corporation, partnership, or limited liability company. The entity can have one or more shareholders/members. As part of the submission of the application to the Board of Pharmacy, the entity needs to provide a Certificate of Incorporation or Article of Organization or Partnership Agreement, stating the name and purpose of the entity. It is advisable that a certified copy obtained from the NY Department of State at the time of filing of the initiation documents be used for this purpose. A filing receipt from the Department of State also needs to be submitted. Next, the corporation or LLC must provide documentation indicating the stock distribution and number of issued and outstanding shares of stock or units of membership. This requirement can be satisfied by providing minutes of the organizational meeting or written consent of incorporators in a corporation, or an LLC membership agreement. The corporation/LLC must also provide documents indicating the officers or partners. This can be accomplished by providing minutes or written consents in lieu of a meeting of directors or LLC members, or by submitting bylaws or operating agreements.

Supervising Pharmacist Requirements

Every pharmacy in New York is required to have a Supervising Pharmacist (Pharmacist in Charge), who is designated as such by the pharmacy owner. A prospective owner is required to designate a supervising pharmacist at the time of submission of the pharmacy registration application. The supervising pharmacist must sign the pharmacy application together with the prospective owner. The supervising pharmacist is charged with complying with all laws and regulations applicable to the pharmacy, and oversees the staff and other pharmacists. The duties and responsibilities of the supervising pharmacist are extensive. The supervising pharmacist may not be a supervising pharmacist at any other pharmacy establishment. He or she must be employed as a practicing pharmacist full time (30 hours or more per week). Space, Layout, Required Items The applicable rules and regulations impose certain requirements with respect to the layout and size of a pharmacy establishment. The registered area may not be less than 300 square feet of continuous space. The compounding/dispensing area may not be less than 100 square feet. If a pharmacy is to be operated as a department of a general merchandizing establishment, there must be a partition of at least nine feet six inches at height separating the pharmacy department from the general area. If the ceiling is less than nine feet six inches high, the partition must be from floor to ceiling. When there is no pharmacist on duty, the pharmacy department must be closed so as to prevent access to it from the general merchandizing area. The department may be identified by a sign, and there may be a notation on the outside sign indicating a pharmacy within. The pharmacy must be equipped with adequate facilities for the safe storage of drugs; with adequate heating and ventilation; with sufficient lighting and with hot and cold water in the dispensing/compounding area. There must be a refrigerator for storage of drugs, with a thermometer. The pharmacy must also contain a copy of the current laws, rules and regulations governing the practice of pharmacy. There must be present a scale with weights, and other compounding and dispensing equipment. Several companies, such as Apothecary Products, Inc. (http://www.apothecaryproducts.com/home.aspx) sell new store opening kits containing all of the necessary equipment. Applicaiton Process A pharmacy application consists of the Application Form (PH-200), the Pharmacy Information Form (PH-210) and all supporting documents. All answers must be typed or printed. The Pharmacy Information Form must be accompanied by a carefully prepared diagram strictly complying with all of the requirements of the Board of Pharmacy. The diagram must indicate the area being registered as a pharmacy, the locations of the sink, refrigerator, drug storage bays, and a bathroom. The application must be accompanied by a check or money order for $345. Personal checks are acceptable. The required documentation is outlined in the form PH-208, which must also be attached. There are several corporate documents that are required to be submitted. These documents should be prepared by an attorney or accountant to ensure compliance. Photographs of the outside signs and the pharmacy area with the gates open and closed (if registered as a department) must be attached to the application. The application must also contain a sample label that will be used by the pharmacy. This can be obtained from a pharmacy software vendor that the pharmacy will purchase its software. The pharmacy application must be approached very carefully. Incorrect or inconsistent information will delay the application process. Inspection by the Office of Professional Discipline Following a review and approval of the application by the Board of Pharmacy, the file is transferred to the NY Department of Health's Office of Professional Discipline for on-site inspection. The Board of Pharmacy notifies the pharmacy of its approval via a letter containing the OPD's regional office's contact information to schedule the inspection. The pharmacy should carefully prepare for the inspection. The purpose of the inspection is to verify compliance with all relevant rules and regulations governing retail pharmacies. While the pharmacy is not required to have any inventory at the time of the inspection, it should nevertheless posses all the required equipment and be fully prepared for operation. The inspector will typically verify the correctness of the layout submitted to the Board of Pharmacy, will check the adequacy and proper functioning of the pharmacy equipment, including refrigerators and the scale, will ensure that the pharmacy is adequately lighted, ventilated and air-conditioned, that the dispensing area has a sink with hot and cold water, that the restroom is functioning properly, that all required licenses and permits are displayed, that phone and fax lines are functioning, as well as many other factors. It is highly advisable that the pharmacy's attorney prepare the pharmacy for, and be present during the inspection, since he or she may help resolve many problems at the time of the inspection, thus eliminating potentially costly delays. If the pharmacy successfully passes the inspection, the investigator prepares the report and sends the file back to the Board of Pharmacy, which then issues a registration number and mails the certificate. Post-Registration Issues To prepare the pharmacy for operation, many additional steps must be taken. First, upon receiving its registration certificate, the newly registered pharmacy must obtain a National Provider Identifier ("NPI"). The application is free, and can be done online. The pharmacy then needs to apply for a federal DEA number. The fee in connection with the application is $551, and the application can also be completed online. Upon receiving the DEA registration certificate, the pharmacy needs to apply for an NCPDP number (formerly "NABP"). Generally, upon registration, the pharmacy will contract with pharmacy suppliers and receive its shipment of inventory. At this time, the pharmacy should apply for Medicaid and Medicare provider numbers, as well as contract with private third-party payors. Prompt and correct submission of Medicaid and Medicare applications are critical to the pharmacy's success and should be done with the help of a knowledgeable professional. The process of obtaining Medicaid and Medicare provider numbers is beyond the scope of this guide. Conclusion Opening a pharmacy is a complicated but ultimately rewarding endeavor. To ensure that the pharmacy registration process proceeds smoothly and without frustrating rejections causing unnecessary delays, it is always advisable to be assisted by a team of knowledgable and reputable pharmacy attorneys.

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