Houck v. Iowa Bd. of Pharmacy Examiners

• Decision Date: 27 June 2008
• Docket Number: No. 06-1747.,06-1747.
• Parties: Garvis G. HOUCK, Appellant, v. IOWA BOARD OF PHARMACY EXAMINERS, Appellee.
• Court: Iowa Supreme Court

752 N.W.2d 14

Garvis G. HOUCK, Appellant, v. IOWA BOARD OF PHARMACY EXAMINERS, Appellee.

No. 06-1747.

Supreme Court of Iowa.

June 27, 2008.

Michael M. Sellers of Sellers Law Office, West Des Moines, for appellant.

Thomas J. Miller, Attorney General, and Scott M. Galenbeck, Assistant Attorney General, for appellee.

HECHT, Justice.

A pharmacist compounded and sold a product to a customer without a prescription. The customer filed a complaint with the administrative agency that regulates the conduct of pharmacists, and a sanction was imposed against the pharmacist. In this appeal from the district court's ruling affirming the agency's action, we must decide whether the agency has authority to designate the compounded product as a drug that may be dispensed by a pharmacist only if it has been prescribed by a practitioner. We conclude the agency acted within its broad authority, and therefore affirm the district court's ruling.

I. Factual and Procedural Background.

Garvis Houck is a licensed Iowa pharmacist and the owner-operator of Houck Drug, a licensed Iowa pharmacy in Clear Lake. In 2002 Shirley Meyer consulted Houck about nasal irritation. After offering to supply a product to ease Meyer's symptoms, Houck compounded¹ a nasal spray containing a mixture of: 2-deoxy-d-glucose (an antiviral); dyclonine (an anesthetic); miconazole (an antifungal); methylcellulose (a suspending agent); sodium chloride; and distilled water. Each of these substances was, by itself, a nonprescription drug. Houck sold the compounded product to Meyer in a bottle that was not labeled with a prescription number, a prescriber's name, or a pharmacist's initial on the label. Meyer used the nose drops once, experienced increased nasal irritation, and filed a complaint with the Iowa Board of Pharmacy Examiners ("board").

The board assigned an investigator, Jacky Devine, to investigate Meyer's complaint.² Houck admitted he compounded the nasal spray for Meyer without a prescription based on his experience in compounding some of the same substances for prescribers in the area. While conducting the investigation of the Meyer complaint, Devine found several violations of pharmacy regulations that had been noted in a prior inspection. Houck was unable to produce for Devine forms required to record transactions involving narcotics,³ a required log for permanent and nonpermanent pharmacist employees, compounding production records bearing the initials of the compounding pharmacist, and a logbook containing the initials of pharmacists who provided customers certain cough syrups containing codeine. Houck had been warned about all of these record-keeping deficits in 2000.

The board filed two charges against Houck based on the investigation of the Meyer transaction and the 2002 inspection: (1) intentional or repeated violation of the board's rules regarding operation of a pharmacy and maintenance of controlled substance records; and (2) unlawful manufacturing and dispensing of a compounded drug without a prescriber's authorization. Following a hearing, the board issued a written decision finding Houck committed the alleged violations and placed Houck and Houck Drug on probation for three years with several conditions. The board specifically ordered Houck to refrain from compounding of any kind without authorization from a prescriber.

Houck sought judicial review in the district court. He contended the regulations prohibiting pharmacists from compounding, without a prescription, substances separately available without a prescription are unconstitutional. Houck also asserted the board lacked authority to issue the regulations, and the board's disciplinary action was not supported by substantial evidence. The district court denied Houck's petition.

II. Scope of Review.

On judicial review of final agency action, we review for errors at law. Hough v. Iowa Dep't of Pers., 666 N.W.2d 168, 170 (Iowa 2003). In determining the appropriate scope of review of an agency's interpretation of a statute, the crucial question for the reviewing court is whether the interpretation of the statute has clearly been vested by a provision of law in the agency's discretion. See Iowa Code § 17A.19(10)(c), (l). If the agency has been clearly vested with interpretive authority, we generally defer to the agency's interpretation, and may grant relief only if the agency's interpretation is "irrational, illogical, or wholly unjustifiable." Id. § 17A.19(10)(l). If the agency has not been clearly vested with discretion to interpret the statute, "we are free to substitute our judgment de novo for the agency's interpretation and determine if the interpretation is erroneous." Auen v. Alcoholic Beverages Div., 679 N.W.2d 586, 589-90 (Iowa 2004) (citing Iowa Code § 17A.19(10)(c)).

The legislature has delegated broad authority to the Board of Pharmacy Examiners for the regulation of the practice of pharmacy in Iowa. Iowa Code section 147.76 (2007)⁴ confers upon the board the authority to "adopt all necessary and proper rules to implement and interpret [chapter 155A]." See also Iowa Code § 155A.3(3) (stating the term "board" in chapter 155A refers to the board of pharmacy examiners). We have previously held similar language in other statutes constituted a clear vesting in the agency of the authority to interpret a statute. Thoms v. Iowa Pub. Employees' Ret. Sys., 715 N.W.2d 7, 11 (Iowa 2006) (finding a clear vesting of interpretive authority where a statute directed the agency to "adopt ... rules ... and take other action it deems necessary for the administration of the retirement system"); Auen, 679 N.W.2d at 590 (holding grant of authority to an agency to adopt rules "necessary to carry out this chapter" clearly vested in the agency authority to interpret a statute); City of Marion v. Iowa Dep't of Revenue & Fin., 643 N.W.2d 205, 207 (Iowa 2002) (holding statute providing "[t]he director shall have the power and authority to prescribe all rules not inconsistent with the provisions of this chapter, necessary and advisable for its detailed administration and to effectuate its purposes," vested authority in the department of revenue and finance to interpret section 422.45(20)). Section 147.76 clearly vests the board of pharmacy examiners with authority to interpret chapter 155A. We will therefore overturn the board's interpretation of that chapter only if it is "irrational, illogical, or wholly unjustifiable." Iowa Code § 17A.19(10)(l).

We review an agency's factual findings for substantial evidence based on the record viewed as a whole. Id. § 17A.19 (10)(f). Substantial evidence is

the quantity and quality of evidence that would be deemed sufficient by a neutral, detached, and reasonable person, to establish the fact at issue when the consequences resulting from the establishment of that fact are understood to be serious and of great importance.

Id. § 17A.19(10)(f)(1).

We review constitutional claims de novo. Wright v. Iowa Dep't of Corr., 747 N.W.2d 213, 216 (Iowa 2008).

III. Discussion.

A. Board's Authority to Regulate Compounding of Nonprescription Drugs.

1. Board's authority to define "prescription drugs." The primary controversy in this case centers on the board's interpretation of Iowa Code section 155A.3(35). This statute defines a "prescription drug" as any of the following:

a. A substance for which federal or state law requires a prescription before it may be legally dispensed to the public.

b. A drug or device that under federal law is required, prior to being dispensed or delivered, to be labeled with one of the following statements:

(1) Caution: Federal law prohibits dispensing without a prescription.

(2) Caution: Federal law restricts this drug to use by or on the order of a licensed veterinarian.

(3) Caution: Federal law restricts this device to sale by, or on the order of, a physician.

(4) Rx only.

c. A drug or device that is required by any applicable federal or state law or regulation to be dispensed on prescription only, or is restricted to use by a practitioner only.

Iowa Code § 155A.3(35) (emphasis added). The board has interpreted subsection (c) as a positive grant of authority by the legislature to the board to enact regulations requiring that certain drugs be dispensed on prescription only. Relying on such authority, the board enacted rule 20.2, a rule which, in relevant part, prohibits a pharmacist from dispensing compounds consisting of exclusively nonprescription components without a prescription from a practitioner.⁵ Iowa Admin. Code r. 657-20.2. Rule 20.2 thus brings a compound made from exclusively nonprescription components within the definition of a "prescription drug" in section 155A.3(35)(c). Houck contends section 155A.3(35)(c) does not vest the board with the authority to designate as a "prescription drug" a compounded substance consisting of a combination of nonprescription substances.

After carefully reviewing chapter 155A in light of the board's authority to implement and interpret that chapter, we cannot say the board's interpretation of section 155A.3(35)(c) as a positive grant of authority to the board to designate all compounded substances as "prescription drugs" is irrational, illogical, or wholly unjustifiable. The plain language of section 155A.3(35)(c) clearly evidences legislative intent to identify, at least in part through state administrative rule, those substances which may be dispensed by pharmacists only if prescribed by a practitioner. As we have already noted, the board has been vested with broad authority to adopt rules to "implement and interpret" chapter 155A. Iowa Code § 147.76. The board is the agency charged with administering Iowa Code chapter 124 ("Controlled Substances") and Iowa Code chapter 126 ("Iowa Drug, Device, and Cosmetic Act"). Id. §§ 124.101(3), .201, .301; 126.2(3), .17. The board asserts, and Houck does not dispute, that no other state administrative agency is assigned regulatory power...