The Alabama Board of Pharmacy, the state body that licenses and regulates more than 29,000 pharmacists and drug manufacturers, distributors and stores, has charged some licensees higher fees than what’s authorized by law and uses “deferral agreements” to allow pending violations to be dropped if the licensees pay higher fine amounts.
Those are two of the significant issues highlighted in an Alabama Department of Examiners of Public Accounts report. Others include violations of open meeting laws and a switch in 2023 to reporting money collected from fees and fines as miscellaneous income.
“This shift in the classification and recording of administrative costs/fines in the board’s financial records creates an inaccurate depiction of how much the board is collecting in administrative costs/fines from licensees and applicants of the board,” the report reads.
In 2020, the board collected about $574,760 in fines and fees and $44,900 in miscellaneous income. In 2023, fines and fees were reported at $194,830 and miscellaneous income was about $598,292.
The board disputes some of the report’s findings.
Covering four years from Oct. 1 2019 to Sept. 30, 2023, the report was released Wednesday before a Joint Sunset Committee meeting today. That’s the panel of lawmakers that regularly extends the authority of the dozens of boards that regulate and fine professions, from general contractors to cosmetologists. Sunset’s activities were previously mostly inconsequential, but last year members started putting a new focus on the quasi-public boards and their management. It made the rare move to dissolve or “sunset” the state massage therapy board after documented mismanagement.
The sunset committee relies on the financial reports from the examiners of public accounts.
“There are some things that are concerning,” committee member Rep. Kerry Underwood, R-Tuscumbia, told Alabama Daily News on Wednesday about the recent document. “And my role on the committee is to focus as much as possible on the financial aspect of things.”
“… It’s not illegal to amass large reserves, but to me it’s not appropriate to keep money in Montgomery when it’s taken from business owners (and licensed workers),” Underwood continued. “It’s not fair to keep the money in Montgomery when it comes from their operations. It needs to be put to use and kept in use.”
The pharmacy board had a year-end cash balance of $4.3 million.
The board’s funds come largely from license and permit fees. For example, pharmacists pay $100 license and license renewal fees. Pharmacies and other businesses pay higher amounts.
The board’s total receipts in 2023 were $5.45 million and it spent about $5.2 million, mostly on salaries and associated costs. The board has 24 employees.
The board is made up of five members, three appointed by the governor and two elected by pharmacists. Members are paid $720 per day for each day of board business. Donna Yeatman is a former board member and now the organization’s contracted executive secretary. She earns about $276,359 per year.
A request for comment from the board was not returned Wednesday. Agencies are allowed to respond to the findings and in the nearly 150-page report, ALBOP disagreed with several of the cited issues.
Regarding fining some licensees for violations amounts above what’s outlined in state code, the board said it considers each day a notification is delinquent, or each time a drug shipment is made to be a violation. It also takes the duration of a violation into account when determining fines.
“A compounding pharmacy providing contaminated IVs to patients for three days should be penalized less than one providing contaminated IVS for 90 days,” it wrote.
About the fees charged under deferrals, the board said those are agreed to by both parties, and allow the board “to provide corrective action while not adding formal discipline on a license, permit or registration. Administrative costs assessed by the board are determined based upon the number of violations and complexity of the review and follow-up.”
It also said the practice has been in place for more than a decade and that for the last two years, administrative processes have been supervised by the Alabama Attorney General’s office, which has “confirmed that this process is appropriate.”
In 2022, the AG’s office began an investigation into the board after it revoked the license of a north Alabama pharmacist, al.com reported.
“As a result of the 2022 investigation, the Attorney General dismissed board complaints filed against a private individual and a pharmacy,” the office told ADN in a statement Wednesday. “The AG also revoked the deputy attorney general designation for the previous board attorney.”
Earlier this year, that pharmacist, Billy Flint East, filed in federal court a lawsuit against the board. It is pending.
The report is likely fodder for state Sen. Chris Elliott’s campaign to consolidate under one state office the operations and management of dozens of the state’s stand-alone licensing boards.
“The findings outline atrocious management practices and governance by the board,” Elliott, R-Josephine, told ADN. “Attempts to disguise fines and penalties as income, charging fine amounts that exceeded statutory authority and entering into deferral agreements that hide violations from the public if an offending entity is willing to pay the board to do so are just a few significant issues found in the examiner’s report.
“These findings make the Alabama Board for Pharmacy a poster child for occupational and professional licensing reform in Alabama,” he said.