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Matter of C.V.S.

Decided: August 14, 1989.

IN THE MATTER OF C.V.S. PHARMACY, WAYNE TIMOTHY BROPHY, R.P. PHARMACIST-IN-CHARGE


On appeal from the Superior Court, Appellate Division, whose opinion is reported at 224 N.J. Super. 631 (1988).

For reversal and reinstatement -- Justices Clifford, Handler, Pollock, O'Hern, Garibaldi, and Stein. For affirmance -- none. The opinion of the Court was delivered by Pollock, J.

Pollock

[116 NJ Page 493] The sole issue on this appeal is the constitutionality of N.J.S.A. 45:14-12, which provides that it is "grossly unprofessional conduct" for a pharmacist to offer discounts or rebates on the sale of drugs or medication. The Appellate Division found the statute unconstitutional, holding that it did not promote the public health, safety, or welfare, and that it was void for vagueness. 224 N.J. Super. 631 (1988). Because the matter involved a substantial constitutional question, the State Board of Pharmacy (Board) appealed as of right. R. 2:2-1(a). We reverse.

-I-

In March 1985, Consumer Value Stores (CVS), a chain of retail pharmacies operating in New Jersey, distributed mail circulars for its stores in Wayne, New Jersey, advertising a special one-week $3.00 price for the vast majority of its prescription drugs. The advertisement read: "Prescription Savings. This price valid at both CVS Pharmacy Wayne stores only. All prescriptions $3.00, Saturday, March 23 through Saturday March 30, 1985." For most drugs, the advertised price was less than the regular price for the drugs; in many instances, the price was less than the cost to CVS.

The Board subsequently issued a penalty letter to respondent, Timothy Brophy, the resident pharmacist of a CVS drug store in Wayne, charging him with violating N.J.S.A. 45:14-12f. The statute provides that it is "grossly unprofessional conduct" for a pharmacist to engage in

[t]he distribution of premiums or rebates of any kind whatever in connection with the sale of drugs and medications provided, however, that trading stamps and similar devices shall not be considered to be rebates for the purposes of this chapter and provided further that discounts, premiums and rebates may be provided in connection with the sale of drugs and medications to any person who is 62 years of age or older.

Here, the decision to advertise the discounted prices had been made not by respondent but by the CVS corporate management. As the pharmacist in charge, however, respondent was responsible for any advertising by the pharmacy. N.J.A.C. 13:39-8.14b14.

After an administrative hearing, the Board found respondent guilty and fined him $500. In reversing, the Appellate Division found both that a discount was tantamount to a prohibitive rebate and that the statute was not reasonably related to the promotion of the public interest. The court rejected the Board's contention that the statute protected the health, safety, and welfare by discouraging the public from buying drugs at different pharmacies, a practice that the Board contended would prevent monitoring drug use by individual customers.

See Supermarkets Gen. Corp. v. Sills, 93 N.J. Super. 326 (Ch.Div.1966). The court stated:

We question the validity of a statute which purports to perpetuate a sort of "marriage" between customer and pharmacist. For reasons that are beyond the scope of this opinion, we doubt that the State could mandate such a binding relationship by direct legislation. We have difficulty perceiving how the State can do by indirection what it is prohibited from doing by direct legislation. Werner Machine Co. v. Director of Div. of Taxation, 31 N.J. Super. 444, 449 (App.Div.1954), aff'd, 17 N.J. 121 (1954). However, even if this were a valid public purpose, it is not served by a statute which prohibits the distribution of "premiums or rebates of any kind whatsoever in connection with the sale of drugs and medications," and which at the same time provides "that trading stamps and other similar devices shall not be considered rebates * * *." With no limitation on the quantity or value of trading stamps "or other similar devices" which could be offered a consumer in connection with the sale of prescription medication, the attempt to regulate price becomes meaningless. Enough trading stamps or similar devices could be provided the consumer as to make the "sale" of the prescription a virtual gift. [224 N.J. Super. at 636.]

According to the court, the irrationality of the statute was exacerbated by the exception for persons age sixty-two and over, a group that uses a disproportionate amount of prescription drugs and should, therefore, be most in need of protection. Additionally, the court found that other requirements obligated pharmacists to maintain records of drugs dispensed to patients and "to determine any harmful drug interaction, reaction, or misutilization of the prescription." N.J.A.C. 13:39-9.13(c).

Finally, the court concluded that the statute was vague, reasoning:

There is no baseline price from which a pharmacist can be charged with providing a discount in connection with the sale of a prescription drug. Put another way, there is no fixed or otherwise identifiable price from which the discount is to be calculated. This provision is so indefinite and uncertain as to be void for want of due process. It is not sufficiently explicit to inform those subjected to action thereunder as ...


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