As of the end of last month, Tennessee pharmacies can no longer offer patients financial rewards in exchange for the transfer of the patient’s prescriptions. The Tennessee Board of Pharmacy recently enacted a new rule providing that “[a] pharmacist shall not incent or induce the transfer of a prescription absent the exercise of professional judgment.1

Where permitted by law, pharmacies commonly offer incentives for a patient to transfer a prescription from one pharmacy to another. For example, a pharmacy might offer rewards points, a gift card or cash incentives to encourage a patient to transfer his/her prescriptions. These kinds of rewards are no longer permissible in Tennessee. The new rule does not address the provision of financial incentives in relation to new (or non-transferred) prescriptions. Non-resident pharmacies serving Tennessee patients should also be aware of this new rule. Non-resident pharmacies licensed by the Tennessee Board of Pharmacy must designate a Tennessee-licensed pharmacist-in-charge. This pharmacist-in-charge is required to comply with Tennessee professional conduct requirements, including the prohibition on prescription transfer incentives.

The Tennessee Board of Pharmacy indicates that the prohibition on prescription transfer incentives is designed to protect patients and promote continuity of care: “While these coupons have benefited some small businesses and consumers, they have an overall negative impact on the safe delivery of pharmacy services across the state. Constant transfer of prescriptions for the purpose of obtaining ‘gas points’ or in-store discounts on non-pharmacy items complicates care delivery and hampers the formation of strong pharmacist-doctor-patient relationships.”

A minority of other states also prohibit incentives for prescription transfers. For example, Alabama law provides that “[a] pharmacist and a pharmacy should never offer or participate in the offering of a financial award or benefit, not related to competitive retail pricing of any drug, to induce or encourage any individual to transfer a prescription from one pharmacy to another.”2 Likewise, Oregon pharmacy rules bar “[i]ncenting or inducing the transfer of a prescription absent professional rationale.”3

The penalty for violation of Tennessee Board of Pharmacy rules may include revocation of a license, suspension of a license, or the imposition of a civil penalty. The civil penalty for a violation of the prescription transfer incentive prohibition may be up to $1,000 per violation.4

Pharmacies located in Tennessee (as well as non-resident pharmacies serving Tennessee patients) should carefully review their processes to confirm compliance with this new rule. Should you have any questions, please contact one of the authors listed or any member of our Specialty Pharmacy & Pharmaceuticals team.

1 Tenn. Comp. R. & Regs. 1140-02-.01(18).
2 Ala. Admin. Code 680-X-2-.22(2)(h).
3 Or. Admin. R. 855-041-1170(5).
4 Tenn. Code § 63-10-305(6).