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Newcomb Sales and Services Corp. v. New Jersey State Board of Pharmacy

Decided: June 5, 1987.

NEWCOMB SALES AND SERVICES CORP., A CORPORATION OF THE STATE OF NEW JERSEY, APPELLANT,
v.
NEW JERSEY STATE BOARD OF PHARMACY, RESPONDENT



On appeal from the Board of Pharmacy.

Furman, Shebell and Stern. The opinion of the court was delivered by Furman, P.J.A.D.

Furman

Appeal is brought from the Board of Pharmacy's denial of a permit to Newcomb Sales and Service Corp. (Newcomb) to operate a pharmacy on the ground floor of Newcomb Hospital in Vineland. Both the applicant and the hospital corporation are wholly owned subsidiaries of Newcomb Health Services Corporation.

The decision below was contrary to the advice to respondent board from the Attorney General, who is its legal advisor and the head of the Department of Law and Public Safety, to which the various Professional Boards, including respondent board, are assigned within the Division of Consumer Affairs. The Attorney General appointed special counsel, pursuant to N.J.S.A. 52:17A-13, to represent respondent board on the appeal by Newcomb and intervened himself to urge a reversal.

According to the Attorney General's opinion to respondent board, its reasons for denying Newcomb's applications were "legally insufficient." We agree and reverse. Respondent board's premise, although tacit, in denying a permit to Newcomb was that a retail pharmacy should not be located within a hospital, an erroneous and untenable interpretation of governing law in our view, as well as in the Attorney General's view.

N.J.S.A. 45:14-33 mandates issuance of a pharmacy permit to any qualified person upon a showing that:

a. The management of the pharmacy is in personal and continuous charge of a pharmacist registered in accordance with the laws of this State.

b. The pharmacy for which the permit is sought will be conducted in full compliance with the law and with rules and regulations of the said board.

c. The location and facilities of said pharmacy are such that it can be operated and maintained without endangering the public health or safety.

d. The said pharmacy shall offer complete pharmaceutical service by compounding or dispensing all prescriptions which may reasonably be expected to be compounded or dispensed by the pharmacist; and

e. The said pharmacy shall not offer professional services under terms and conditions which tend to interfere with or impair the free and complete exercise of professional judgment and skill or enter into any agreement which denies the patient the right of free choice of pharmacies.

Respondent board set forth six reasons for its denial of Newcomb's application, all directly related to the proposed location of its pharmacy within Newcomb Hospital: (1) The location would result in an unfair competitive advantage for the pharmacy business of outpatients and discharged patients to the "detriment" of their freedom of choice; (2) There would be a potential for "inventory leakage" from Newcomb Hospital's institutional pharmacy, which holds an institutional permit under N.J.S.A. 45:14-32 to dispense drugs to inpatients and hospital employees; (3) There would be a potential for steering of patients by "professionals;" (4) The hospital's institutional pharmacy was found guilty of four violations in 1980; (5) There would be a potential for assignment of employees of the tax exempt hospital to work in the pharmacy, whenever pharmacy employees were sick ...


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