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The Dose

Welcome to The Dose, which tackles the business and economics inside the turbulent world of health care and life sciences in Indiana. Your host is John Russell. To contact me call 317-472-5383.
Pharmacies / Health Care & Insurance / Health Care & Life Sciences

Pharmacy board member fined for conflict of interest

November 7, 2016

The vice president of the Indiana Board of Pharmacy has agreed to pay a $600 fine for participating in several votes involving a pharmacy he was buying.

Steven Anderson, a registered pharmacist and member of the pharmacy board since 2003, signed a settlement admitting that he violated state ethics laws when he voted on matters involving McGrady’s Family Pharmacy in New Castle, about 50 miles east of Indianapolis.

The small, independent pharmacy had been struggling financially after the pharmacy board found five violations in 2014 and placed the owner’s license on probation for three years and fined it $5,000.

The trouble started when owner James Vincent McGrady failed to renew his Drug Enforcement Administration license and could not dispense drugs. But according to state documents, McGrady continued to dispense drugs, was caught by the DEA and had to surrender his license.

McGrady told the board in 2015 he was unable to pay his fine and asked for an extension. A few months later, in a possible solution, he told the board’s compliance officer he had received a purchase offer from Walgreen’s Pharmacy, and said if the sale went through, he would be able to pay the fine.

Anderson, the pharmacy board member, was present during a meeting with the pharmacy board’s staff when the subject of the Walgreen’s purchase was discussed, according to a report filed by the Indiana Inspector General’s office.

Anderson had a one-third ownership in Panacea Pharmacy Inc. along with his nephew, Joshua Anderson, and an associate, Lester Burris. In May 2015, the three partners began discussing an interest in purchasing McGrady’s Family Pharmacy.

“After learning that the owner might be selling the pharmacy, the nephew asked [Anderson] to give the owner his phone number at the June 2015 board meeting,” the Inspector General’s report said. “[Anderson] approached the owner at the June 8, 2015 board meeting and asked the owner to call his nephew prior to selling the pharmacy to another company.”

On June 13, the owner called the nephew to begin discussions. Afterward, the three partners agreed to buy the pharmacy.

Their company, Panacea, entered a contract on June 15 to serve as the central fill pharmacy for McGrady’s while the sale was being completed. A month later, on July 8, 2015, the three partners formed another company, Anderson Burris Inc., that paid $50,000 to buy McGrady’s.

The state pharmacy board voted Nov. 9 to approve on the new store application for McGrady’s submitted by Anderson Burris. During the vote, Anderson recused himself and left the room.

However, Anderson participated in three votes on June 8 involving the store while he was in discussions to buy it. The votes were to approve the probationary appearance for McGrady, to modify his probationary order to allow him to make monthly payments on his fine, and to issue an order to show cause for unpaid fines for the pharmacy’s license.

“Although he recused himself from some votes, he participated in several other votes in which both he and a business organization in which he serves as a partner had a financial interest in the outcome,” according to the Inspector General’s report.

Anderson, who works as a pharmacist at Crowder’s Pharmacy in Bedford, told IBJ he disagreed with the allegations. He said Anderson Burris wasn’t even formed when he voted on the matters last summer. However, he agreed to the settlement for financial reasons.

“To fight it, it gets very expensive,” Anderson said. “I did fight it for a little while, but there was the expense of a lawyer, compared to a small fine. I just couldn’t continue with the defense.”

The Indiana State Ethics Commission voted Oct. 13 to approve the settlement.

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