Legal implications of hospital resales of pharmaceuticals. American Hospital Association Office of General Counsel.

The legal implications of and restrictions on hospital resales of pharmaceuticals are analyzed to help hospital managers distinguish between legitimate drug redistribution and illegal drug diversion and, thus, enable them to conform to the law in their own resale practices. The requirements of the Robinson-Patman Act regarding resales are discussed, and the application of those requirements is explained. Particular attention is given to descriptions of dispensations that are permissible, those that are not permissible, and those that result from group purchasing arrangements. Other legal issues that must also be considered as possible problems are breach of contract suits; fraud, not only according to state law but also under the Racketeer Influenced and Corrupt Organizations Act; exposure to product liability; adverse tax consequences; and violations of the Federal Food, Drug and Cosmetic Act. Many resale practices are legitimate, but others may constitute illegal drug diversion. Hospital managers should review their institutions' procedures and correct those activities that may be inappropriate or questionable. At a time when concern is being focused on potential public-health risks created by illegal drug diversion, hospitals must play a constructive role in helping to solve the diversion problem.