The New Jersey Superior Court, Appellate Division, recently issued an important ruling upholding a determination by the New Jersey Board of Pharmacy that a medical practice may not own an in-practice pharmacy to which the physician owners refer patients. The case stemmed from a 2019 decision of the board that denied application of Oncology and Hematology Specialists, a New Jersey medical practice (the petitioner), to register, open and operate an in-office pharmacy for its practice. The case is In re Oncology & Hematology Specialists, No. A-2080-19 (App. Div. Dec. 22, 2021).

The petitioner, owned by four medical doctors, had sought to open a pharmacy within its practice location that would be exclusively for patients of the practice. The board denied the practice’s application citing New Jersey’s Codey Law, N.J.S.A. 45:9-22.4 to -22.9, which prohibits physicians from referring a patient to “a health care service in which the practitioner, or the practitioner’s immediate family, or the practitioner in combination with the practitioner’s immediate family has a significant beneficial interest” (N.J.S.A. 45:9-22.5(a)), unless an exception applies. A “significant beneficial interest” is defined as “any financial interest.” Moreover, the Codey Law definition of “health care services” explicitly includes pharmacies.