COLUMBIA — House Speaker Bobby Harrell says his drug repackaging business has flourished since its founding six years ago.
Documents show that various pharmacy officials have expressed concerns over a period of years that House Speaker Bobby Harrell used his political power as he sought to help his company. Harrell has said he did not seek special treatment, and was merely interacting with state agencies in the way any other business owner would.
“We’re all over the country, and we’re providing medications to companies as far away as California. In the lower 48, we sell medications in over 20 states,” the Charleston Republican said of Palmetto State Pharmaceuticals last month as he addressed questions about the company.
What is drug repackaging?
Drug repackaging involves a company purchasing bulk generic pharmaceuticals, then repackaging them into smaller packages and selling them to doctors. The doctors then sell the drugs to their patients.The practice has generated controversy, with traditional pharmacists expressing concerns that it is not in the best interest of patients. The pharmacists worry that the huge profit incentive for doctors to sell the drugs to patients can lead to abuse, and that the drugs often can be sold at significant markups through insurance rules.Profits from repackaging are shared by the doctors, repackagers and others who help doctors set up in-office pharmacies. Repackagers argue that they help patients obtain medications more quickly and with greater convenience. There are three drug repackaging companies operating in South Carolina, including Bobby Harrell’s Palmetto State Pharmaceuticals, according to the state Department of Labor, Licensing and Regulation.
Records obtained by The Post and Courier and others show that the success has come with another legacy — a collection of state and pharmacy group officials who expressed concerns spanning several years that Harrell used his political power as he sought to help his company.
In a series of 2010 emails recently released to the newspaper under the S.C. Freedom of Information Act, one Presbyterian College pharmacy professor, at the time also the head of the S.C. Society of Health System Pharmacists, talked of filing an ethics complaint against Harrell for “blatant abuse” of his political power to promote his business.
The professor, Lewis McKelvey, declined an interview request, saying only that his allegation involved a “conflict of interest thing.”
Through spokesman Greg Foster, Harrell declined a request for an interview on the newly released emails after they were provided to his office by the newspaper. Regarding earlier emails, Harrell had said that he had not sought special treatment for his company.
Changing the law?
In another of the latest emails, the former president of the S.C. Pharmacy Association wrote to various pharmacy group officials in November 2010 that during a conversation with Harrell, the House speaker had told him that he would change a state law if a practice he was inquiring about wasn’t legal.
Harrell had sent a letter to hospitals a month earlier about the possibility of Palmetto State Pharmaceuticals working with hospitals to dispense prescriptions directly to ER patients, records show.
Harrell wrote that allowing the company’s ER dispensing program to operate in hospitals would provide convenience to patients, allowing them to fill prescriptions at the time of check-out.
Despite the alleged reference to changing the law, a former attorney for the state agency that oversees pharmacy practices in South Carolina said there is no current law that governs repackaging companies partnering with emergency rooms. That’s because a test case is needed, the attorney has said, according to records.
Harrell led off his letter by saying that he was not writing to the hospitals in his capacity as House speaker but as a business owner. The letter appears to have been written on non-House-speaker’s stationery.
Don Ray, the 2009 Pharmacy Association president who now heads the group’s foundation, wrote in a November 2010 email that Harrell’s inquiry had been addressed before. “Bobby Harrell has been told that this type of practice is not in the best interest of patients and the Board of Pharmacy said it was against the law since no physician was actually overseeing the dispensing,” Ray wrote.
“Mr. Harrell said if that was the case then he would change the law. For the most part, that ended the discussion.”
Foster, Harrell’s spokesman, said the speaker never said he would change the law.
Foster said Harrell stands by what he said last month following the release of a different set of correspondence, mostly from 2006, by the S.C. Policy Council. Harrell said then that he had not sought special treatment for his company.
The Policy Council’s president, Ashley Landess, who provided the correspondence to reporters, said the records raised issues, including possible ethical conflicts related to Harrell’s use of the speaker’s office letterhead for a private business matter. Landess said another issue was the concern expressed by a former S.C. Board of Pharmacy chairman that Harrell was receiving special treatment.
Other high-profile S.C. politicians have been accused of using their offices to benefit themselves financially, with Gov. Nikki Haley a notable recent example. Haley was eventually cleared last summer by a panel of state House members of charges that she had used her former House office to enrich herself.
Michael Bitzer, a professor at Catawba College and a longtime observer of S.C. politics, said perceptions of political-personal conflict are an inherent danger politicians must always be mindful of, particularly in a state like South Carolina, with a part-time legislature.
The vast majority of S.C. lawmakers, who generally are not independently wealthy, have other jobs.
“The question becomes, can they exercise good judgment when there could be an appearance of conflict?” Bitzer said.
The criticism Harrell faced in 2010 was not the first time he has been questioned about his business dealings.
Critics denounced Harrell in 2008 for asking a state agency a year earlier to quickly approve allowing a Medicaid insurer a new option to purchase drugs, The State newspaper reported in 2008. The insurer went on to do business with Harrell’s Palmetto State Pharmaceuticals.
Harrell told the newspaper that he had done nothing improper and said he was being criticized because the repackaging industry would cost traditional pharmacists money.
Fears of Harrell
Ray, the former Pharmacy Association head, wrote in the November 2010 email to pharmacy officials that it would be dangerous to cross Harrell in response to his letter pitching his company to hospitals.
Ray wrote of a desire for pharmacy groups and the state boards of pharmacy and medical examiners to put up a united front against allowing drug repackagers into hospitals. But his email said, “If we press too hard, he could certainly hurt us in other legislative ways.”
Pharmacists in several states have expressed concerns that the major profit incentive for doctors to sell drugs directly to patients can lead to abuse.
“People Like Bobby Harrell and (Senate Finance Committee Chairman) Hugh Leatherman are exactly what is wrong with the legislative process in SC,” Ray wrote. “They are precisely what (then newly elected governor) Nikki Haley is against and that is why she has pushback from some of the Republicans.” Ray did not explain the mention of Leatherman, or what it was based on.
Ray went on to suggest that the pharmacists consult with high-powered Statehouse lobbyist Richard Davis, but warned, “You could easily spend a lot of time, effort, and money on this to no avail.”
Additionally, he said going against Harrell could cost pharmacists with their legislative priorities.
“I think the practice should be stopped, but who is going to stand up to the Speaker of the House and win? It’s a lot like playing with fire!” Ray wrote.
Ray did not respond to repeated requests for comment.
He was not the only person to express concerns about Harrell’s letter. Lee Ann Bundrick, an administrator for the Pharmacy Board, wrote in a November 2010 email to pharmacy group officials that she had received “numerous complaints” about the letter, but did not specify who they came from.
Patricia Powell, a professor at the South Carolina College of Pharmacy, in an email echoed Ray’s concerns about how dealing with Harrell could affect pharmacists’ legislative agendas. “I think we need to be very cautious how we approach this issue because the last thing I want to happen is for it to affect our legislative agenda,” Powell wrote.
She also questioned a study Harrell cited in his letter to hospitals.
McKelvey, the Presbyterian College professor who wrote of possibly filing an ethics complaint against Harrell, also said in the same November 2010 email to the then president of the S.C. Pharmacy Association that he wanted the group to object to Harrell’s proposed emergency room dispensing program.
Emails show that the Pharmacy Board addressed Harrell’s letter at the panel’s Nov. 16, 2010, meeting. The board’s parent agency, the S.C. Department of Labor, Licensing and Regulation, could not provide an official explanation last week of what ruling, if any, was issued in response to the letter.
The state-maintained official minutes of the meeting make no mention of Harrell or Palmetto State Pharmaceuticals. The board went into executive session several times during the meeting to receive legal advice, the minutes show. The minutes state that no official action was taken in those closed-door periods.
However, an email sent by Carmelo Cinqueonce, then the chief executive officer, states that Bobby Bradham, the chairman of the Pharmacy Board at the time, brought up “the matter of Speaker Bobby Harrell and his solicitation letter.” Bradham did not respond to more than a half-dozen requests for an interview.
The email states that Bradham asked the board’s legal counsel, Sharon Dantzler, to comment on the matter. Dantzler said the mere act of issuing the letter did not violate state law or the Pharmacy Practice Act, according to the email.
“In fact, there may be a scenario in which the proposed business venture would be legal in the ER, however unlikely it may seem,” Cinqueonce wrote. According to the email, Dantzler said that scenario would involve an ER doctor owning the drug inventory and otherwise complying with the Pharmacy Practice Act.
But Dantzler reportedly said that until an ER attempted to implement the model, neither the Pharmacy Board nor LLR could act. Once the model was in place, it would have to comply with state law, and at that point the board could investigate the ER’s compliance, Dantzler said, according to the mail.
Lesia Kudelka, a spokeswoman for the board and LLR, told The Post and Courier that she could not address Dantzler’s comments because she has retired from the agency.
Kudelka said the board is not aware of anyone implementing the ER dispensing business model in the state, and no one has come to the board seeking approval for such a business.
Harrell said last month that Palmetto State Pharmaceuticals did not have a partnership with any hospitals. Harrell’s spokesman did not respond to repeated requests for comment on whether Harrell and the company ever pursued such a partnership after Harrell wrote the letter to hospitals indicating he was interested.
Reach Stephen Largen at 864-641-8172 and follow him on Twitter @stephenlargen.