What Is a pharmacy bond?
The pharmacy surety bond is a type of license and permit bond. It is required in at least 15 states as a licensing requirement for wholesale distributors of prescription and non-prescription drugs and sometimes also by distributors of medical equipment. The purpose of the bond is to guarantee that bonded distributors will make any due payments of administrative penalties, fees or costs to the state on time (typically within 30 days).
These bonds are a form of financial guarantee agreement made between three parties. These are the distributor (the bond principal), the state authority overseeing them - typically the state Board of Pharmacy (the bond obligee), and the surety (the guarantor) which backs the bond financially.
See below for a list of states that currently require this bond, and more information about bond cost.
Questions about Pharmacy Bond
Which states require this type of bond?
Currently at least 15 states require this bond. These are: Arizona, California, Florida, Iowa, Indiana, Nebraska, Nevada, North Dakota, Oregon, Maryland, Mississippi, South Dakota, Texas, Wisconsin, and Wyoming.
In some states, this bond is also known as a wholesale drug distributor bond. It is usually always required as a licensing requirement without which distributors may not operate legally.
What is the cost of this bond?
The cost of your bond depends on the bond amount and on your personal credit score.
The amount of this bond in most states requiring it is $100,000. The bond amount is the full amount of coverage that can be extended by the surety to a claimant under a bond agreement. It is not the amount you need to pay. Instead, you only need to pay a fraction of that amount, a bond premium.
Your premium is determined by the surety on the basis of your personal credit score as well as other personal financial information. The higher your score, and the more stable your financials - the lower your rate will be. Generally, if you have a high credit score, you can expect to receive a premium on your bond between 1% and 5% of the total amount.
Even if your score is not ideal, you can still get bonded, thanks to our Bad Credit Program. Under this program, you will need to pay a slightly higher rate, between 5%-15%, but you will work with the same expert sureties that back all of our bonds.
How are claims handled for these bonds?
The purpose of these bonds is to guarantee that bonded wholesalers will pay any penalties or fees they owe to the state in a timely manner. This applies to payments that are related to the license held by the wholesaler and arise out of an obligation or responsibility they have.
If a wholesaler fails to comply with such obligations, as set out in state law, then a claim can be filed against their bond to receive the necessary compensation, up to the full amount of the bond. Claims against these bonds are typically filed by the obligee (the state Board of Pharmacy).
If a claim is made and the surety pays out compensation to the claimant, the bonded wholesaler is required to reimburse the surety in full.
How can I get bonded?
You can get a free quote on your bond by submitting a surety bond application. We will provide you with your rate along with additional information on getting bonded.
See our How to Get Bonded page for more details about the process of getting bonded.
Do you have any questions about getting bonded? Call us at (877) 514-5146 anytime!