Learn more about pharmacy bonds, and apply today. Absolute Surety offers surety bonds nationwide through a convenient online application system.
What Are Pharmacy Bonds?
License and permit bonds are commonly required in industries that are highly regulated. That certainly is an accurate description of the pharmaceutical industry. A pharmacy bond (also known as a wholesale drug distributor bond) is a type of license bond intended to prevent the mismanagement of the shipment and sale of prescription and over-the-counter drugs by pharmaceutical wholesalers. Wholesale pharmacy businesses are licensed at the state level, and certain states require a bond to be purchased as a condition of issuing or renewing a license.
The bond provides several forms of protection. It is the business’s pledge to the governing federal and state agencies that the pharmaceutical wholesaler will abide by all relevant laws and regulations. It guarantees that Medicare beneficiaries get the medications they need from legitimate suppliers and protects consumers in general by deterring wholesalers from breaking laws designed to protect the public. The bond also protects the retail pharmacies that buy from the wholesaler against any financial loss due to unlawful actions of the wholesaler.
Who Needs Them?
Any wholesale pharmacy business applying for a license to operate in a state that requires pharmacy bonds must purchase one. The bond must remain in force to prevent revocation of the license.
How Do They Work?
The government agency requiring the bond is the obligee, the wholesale pharmacy business buying the bond is the principal, and the company underwriting and issuing the bond is the surety. The bond ties these three parties together in a legally binding contract.
Any violation of the terms of the bond can result in a claim being filed against it. For example, if the obligee fines the principal for a regulatory infraction, it can file a claim against the bond to collect it. The surety will investigate to determine the validity of the claim and will pay any valid claim up to the full amount of the bond. The surety will then recover from the principal the amount paid out to the claimant.
What Do They Cost?
Most states that require pharmacy bonds set the bond amount at $100,000. The business owner will pay a small percentage of that amount as the annual premium, typically under 5% for applicants with good personal credit and finances.
Use our convenient online system to apply for a pharmacy bond today.
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