What is a Pharmacy Bond?
Wholesale distributors of prescription drugs, non-prescription medications, and some medical equipment may be required to obtain a license in order to operate legally. A pharmacy bond, also known as a wholesale drug distributor bond, may be included as part of the licensing requirements. This type of license bond is meant to protect the public from fraudulent or illegal activities that may cause financial harm. If a customer of a licensed pharmacy experiences an issue that results in damages, a claim can be made against a pharmacy bond.
As a license bond, a pharmacy bond is a contract between three parties: the surety company providing the bond, the principal required to post a bond, and the obligee that mandates a bond be in place. Claims are paid by the surety company initially, but the principal is responsible for paying back claims over time.
What Does a Pharmacy Bond Cost?
Two main factors drive pharmacy bond costs: the amount of the bond and the personal credit of the applicant. First, the bond amount required varies from state to state, but it often falls between $25,000 and $100,000. However, you do not pay the entire amount to meet this requirement. Instead, the surety company charges a percentage of the bond, ranging from 1 to 10% of the total.
The percent of the bond you pay, known as your bond premium, is based on your personal credit history. Because a pharmacy bond acts as a form of credit extended to your business, the surety company wants to feel confident you can repay claims should they arise. Bad credit history or a low credit score increases the bond premium you pay for a pharmacy bond because you are deemed a higher risk to the surety company.
How Do I Get a Pharmacy Bond?
You can start the process of obtaining a pharmacy bond by filling out a short online application. Once the details of your business and personal credit score are reviewed, you receive a quote for your pharmacy bond premium.