NAC639.634. Enforcement of statutory liens.

     1. An authorized warehouse that intends to enforce any statutory lien it may have against a manufacturer, wholesaler, pharmacy or chain warehouse with whom it has contracted shall notify the Board in writing of its intent to enforce the lien.

     2. Upon receipt of the notice, the Board will determine whether the claim of the authorized warehouse is valid. The authorized warehouse shall provide any documentation or evidence requested by the Board to verify its claim.

     3. If the Board determines that the claim of the authorized warehouse is valid, the Board will impound the prescription drugs and goods that are the subject of the lien, cause an inventory of the impounded items to be conducted and segregate those items. The authorized warehouse shall continue to store the impounded items at its expense.

     4. The Board will give written notice of the claim of the authorized warehouse to the manufacturer, wholesaler, pharmacy, chain warehouse and any other person who claims an interest in the prescription drugs and goods, in person, or by registered or certified mail to the last known address of the person to be notified. The notice will include:

     (a) A statement of the claim of the authorized warehouse;

     (b) A copy of the inventory of the impounded items;

     (c) A demand for payment within a specified time of not less than 10 days after the receipt of the notice;

     (d) A conspicuous statement that the items will be sold to satisfy the claim of the authorized warehouse unless the claim is paid within the specified time; and

     (e) A statement that the manufacturer, wholesaler, pharmacy, chain warehouse or other person claiming an interest in the prescription drugs and goods may refute the claim of the authorized warehouse by providing to the Board any documentation or evidence that supports his or her position within the time designated in the notice.

     5. The Board will attempt to reconcile the dispute informally if it receives documentation or evidence from the manufacturer, wholesaler, pharmacy, chain warehouse or other person claiming an interest in the prescription drugs and goods that refutes the claim of the authorized warehouse. If any portion of the dispute is reconciled, the Board will release the impounded prescription drugs and goods to carry out the purposes of the reconciliation. If the dispute is not reconciled, the parties shall submit the dispute to binding arbitration in accordance with the rules and procedures of the American Arbitration Association. The costs of the arbitration must be borne by the parties to the dispute.

     6. If the arbitrator resolves all or any portion of the dispute in favor of the manufacturer, wholesaler, pharmacy, chain warehouse or other person claiming an interest in the prescription drugs and goods, the Board will release the impounded prescription drugs and goods in accordance with the decision of the arbitrator.

     7. The Board will sell the impounded prescription drugs and goods for the satisfaction of the claim of the authorized warehouse if:

     (a) The arbitrator resolves all or any portion of the dispute in favor of the authorized warehouse; or

     (b) The manufacturer, wholesaler, pharmacy, chain warehouse or other person claiming an interest in the prescription drugs and goods fails to provide documentation or evidence refuting the claim of the authorized warehouse within the time set forth in the Board’s notice.

     8. A sale will be conducted by the Board as follows:

     (a) The Board will notify all wholesalers licensed by the Board, the manufacturer, wholesaler, pharmacy or chain warehouse and any other person claiming an interest in the prescription drugs and goods of its intent to sell the items to the highest responsible bidder and of the terms and conditions for submitting a bid. The Board will allow the manufacturer, wholesaler, pharmacy, chain warehouse or other person claiming an interest in the items to redeem the prescription drugs and goods upon payment of the claim of the authorized warehouse, including the costs incurred by the authorized warehouse to enforce its claim, before the consummation of the bidding procedure.

     (b) The Board may divide the prescription drugs and goods into lots or portions if necessary to facilitate an efficient and effective sale.

     (c) The Board will accept the highest responsible bid received for the prescription drugs and goods.

     (d) Any bid accepted by the Board must be paid in cash or by a certified or cashier’s check made payable to the Board.

     (e) The Board will distribute all money received from the sale in the following order of priority:

          (1) To the Board in such an amount as is necessary to pay the expenses of impounding the prescription drugs and goods, causing an inventory of those items to be conducted and conducting the sale.

          (2) To the authorized warehouse to satisfy its claim, including all costs and charges incurred by the authorized warehouse until the day of the sale.

          (3) To any person who has established an interest in the prescription drugs and goods to the satisfaction of the Board, other than the manufacturer, wholesaler, pharmacy or chain warehouse.

          (4) To the manufacturer, wholesaler, pharmacy or chain warehouse.

     9. The authorized warehouse:

     (a) Shall not conduct a sale of the prescription drugs and goods pursuant to NRS 104.7206 or 104.7210.

     (b) May not purchase prescription drugs and goods at any sale unless it is also licensed by the Board as a wholesaler.

     (c) Shall execute such documents as are required by the Board to indemnify the Board and hold it harmless from any liability arising as a result of the authorized warehouse exercising its rights pursuant to this section.

     (d) Shall pay all costs related to the exercise of its rights pursuant to this section, including any costs incurred by the Board to impound the prescription drugs and goods, cause an inventory of those items to be conducted and conduct the sale that are not paid pursuant to subparagraph (1) of paragraph (e) of subsection 8.

     10. A wholesaler who in good faith purchases prescription drugs or goods at any sale conducted by the Board pursuant to this section takes the items free of any rights of persons against whom the lien of the authorized warehouse was valid.

     11. The rights provided by this section are in addition to all other rights allowed by law to a creditor against his or her debtor.

     (Added to NAC by Bd. of Pharmacy, eff. 10-1-93)