Kansas Attorney General Opinion 2019-007

September 9, 2019
ATTORNEY GENERAL OPINION NO. 2019- 7
Justin L. McFarland
General Counsel
Kansas Insurance Commissioner
420 SW 9th Street
Topeka, KS 66612-167
Re: 	Insurance—Utilization 	Review—Utilization 	Review 	Organization 	Act;
Definitions; Certificate; Conditions.
Insurance—Regulation and Registration of Administrators—Regulation and
Registration of Administrators; Certification as an Administrator; Home State
TPA License; Nonresident License.
Insurance—Regulation 	and 	Registration 	of 	Administrators—Pharmacy
Benefits Manager Registration Act; Definitions; Registration.
Public Health—Food, Drugs and Cosmetics—Exhibition of Title "Drugstore,"
"Pharmacy" or "Apothecary;” Enforcement of Act; Penalty.
Public Health—Regulation of Pharmacists—Definitions; Registration or Permit
Required; Repeated Violations of Act or Rules and Regulations May Be
Enjoined.
Synopsis: 	The Kansas Insurance Department lacks authority to deny an application for a
certificate to a utilization review organization, a registration to a pharmacy
benefit manager, or a license to a third party administrator when the applicant
is not licensed under the Kansas Pharmacy Act, yet uses or exhibits the words
“drug store,” “pharmacy,” “apothecary,” a combination of such titles, any title
or description of like import, or any other term such as “Rx” designed to take
the place of such title. 	Cited herein: 	K.S.A. 40-22a01; 40-22a03; 40-22a04;
40-22a06; K.S.A. 2019 Supp. 40-3801; 40-3810; 40-3812; 40-3813; 40-3817;
40-3821; 40-3822; 40-3823; K.S.A. 65-636; 65-646; 65-647; 65-655; 65-690;

Justin L. McFarland
Page 2
65-691; 65-692; 65-1625; K.S.A. 2019 Supp. 65-1626; K.S.A. 65-1643; and
65-1647.
* 	* 	*
Dear Mr. McFarland:
As General Counsel for the Kansas Insurance Department (KID), you ask for an opinion on
whether the KID has the authority to deny an application for a certificate to a utilization review
organization (URO), a registration to a pharmacy benefit manager (PBM), or a license to a
third party administrator (TPA) operating in Kansas when the applicant is not licensed under
the Kansas Pharmacy Act, 1 yet uses or exhibits the titles “drug store,” “pharmacy,”
“apothecary,” a combination of such titles, any title or description of like import, or any other
term such as “Rx” designed to take the place of such title. 	You also ask to what extent a
URO, PMB, or TPA may use or exhibit these titles if it is not licensed under the Kansas
Pharmacy Act. 	Your third question is whether the phrase “or other place” in K.S.A. 2019
Supp. 65-1626(xx) includes places other than physical locations, such as a website or
written materials.
You state the KID has received applications from UROs, PBMs, and TPAs that use or exhibit
the above-referenced titles. 	Your concern arises from two statutes, K.S.A. 65-636 and
K.S.A. 65-1636, that limit the use of the above-referenced titles.
The Kansas Food, Drug and Cosmetic Act (KFDCA) includes K.S.A. 65-619 through K.S.A.
69-690, and K.S.A. 65-691 and K.S.A. 65-692, amendments thereto. 2 K.S.A. 65-636, which
is a part of the KFDCA, states:
It shall be unlawful for any person, who is not legally licensed as a pharmacist
by the state board of pharmacy, or any person, firm or corporation who does
not have in continuous employ, at each place of business, a pharmacist
licensed by the state board of pharmacy, to take, use or exhibit the title
“drugstore,” “pharmacy” or “apothecary” or any combination of such titles, or
any title or description of like import, or any other term designed to take the
place of such title.
The symbol “Rx” is considered to be a term designed to the take the place of the titles
“drugstore,” “pharmacy,” and “apothecary.”3 	As such, K.S.A. 65-636 prohibits the use of
“Rx” by unauthorized entities. 4 The penalty for violating the KFDCA is a fine not exceeding
1 K.S.A. 65-1625 et seq.
2 K.S.A. 65-655.
3 Kansas Attorney General Opinion No. 97-8.
4 Id.

Justin L. McFarland
Page 3
$200 or imprisonment not exceeding ninety days, or both. 5 	The provisions of the KFDCA
are enforced by the Kansas Attorney General and county attorneys. 6
K.S.A. 2019 Supp. 65-1626(xx), which is a part of the Pharmacy Act, defines “‘pharmacy,’”
“‘drugstore’” or “‘apothecary’” as:
Premises, laboratory, area or other place: 	(1) Where drugs are offered for
sale[,] where the profession of pharmacy is practiced and where prescriptions
are compounded and dispensed; (2) that has displayed upon it or within it the
words “Pharmacist,” “pharmaceutical chemist,” “pharmacy,” “Apothecary,”
“Drug store,” “druggist,” “drugs,” “drug sundries” or any of these words or
combinations of these words or words of similar import either in English or any
sign containing any of these words; or (3) where the characteristic symbols of
pharmacy or the characteristic prescription sign “Rx” may be exhibited. 	As
used in this subsection, premises refers only to the portion of any building or
structure leased, used or controlled by the licensee in the conduct of the
business registered by the [Kansas Board of Pharmacy] at the address for
which the registration was issued.”
K.S.A. 65-1643(a) requires a person to obtain from the Kansas Board of Pharmacy a
registration to operate, maintain, open or establish a pharmacy. 	By continuing to use a
deceptive name without such registration, a person is in violation of K.S.A. 65-1643(a) and
the Board of Pharmacy may seek injunctive relief under K.S.A. 65-1647. 7
The question of whether the KID may deny an application because a URO, PBM, or TPA
uses or exhibits the titles referenced in K.S.A. 65-636 or K.S.A. 2019 Supp. 65-1626(xx) if
the applicant is not licensed by the Kansas Pharmacy Board is dependent upon the statutes
that grant authority to the KID. 	“Administrative agencies are creatures of statute and their
power is dependent upon authorizing statutes, therefore any exercise of authority claimed
by the agency must come from within the statutes. There is no general or common law power
that can be exercised by an administrative agency.” 8
The Utilization Review Organization Act 9 defines a URO as an “entity which conducts
utilization review and determines certification of an admission, extension of stay or other
health care service.”10 	To operate in Kansas, a URO must obtain a certificate from KID
unless an exception is granted under K.S.A. 40-22a06. 11 However, the exemptions in that
statute are not applicable to your question. 	To obtain a certificate, the URO must file an
5 K.S.A. 65-647.
6 K.S.A. 65-646.
7 Kansas State Bd. of Pharmacy v. Wilson, 8 Kan. App. 2d 359, 361 (1983) (the Kansas State Board of
Pharmacy may enjoin a person from operating and advertising a health food store as “Nature’s Farmacy”).
8 Pork Motel, Corp. v. Kansas Dept. of Health & Environment, 234 Kan. 374, 378 (1983).
9 K.S.A. 40-22a01 et seq.
10 K.S.A. 40-22a03(c).
11 K.S.A. 40-22a04(a).

Justin L. McFarland
Page 4
application, submit other documents and information and pay a $100 fee. 12 	If those
requirements are met, the KID is required to issue the certificate to the URO; there is no
provision in the Act prohibiting a URO from using or exhibiting any title, words, or phrases
in its name. 13 Thus, the KID cannot deny an application for a certificate to a URO because
the applicant’s name uses or exhibits the words “drug store,” “pharmacy,” “apothecary,” a
combination of such titles, any title or description of like import, or any other term such as
“Rx” designed to take the place of such title even though the applicant is not licensed under
the Kansas Pharmacy Act.
The Third Party Administrators Act 14 defines a TPA as “any person who directly or indirectly
underwrites, collects charges or premiums from or who adjusts or settles claims on,
residents of this state in connection with life, annuity or health insurance coverage offered
or provided by a payor,” subject to certain exclusions. 15 The KID can only refuse to issue a
license to a resident TPA upon determining the applicant or an individual who is responsible
for 	the 	conduct 	of 	the 	applicant’s 	affairs 	“is 	not 	competent, 	trustworthy, 	financially
responsible or of good personal and business reputation, or has had an insurance or
administrator certificate of authority or license” from any jurisdiction denied or revoked for
cause, or if any of the grounds in K.S.A. 2019 Supp. 40-3810 exist regarding the applicant. 16
None of those grounds mention the use of titles, words, or phrases in the applicant’s name.
A nonresident TPA must file an application with the KID and hold a home state certificate of
authority or license in a home state that has adopted a substantially similar law governing
TPAs. 17 The KID can refuse to issue or to delay the issuance of a nonresident administrator
license if it determines that, based upon events or information obtained after the home
state’s licensure of the TPA, the nonresident TPA “cannot satisfy the requirements of this
act or that grounds exist for the home state’s revocation or suspension of the administrator’s
home state certificate of authority or license.” 18 	K.S.A. 2019 Supp. 40-3813(h) does not
prohibit a nonresident TPA from using or exhibiting any title, words, or phrases in its name.
Based upon the statutes governing a TPA, the KID is not authorized to deny an application
for licensure as a resident or nonresident TPA because the applicant’s name uses or exhibits
the words “drug store,” “pharmacy,” “apothecary,” a combination of such titles, any title or
description of like import, or any other term such as “Rx” designed to take the place of such
title even if the applicant is not licensed by the Kansas Board of Pharmacy.
The Pharmacy Benefits Manager Registration Act 19 defines a PBM as “a person, business
or other entity that performs pharmacy benefits management. Pharmacy benefits manager
includes any person or entity acting in a contractual or employment relationship for a
12 K.S.A. 40-22a04(b)(1)–(6).
13 Id.
14 K.S.A. 2019 Supp. 40-3821(a).
15 K.S.A. 2019 Supp. 40-3801(a).
16 K.S.A. 2019 Supp. 40-3812(e).
17 K.S.A. 2019 Supp. 40-3813(a)-(b).
18 K.S.A. 2019 Supp. 40-3813(h).
19 K.S.A. 40-3821 et seq.

Justin L. McFarland
Page 5
pharmacy benefits manager in the performance of pharmacy benefits management for a
covered entity.”20 	A person who acts or operates as a PBM is required to obtain a
registration from the KID. 21 	To obtain a registration, the PBM must submit an application;
provide the name, address, official position, and qualifications for each person who is
responsible for the PBM’s conduct of affairs; and pay a fee. 22 If those requirements are met,
there is no statutory language authorizing the KID to deny an application for registration as
a PBM. 	Thus, the KID is not authorized to deny an application for licensure as a PBM
because the applicant’s name uses or exhibits the words “drug store,” “pharmacy,”
“apothecary,” a combination of such titles, any title or description of like import, or any other
term such as “Rx” designed to take the place of such title even though the applicant is not
licensed by the Kansas Board of Pharmacy.
You also asked two other questions. First, to what extent a URO, TPA, or PBM may use or
exhibit the titles referenced in K.S.A. 65-636 and K.S.A. 2019 Supp. 65-1626(xx) if the URO,
TPA, or PBM is not licensed under the Kansas Pharmacy Act. Second, whether the phrase
“or other place” in K.S.A. 2019 Supp. 65-1626(xx) includes places other than physical
locations, such as a website or written material. We decline to answer these questions as
they are not within the jurisdiction of the KID and any violation of these statutes is dependent
upon facts determined by the appropriate agency having jurisdiction.
In summary, we conclude that the KID lacks statutory authority to deny an application for a
certificate to a URO, a license to a TPA, or a registration to a PBM when the applicant is not
licensed under the Kansas Pharmacy Act, yet uses or exhibits the words “drug store,”
“pharmacy,” “apothecary,” a combination of such titles, any title or description of like import,
or any other term such as “Rx” designed to take the place of such title.
Sincerely,
Derek Schmidt
Kansas Attorney General
Janet L. Arndt
Assistant Attorney General
DS:AA:JLA:sb
20 K.S.A. 2019 Supp. 40-3822(e).
21 K.S.A. 2019 Supp. 40-3823(a).
22 K.S.A. 2019 Supp. 40-3823(b)(1)–(3).