By Cy Ryan (contact)

Mon, Sep 15, 2008 (10:40 a.m.)

CARSON CITY –- The state Pharmacy Board can punish a drug wholesaler that broke the law without proving the company intended to cause harm or violate the law.

That was the ruling of the Nevada Supreme Court in a case in which the state board revoked the licenses of Dutchess Business Services and its successor, Legend Pharmaceuticals Inc., for numerous violations.

The board accused the two companies of buying and selling “adulterated and misbranded prescription drugs,” failing to keep records where they purchased the drugs and purchasing drugs from unlicensed distributors.

The court, in a 35-page opinion authored by Justice James Hardesty, ordered the pharmacy board to lower its $519,750 fine against Dutchess and its $31,250 fine against Legend.

The court said Thursday the board was wrong in determining that Dutchess violated the law by conducting business with Overseas International, which was exempt from Nevada licensing at the time.

Dutchess and Legends purchased drugs from manufacturers, wholesalers and pharmacies and resold them to wholesalers and pharmacies.

The complaint included an allegation that Dutchess purchased 927 boxes of Serostim, used to treat extreme weight loss and anemia. The drugs, bought from Crystal Coast an unauthorized distributor, contained 399 boxes of counterfeit Serostim in late 2000.

When Duchess learned the drugs were counterfeit, it never asked Crystal Coast where it got the Serostim. The person who supplied the counterfeit Serostim to Crystal Coast, before going to federal prison, had conducted a wholesale business in Florida without a state permit.

The pharmacy board said Dutchess should have discovered the “questionable character of Crystal Coast’s distributor status.”

Justice Hardesty wrote the plain language of the law permits the pharmacy to find that a licensee violated the law “without providing a licensee’s intent to cause harm or violate the statute.”