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Pharmacy, Distribution, and Medical Services Nonprofit Laws

Do Not Assume Having Good Intentions to Help Others Means it is Legal


So, You Want to Start a Medical Services Nonprofit?

First of all, good for you! Women are the dominant force behind all social service organizations in the world and other types of nonprofits (like women helping women organizations and public awareness causes).

According to the most recent survey conducted by the U.S. Census Bureau (2002 Survey of Business Owners) thirty five percent of all black women entrepreneurs own a business related to health care or social assistance. And, black business women significantly out-pace all other races of women and male business owners in the number of health care or social assistance businesses.

But good intentions will not keep your out of court.

If you provide any kind of medical services or medical advice, or tangible goods like medications, supplies, and medical devices, you absolutely must know the law in advance or you run the risk of legal liability exposure and criminal prosecution.

But do not be discouraged - just be informed and know your industry and laws that govern what you can and cannot do. For example, if you start a nonprofit to take in donations of spare prescription drugs with the intention of redistributing them to people in need, you must follow pharmacy laws - both Federal and state-by-state.

Important Business Tip: Just because you see someone else doing something does not mean it is legal!

It is illegal to sell, give away, or trade prescription drugs and medical devices over the Internet or through other means of advertising or private distribution. Yes, people do it, but they are breaking the law. Even doctors are required to have a special license to dispense medications to patients, online wholesalers are subject to strict regulation, and stores that dispense medications must have at least one licensed pharmacist.

Sometimes these people are prosecuted by drug companies and medical manufacturers or even by state and federal government agencies. But one person selling one item in an Internet forum is small potatoes. However, if you start an organization that illegally takes in or distributes medical services, advice, or items, you will attract the attention of consumer and government watchdogs.

Federal law also prohibits the transfer of warranties on many medical devices. To legally transfer ownership to someone else you usually need to go directly through the devices' manufacturer. Most manufacturers charge of fee to transfer ownership or will refuse to do so at all. If you do not abide by the law and give a device (or medication) to someone else and they suffer any harm for use or misuse, you could not only be sued to damages but could also be prosecuted on criminal charges.

If you are thinking of starting a nonprofit medical service that offers any medical products or devices (new or used) start by calling your state's board of pharmacy. State laws are often even more restrictive than federal laws. If you plan to provide your services in more than one state, you will have to comply with each states' laws.

If you work with clients who have any medical concerns whatsoever, you will also need to understand and comply with patient confidentially laws, including those detailed in the Health Insurance Portability and Accountability Act (HIPAA). Something as simple as sending a postcard (which is visible to the public) with any information that identifies or associates a person with a particular health issues is against the law.

Before you give out medical supplies, medications, devices, advice, or services, here are some valuable resources to help you understand laws that govern medical charities and their practices:

Another reason to know the laws in advance is that the IRS requires very lengthy explanations of your business when you file for tax exemption status. You will need to be able to explain how you will distribute items within the parameters of the law.

Remember, a desire to help is commendable but breaking the law is punishable!

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