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                                 Cctober 8, 1986




         Jerry Hodge, R.Ph.                          opinion No. JM-555
         President
         Texas State Board of Pharmacy               Re: Whether the State Board of
         211 East 7th Street, Suite 1121             Pharmacy may license and regu-
         Austin, Texas   78701                       late out-of-state mail-order
                                                     pharmecies

         Dear Dr. Hodge:

              On behalf of the Tmas    State Board of Pharmacy you ask the
         following questions:

                     1. Whether sections 18 and 29 of article
                  4542a-1, V.T.C.:., authorize the board to license
                  out-of-state plwmacies    or pharmacists which
                  solicit mail-ord,er sales of prescriptions from
                  Texas residents.

                      2. Whether requiring licensing by the board of
                   out-of-state pharmacies or pharmacists, whether
                   pursuant to a specific statute or based on an
                   implied legislative mandate, establishes an un-
                   constitutional burden on interstate commerce.

                     3. If it ir; assumed that out-of-state phar-
                  macies and phanmcists may dispense prescriptions
                  by mail to Texm residents without being licensed
                  by the board, :nhether] the pharmacies or phar-
                  macists [must] nevertheless comply with other
                  provisions of n-cticle 4542a-1, V.T.C.S. (Texas
                  Pharmacy Act), article 4476-15, V.T.C.S. (Texas
                  Controlled Subs,:ancesAct), and article 4476-14.
                  V.T.C.S. (Texas Dangerous Drugs Act), regarding
                  the dispensing cf prescriptions drugs.

              As a fundamental rule. administrative agencies have only those
         powers granted by statute:and those powers necessarily implied from
         the statutory authority conferred or duties imposed. City of Sherman
         v. Public Utility Commission, 643 S.W.2d 681, 686 (Tex. 1983); see
         also State ex rel. GrinzaCounty      Taxpayers Association v. Texas
         Municipal Power Agency, 51?iS.W.2d 258 (Tex. Civ. App. - Houston [lst
         Dist.] 1978, no writ). You premise your first question specifically




                                           p. 2463
                                                                       4

Dr. Jerry Hodge - Page 2        (34-555)
                                                                           .




on sections 18 and 29 of the Texas Pharmacy Act, article 4542a-1,
V.T.C.S. You also cite sections 17 and 19 of the act in your request
letter.

     Section 17 details c:kreboard's responsibilities, in part, as
follows:

             (a) The board is responsible for the regula-
          tion of the practice of pharmacy in this state,
          including the fo:kowing:

                (1) the :.J.censingby examination or by
             reciprocity OE applicants who are qualified to
             engage in. the practice of pharmacy and the
             licensing of pharmacies under this Act;

                (2)  the renewal of licenses to engage in
             the practice of pharmacy and licenses to
             operate pharmacies;

                .   .   .   .

               (4) the enforcement of those provisions of
            this Act relating to the conduct or competence
            of pharmacistr;practicing in this state and the
            conduct of phkacies    operating in this state
            and the suspekon,    revocation, fining, repri-
            manding,   cancellation, or    restriction of
            licenses to engage in the practice of pharmacy
            or to operate a pharmacy;

                .   .   .   .

                (6) the enforcement of this Act and any
             rules adopted under this Act.

            (b) The board has the following responsibi-
         lities relating 1:~the practice of pharmacy and to
         prescription drugs and devices used in this state
         in the diagnosis:, mitigation, and treatment or
         prevention of in:ury, illness, and disease:

               (1) reguktion of the delivery or distribu-
            tion of prem:ription drugs and devices, in-
            cludina the r%zht to seize, after notice and
            hearing. any prescription drugs or devices
            posing a hazard to the public health and wel-
            fare, but the board may not regulate: [certain
            manufacturing and wholesale exceptions];




                                      p. 2464
Dr. Jerry Hedge - Page 3     (JM-555)




                (2) specification of minimum standards for
             professional environment, technical equipment,
             and security in the prescription dispensing
             area; and

                (3) specification of minimum standards for
             drug storage, maintenance of prescription drug
             records, and procedures for the delivery, dis-
             pensing in a siuitable container appropriately
             labeled, or providing of prescription drugs or
             devices withir.the practice of pharmacy.
             (Emphasis added).

     Section 19 states, in part, that

            (a) A person may not dispense or distribute
         prescription dru@ unless he is a licensed phar-
         macist or is autt.orizedby this Act to dispense or
         distribute prescription drugs. (Emphasis added).

     Section 29 provides Cat

             (a) A pharmacy shall annually register with
          the board.

             .   .   .   .

             (d) The boa::d shall establish by rule the
          standards that each pharmacy and its employees or
          personnel involved in the practice of pharmacy
          shall meet to qualify for the licensing or re-
          licensing as a pt.armacyin each classification.

             .   .   .   .

             (f) The board shall have the authority to
          inspect facilities licensed under this Act for
          compliance with t:hisAct.

Section 18 adds to section 29(f) by providing for extensive admini-
strative inspections of the physical facilities of pharmacies under
the board's jurisdiction.

     In light of these provisions, the context of your first question
requires consideration 0:: regulation both of "the practice of
pharmacy" and of "pharmacies." You do not present any specific
administrative rules which explain how the board plans to apply all of
these provisions to out-o:i-statemail-order pharmacies. The legis-
lature intended to grant the board statutory authority, under sections
17 and 19, to regulate the practice of pharmacy by out-of-state




                                  p. 2465
Dr. Jerry Hedge - Page 4     (:JM-555)




pharmacists and pharmacies 'onlyto the extent they actually engage in
business within the state of Texas. Although this may include annual
registration of pharmacies under section 29(a), the legislature could
not have intended the board to physically inspect, pursuant to
sections 18 and 29(f), fac:il.ities
                                  located in other states. Thus, this
statute permits the boar,d to require that persons who practice
pharmacy in Texas be licensed; it does not allow the board to license
pharmacies that are located outside of Texas.

     Section 17 authorize:3 the board to regulate the "practice of
pharmacy in this state." Section 19 authorizes the board to prohibit
persons from engaging unlawfully in the "practice of pharmacy." The
"practice of pharmacy" is defined in section 5 of article 4542a-1 as
follows:

            (29) 'Practice of pharmacy' means interpreting
         and evaluatina ur,escrintionor medication orders.
         dispensing and -labeling drugs or devices, seleci
         ting drugs and r&ewing   drug utilization, storing
         prescription drrgs and devices and maintaining
         prescription drug records in a pharmacy, advising
         or consulting when necessary or required by law
         about therapeuti: value, content, hazard, or use
         of drugs or devices, or offering or performing the
         services and transactions necessary to operate a
         pharmacy. (Emphas;isadded).

     Sections 17 and 19 also provide direct authority to regulate the
dispensing, distributing, and delivering of prescription drugs. See
5517(b)(1)-(3); 19(a). These terms are defined in section 5 z
follows:

            (14) 'Deliver' or 'delivery' means the actual,
         constructive, or attempted transfer of a prescrip-
         tion drug or device or controlled substance from
         one person to ar,other,whether or not for a con-
         sideration.

             .   .   .   .

            (1’3) 'Dispense' means preparing, packaging,
         compounding, or labeling for delivery a prescrip-
         tion drug or devtce in the course of professional
         practice to an ultimate user or his agent by or
         pursuant to the lawful order of a practitioner.

            (17) 'Distribute' means the delivery of a
         prescription dru(;or device other than by admini-
         stering or dispersing. (Emphasis added).




                                  p. 2466
Dr. Jerry Hedge - Page 5   (JM-555)




     Out-of-state mail-or&r pharmacists or pharmacies which fill
prescriptions for Texas residents clearly deliver, dispense, or
distribute those prescriptions in Texas. Consequently, the legisla-
ture granted authority in sections 17 and 19 of article 4542a-1 to
regulate mail-order sales or transfers of prescription drugs from
out-of-state pharmacists or pharmacies to persons within Texas with
regard to the asvects of such practice that may directly affect users
residing in Texas. ---See .sl& V.T.C.S. art.. 4476-14. §2(b); art.
4476-15, §1.02(8)-(13).

     Your second question is whether such regulation would create an
unconstitutional burden on interstate commerce. Because you do not
present specific administrative rules detailing exactly which aspects
of sections 17 and 19 ~11:. be applied to out-of-state pharmacies and
pharmacists and how those ~?::ovisions
                                     will be applied, this opinion can
provide only the general principles of law established in similar
cases under the Commerce Ctause of the United States Constitution.

     The basic criteria for determining the validity of state statutes
and actions which affect interstate commerce are set forth in Pike v.
Bruce Church, Inc., 397 U.S. 137, 142 (1970). as follows:

          Where the statute regulates evenhandedly to effec-
          tuate a legitimate local public interest, and its
          effects on interstate commerce are only inci-
          dental, it wilt be upheld unless the burden
          imposed on such commerce is clearly excessive in
          relation to the putative local benefits. If a
          legitimate local purpose is found, then the
          question becomes toneof degree. And the extent of
          the burden that will be tolerated will of course
          depend on the nature of the local interest
          involved, and on whether it could be promoted as
          well   with   a  lesser   impact   on   interstate
          activities. (Citation omitted).

     Authorities in several jurisdictions across the country have con-
sidered the constitutionality of different statutory schemes which
regulate out-of-state mail-order pharmacists or pharmacies with
varying results. Some upheld the constitutionality of their statutes
under the Commerce Clause. See, e.g., Pharmaceutical Manufacturers
Association v. New Mexico-Board of Pharmacy, 525 P.2d 931 (N.M. Ct.
App. 1974); Wisconsin Attorney General Opinion No. 33-83 (August 23,
1983); See also 61 Op. Cal. Att'y Gen. 192 (No. CV 76-212, CV 77-236;
May 2, 1978). Others have not. See, e.g., Iowa v. Rasmussen, 213
N.W.2d 661 (Iowa 1973); Nebraska Attorney General Opinion No. 57
(April 4, 1985); Ohio Attorney General Opinion No. 82-032 (May 4,
1982). All of these op:Lnions agree, however, that regulation of
prescription drugs meets the first part of the constitutional test




                                p. 2467
Dr. Jerry Hedge - Page 6   1:JM-555)




under the Commerce Clause --     that the regulation must    effect a
legitimate local interest.

     Article 4542a-1, in E,ection 2. recognizes that the practice of
pharmacy in this state affects the health, safety, and welfare of the
public. The overall purpose of the act is to protect the consumers of
prescription drugs. The State Board of Pharmacy also has regulatory
duties with regard to cortrolling drug abuse and misuse under the
Texas Controlled Substances Act, article 4476-15, V.T.C.S., and the
Texas Dangerous Drugs Act, article 4476-14. V.T.C.S. The regulation
of the delivery, distributi,on,and dispensing of prescription drugs is
well within the traditional definition of a state's police power. See
Head v. New Mexico Board of Examiners in Optometry 374. U.S. 424
(1963); Pharmaceutical YinFEacturers Association v. iew Mexico Boar:
of Pharmacy, 525 P.2d at 9?i.

     In Pike v. Bruce Churc&, Inc., 397 U.S. at 142, the Court stated
that regulation must be evenhanded. The Texas Pharmacy Act is, on its
face, even-handed. Under the Commerce Clause, application of the
state statute must not discriminate aeainst nonresidents eneaeed
                          fee Pike v. Bruce Church, supra; Hun;;.
in interstate commerce. ---
Washington Apple Advertising Commission, 432 U.S. 333 (1977). Because
article 4542a-1 applies to both in-state and out-of-state pharmacists
and pharmacies, and does not authorize regulations for out-of-state
pharmacists and pharmacies which do not apply to those in Texas, it is
not per se unconstitutiona~l. See Iowa v. Rasmussen, 213 N.W.2d at
667; Nebraska Attorney Ger,eralTinion No. 57, at 4; Ohio Attorney
General Opinion No. 82-032, at 5; Wisconsin Attorney General Opinion
No. 33-83, at 4.

     Nevertheless, even if sitateregulation of mail-order pharmacists
and pharmacies serves a legitimate public interest and is applied
evenhandedly, under the test set forth in Pike v. Bruce Church, the
burden imposed on interstate:commerce by regulation must not outweigh
the benefits derived. As c,uoted above, the court in Pike v. Bruce
Church stated that the question is one of degree, depending on the
nature of the local interest involved and on whether the interest
could be promoted in a less burdensome way. 397 U.S. at 142. The
extent of the burden imposed is the analytical point on which legal
authorities diverge.

     The court in Pharmaceutical Manufacturers Association v. New
Mexico Board of Pharmacy characterized the regulations and the
licensing fee imposed by tt,eNew Mexico statutes as a small burden in
relation-to the-state's ir,terestin drug control. 525 P.2d at 935.
The regulations in question were similar to those at issue here
insofar as they dealt with regulation of safe storage and labeling
of drugs and with the registration or licensing of pharmacists.
Similarly, the Wisconsin Attorney General determined that the primary
purpose and effect of such regulation is to protect the public.




                                p. 2468
Dr. Jerry Hodge - Page 7   (JM-555)




Because the effect on inixcstate commerce was merely incidental to
this purpose, no undue br,rden on interstate commerce was found to
exist. Opinion No. 33-83, at 4; see also 61 Op. Cal. Att'y Gen. 192.

     In contrast, the court in Iowa v. Rasmussen, supra, struck down
state regulations which, l.n practical effect, prohibited Iowa phar-
macists from filling prescriptions written by nonresident physicians
who were not registered by Iowa authorities. 213 N.W.2d at 663.
Clearly, the issue involved here differs. Moreover, the court in
Rasmussen declined to rule on whether the local interest involved
outweighed the burden imposed, relying instead on a preemption
argument. The court cited Huron Portland Cement Co. v. City of
Detroit, 362 U.S. 440 (1560), for the proposition that, under the
Commerce Clause, state regulation must not disrupt "uniformity" in
interstate commerce.    21:) N.W.2d at 667.     The Rasmussen court
concluded that state regulation would -prevent uniformity in adminis-
tering federal registration provisions enacted to control drug
trafficking. See also Ohic'Attorney General Opinion No. 82-032, at 6.

     The court's conclusiou with regard to preemption, however, is no
longer persuasive. Congres:sdid not intend to preempt the field of
drug abuse control:

          No provision of t:hissubchapter shall be construed
          as indicating z.n intent on the part of the
          Congress to occupy the field in which that
          provision operates, including criminal penalties,
          to the exclusion of any State law on the same
          subject matter which would otherwise be within the
          authority of the State, unless there is a positive
          conflict between that provision of this subchapter
          and that State l&f so that the two cannot consist-
          ently stand togei%.er
                           --*   (Emphasis added).

21 U.S.C. 5903 (1982). The Texas Pharmacy Act parallels, rather than
conflicts with the federal sitatute.See, e.g., art. 4542a-1, 605 (lo)-
(12); 6; see also arts. 44;'t1-14,
                                 4476-15.

     The Nebraska Attorner General stated that having to meet the
licensing requirements of a number of states would impose a sub-
stantial burden on the pt.srmacies'ability to engage in interstate
commerce. Opinion No. 57, pp. 4-5. The opinion stated that

          [i]n such an instance. the pharmacy involved would
          be subject to ,multiple licensing procedures,
          including duplicative registrations, records re-
          quirements, and :.abelingrequirements.

Id. The :regulations were also deemed to be unnecessarily duplicative
                                                            -.
because they operated parallel to the federal statutes.     The added




                                 p. 2469
Dr. Jerry Hedge - Page 8   (JM-555)




burden of complying with a duplicative statute regarding the practice
of pharmacy, with the "burden" lying primarily in registration and in
additional reporting, lab~LLing,and record keeping functions, is not
sufficient to outweigh tha state's interest in the control of poten-
tially dangerous drugs. ::fthe pharmacy has already created records,
it should not be a tremcrtdous "burden" to provide extra copies of
those records.

     This burden is substantially less onerous than the regulations
which have been held unconstitutional by the Supreme Court under the
Commerce Clause. For example, in Pike v. Bruce Church, the Supreme
Court struck down a statute which stated a primary purpose of pro-
moting and preserving the reputation of Arizona cantaloupe growers by
prohibiting deceptive packaging and requiring a certain type of
packaging prior to shipmert out of state. The parties stipulated that
the practical effect of the statute was to compel the company in
question to build a packir,gfacility in Arizona. The Court recognized
that burdens on conrmerce which require business operations to be
performed in the home state that could more efficiently be performed
elsewhere must be viewed with particular suspicion. 397 U.S. at 145;
see also Hunt v. Washingtcn Apple Advertising Commission, 432 U.S. 333
(1977); Dean Milk Company ;,. City of Madison, Wisconsin, 340 U.S. 349
(1951). The Court has uph;ld a number of ordinances and statutes with
burdens of the relatively minor magnitude involved here. See, e.g.,
Exxon Corporation v. Governor of Maryland, 437 U.S. 117 (1978); Breard
v. Alexandria, 341 U.S. 'f?2 (1951); Hartford Accident and Indemnity
Co. v. Illinois, 298 U.S. 155 (1936); Asbell v. Kansas,   209 U.S. 251
(1908).

     The argument has also been advanced that if a statute is, on its
face. for the orotectioa of local economic benefit. then such a
statute is per se unconst,itutionalas an undue burden on interstate
commerce. SeemIowa v. Rasmussen,
                        ---       213 N.W.2d at 666-67 (citing Pike v.
Bruce Church    397 U.S . at 145). As indicated, however, article
4542a-1 ap-Fies to both in-state and out-of-state pharmacists and
pharmacies with regard to the practice of pharmacy; it does not
protect local pharmacists.

     The purpose of the ac't is to protect the drug-consuming public;
thus the burden on interrtate commerce is merely incidental and is
outweighed by Texas' interest in controlling the dispensing, distribu-
tion, and delivery of prescription drugs. Because you do not present
any specific administrati~~erules which exlain how the board plans to
regulate out-of-state mail-order pharmacies and pharmacists, we can
only state that regulation by the board of out-of-state pharmacies and
pharmacists is not per se unconstitutional under the Commerce Clause.
We emphasize that the law requires the least burdensome regulation
which will effect the state’s objectives. The numerous cases cited in
this opinion should provide guidance as to what sorts of regulation
have been held to be overly burdensome.




                               p. 2470
Dr. Jerry Hedge - Page 9     IJM-555)




     In light of this rerponse to your first two questions, this
opinion does not address your third question.

                              SUMMARY

             The Texas Stat,eBoard of Pharmacy may regulate
          out-of-state mail-order pharmacists only to the
          extent that they .sctuallyengage in the practice
          of pharmacy or dispense, deliver, or distribute
          prescription drugs within the state of Texas.
          Such regulation is not Per se unconstitutional
          under the Commerce Clause of the United States
          Constitution.




                                        JIM     MATTOX
                                        Attorney General of Texas

JACK HIGHTOWER
First Assistant Attorney Gen~eral

MARY KELLER
Executive Assistant Attorney General

RICK GILPIN
Chairman, Opinion Comittee

Prepared by Jennifer Riggs
Assistant Attorney General




                                  p. 2471
