South Dakota law gives every person the right to have prescriptions filled at the pharmacy of their choice (SDCL 34-12B-1). It also bars exclusive supply contracts between nursing homes and pharmacies, except for hospitals, nursing homes with their own pharmacy, and nursing homes using a 'unit dose' system. Does a patient in a unit-dose nursing home retain any right to use an outside pharmacy?
Plain-English summary
South Dakota's pharmacy statute establishes a general right of patient choice: every person can have prescriptions filled at the pharmacy or by the pharmacist of his or her choice (SDCL 34-12B-1). The legislature also created targeted exceptions to that right for the nursing home context (SDCL 34-12B-2). Exclusive contracts between a nursing home and a pharmacy are prohibited, except in three categories: hospital-owned or hospital-operated nursing homes, nursing homes with their own licensed pharmacy department, and nursing homes that provide patient medication under a "unit dose" system following State Board of Pharmacy rules.
Mr. Schuler asked AG Janklow whether a patient in a unit-dose nursing home retained any of the SDCL 34-12B-1 right after entering the facility. Did the right travel with the patient (the patient takes their pharmacy of choice with them) or did it end at the door?
Janklow's reading was that the right ended at the door. The structure of SDCL 34-12B-1 and 34-12B-2 is a general rule plus enumerated exceptions. The exceptions are not optional from the patient's perspective; they are mandatory limitations on the patient's choice when the patient is in one of the excepted facility types. Once the patient enters a unit-dose nursing home, the exclusive pharmacy contract that the nursing home has with its chosen pharmacy is the operative arrangement.
Janklow's reasoning followed a clean syllogism. The general right (SDCL 34-12B-1) applies to "any person." The exceptions in SDCL 34-12B-2 carve out specific contexts where exclusive contracts are permitted. If an exclusive contract is permitted, then by definition the patient cannot use a different pharmacy because the contract is exclusive. So the patient's general right yields to the contract.
The opinion's tone reflects some discomfort with the result. Janklow wrote that he was "not sure that the Legislature fully intended to put such a limitation on the general public" but felt "compelled to interpret the law as set forth in this opinion" given the clear statutory language. The text was the text, and it produced an exclusion of patient choice in the unit-dose context.
Question 4 (the unit-dose-specific question) was therefore answered no: there was no continuing right to patient pharmacy choice once the patient entered a unit-dose nursing home with an exclusive supply contract. Questions 2 and 3 (about whether the patient's right traveled with them outside the nursing home or to other settings) were unnecessary to answer given the answer to Question 1; the right applied to people not in excepted facilities.
Currency note
This opinion was issued during AG William Janklow's tenure (1975-1979). Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. SDCL chapter 34-12B governing patient pharmacy choice has been amended multiple times, and modern questions about exclusive pharmacy contracts, the unit-dose system rules, and patient choice in long-term care should be verified against current SDCL chapter 34-12B and applicable Board of Pharmacy rules. Federal long-term care regulations (and Medicare/Medicaid conditions of participation) have also evolved and may now provide additional patient-choice protections.
What the opinion meant at the time
For nursing home administrators, the opinion provided contractual certainty. An exclusive pharmacy contract under a unit-dose system was enforceable against the patient, not just against competing pharmacies.
For unit-dose system pharmacies, the opinion confirmed the value of the exclusivity. Patients could not opt out individually; the contract bound everyone in the facility.
For nursing home residents and their families, the opinion was the bad news. Choosing the residence meant accepting its pharmacy. Patients with relationships with outside pharmacies (perhaps long-standing community pharmacists who knew their history) lost that choice upon admission.
For the State Board of Pharmacy, the opinion confirmed that its unit-dose rules were a real gateway. Once a nursing home met the unit-dose criteria and had an exclusive contract, the patient-choice override was firm.
Common questions
Q: What is a "unit dose" system?
A: A pharmacy dispensing system where medications are packaged in individual single-dose units for each scheduled administration. Each unit is labeled, sealed, and prepared specifically for one patient at one time. The system reduces medication errors and improves tracking, but it requires close coordination between the dispensing pharmacy and the nursing home staff.
Q: Why does unit dose justify an exception to patient choice?
A: Because the system depends on tight coordination. Multiple outside pharmacies serving different patients would defeat the system's quality-control logic. The legislature accepted this trade-off: more efficient, safer medication management in exchange for less patient choice.
Q: Did the patient have to agree to the contract?
A: The opinion did not address this. As a practical matter, the contract was between the nursing home and the pharmacy; the patient was the third-party beneficiary (or in this reading, the third-party subject). The patient's admission to the facility was the de facto acceptance of the arrangement.
Q: Could the patient bring outside medications?
A: The opinion did not address that scenario. Many nursing homes have separate policies about outside medications, often requiring physician orders and nursing review. The opinion was specifically about exclusive pharmacy supply contracts, not the broader question of medication source.
Q: What if the unit-dose pharmacy was much more expensive than the patient's preferred outside pharmacy?
A: The opinion did not address cost. SDCL 34-12B does not require the exclusive pharmacy to match outside prices. Patients (or their insurers) bear whatever cost difference exists.
Q: Could the legislature have been clearer?
A: Janklow seems to wish so. His comment that he was "not sure" the legislature fully intended this result is unusually candid for an AG opinion. If the legislature wanted to preserve patient choice in the unit-dose context, additional statutory language would have been needed.
Background and statutory framework
Pharmacy practice in the 1970s was undergoing operational changes. The unit-dose system was emerging as a quality-of-care improvement in institutional settings. Hospitals had used unit dose for some time; nursing homes were beginning to adopt it. The State Board of Pharmacy had rules to govern the implementation.
SDCL chapter 34-12B reflected legislative attention to the patient-choice question in two pieces: the general right (34-12B-1) and the enumerated exceptions (34-12B-2). The exceptions targeted situations where the institutional structure made an exclusive arrangement appropriate or efficient. Hospital-owned nursing homes were a natural fit because hospitals usually had their own pharmacy infrastructure. In-house licensed pharmacy departments at nursing homes were similar. The unit-dose exception captured a newer model that did not depend on owning a pharmacy but did require exclusive coordination.
Janklow's reading kept the structure intact. Reading the exceptions as not actually limiting patient choice would have made the legislative carve-outs meaningless. The legislature must have meant the exceptions to override the general right; otherwise the statute would be self-contradictory.
The practical concern about patient autonomy that Janklow flagged is real. Patients in nursing homes are often vulnerable, and reducing their pharmacy choice diminishes one element of self-determination. But the opinion took the legislature at its word; if a different policy balance was desired, the legislature would need to revise the statute.
Citations and references
Statutes:
- SDCL 34-12B-1 (right to choose pharmacy or pharmacist)
- SDCL 34-12B-2 (exception for hospital-owned, in-house, and unit-dose nursing homes)
Source
Original opinion text
Exclusive contract rights of a nursing home pharmacy under the unit dose system
Dear Mr. Schuler:
You have requested an opinion from this office pertaining to the unit dose dispensing system and SDCL 34-12B. The questions you ask are:
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Is the right granted by SDCL 34-12B-1 limited to patients in nursing homes which have no licensed pharmacy, but have retail drug stores provide prescription drugs to patients in the nursing home?
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Does the right granted by SDCL 34-12B-1 travel with a patient wherever he is located, such as nursing homes and hospitals?
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Does the right granted by SDCL 34-12B-1 travel with a person who is not in a hospital or nursing home, but is purchasing prescription drugs from any licensed pharmacy in South Dakota?
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If a patient in a nursing home has the right of having his prescription filled at the pharmacy of his choice, does that patient still have that right when a nursing home and pharmacy enter into an exclusive contract to provide patient medication under a "unit dose" system in accordance with the rules passed by the State Board of Pharmacy?
SDCL 34-12B-1 provides:
Any person shall have the right and privilege of having his prescription filled at the pharmacy or by the pharmacist of his choice.
SDCL 34-12B-2 provides
It shall be unlawful for any pharmacy, pharmacist, nursing home, or nursing home administrator, to contract, agree or to arrange for the exclusive right of a pharmacy or pharmacist to furnish drugs and medicines to residents or patients of a nursing home, except in nursing homes which are owned or operated by a licensed hospital, nursing homes which maintain a licensed pharmacy department and nursing homes which provide patient medication under a "unit dose" system in accordance with rules and regulations established by the state board of pharmacy.
The questions you raise essentially involve an analysis of the provisions of SDCL 34-12B-l and 34-12B-2. The general provision of SDCL 34-12B-l is, in my opinion, a statement by the Legislature of a general policy. SDCL 34-12B-2 provides for certain exceptions to this general policy, in situations where a nursing home is owned or operated by a licensed hospital, where a nursing home maintains a licensed pharmacy department, and where a nursing home provides patient medication under a unit dose system. In these situations, the Legislature recognizes exceptions to the general principle established in SDCL 34-12B-l.
With respect to your first question, it is my opinion that the right granted by SDCL 34-12B-l is a right granted to all people of the State of South Dakota. SDCL 34-12B-2, however, provides for situations in which there is an exception to this general right. Individuals who enter nursing homes, which meet the criteria of SDCL 34-12B-2, in effect are required by statute to deal exclusively with the pharmacy or pharmacist who has contracted for the exclusive right to serve the nursing home residents.
In view of the above comments, no additional answer is necessary for questions Nos. 2 and 3.
With respect to question No.4, the above analysis indicates my view here that there is no continuing right pursuant to SDCL 34-12B-l once an individual enters a nursing home which meets the criteria established by SDCL 34-12B-2.
I am not sure that the Legislature fully intended to put such a limitation on the general public. However, in view of the clear and concise language in the statutes, I am compelled to interpret the law as set forth in this opinion.
Respectfully submitted,
William Janklow
Attorney General
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