California Board Opens Door to Interstate Central Fill Models

The California State Board of Pharmacy (the “Board”) has issued a second modified version of its proposed amendments to California’s central fill regulation, Cal. Code Regs. tit. 16, § 1707.4. The latest revision makes a significant change for pharmacies operating interstate shared-service models: the Board has removed the proposed requirement that a central fill pharmacy be physically “located in California.” The Board has opened a 15-day comment period on the latest modifications, which closes October 2, 2026.

The change represents a notable reversal from earlier versions of the proposed rule and, if finalized, would permit a properly licensed nonresident pharmacy to serve as a central fill pharmacy for a California originating pharmacy. This is a significant development for national and regional pharmacy operators that rely on centralized fulfillment models across state lines.

Background

As we previously reported, the Board has been working for several years to modernize section 1707.4, a regulation originally written around traditional central refill models. The proposed amendments expand the regulation beyond refills, formally define “central fill pharmacy” and “originating pharmacy,” address labeling and patient notification, permit certain image-based final product verification, and clarify the treatment of controlled substances and other pharmacy models.

But one feature of the proposal drew substantial industry attention: the Board proposed requiring a central fill pharmacy to be both licensed by the Board and physically located in California. The Board previously explained that the geographic limitation was intended, in part, to preserve its ability to inspect central fill facilities and to reduce the risk of delays associated with returning filled prescriptions to the originating pharmacy.

That restriction produced an unusual interstate result. A California-based central fill pharmacy could provide central fill services to another California pharmacy or, following other modifications to the proposal, to a nonresident originating pharmacy. But a nonresident central fill pharmacy could not provide those same central fill services to a California pharmacy. In practical terms, national pharmacy systems could not use an otherwise appropriately licensed out-of-state centralized fulfillment facility to support their California pharmacy locations.

Key Change: The Board Removes the In-State Central Fill Requirement

The Board’s September 17, 2026 second modified text changes that result. Specifically, the Board has deleted the words “located in California” from proposed subsection 1707.4(c). The proposal would now provide that a central fill pharmacy “licensed by the Board” may process a request for prescription medication received by another pharmacy, subject to the other requirements of the regulation.

The practical consequences are significant:

• Nonresident central fill pharmacies are no longer categorically excluded. An out-of-state pharmacy that holds the required California licensure could serve as the central fill pharmacy for a California originating pharmacy.
• Interstate central fill arrangements can operate in both directions. The rule would no longer effectively reserve the central fill role to California-based facilities while allowing those facilities to support pharmacies elsewhere.
• Existing California licensure and compliance obligations remain. Removing the geographic restriction does not exempt an out-of-state pharmacy from California nonresident pharmacy requirements or the other conditions imposed by section 1707.4.
• The proposal still reflects a traditional central fill structure. The originating pharmacy remains defined as the pharmacy that receives the patient's initial prescription and dispenses the medication to the patient. Accordingly, the latest modification does not expressly authorize a central fill pharmacy to ship directly to the patient when acting in its central fill capacity. However, the Board has said separately that the rule preserves mail-order and common electronic file models where direct to patient models may be permitted.

The timing of the change is also noteworthy. The Board has added Assembly Bill 1503 to the rulemaking record. Effective July 1, 2026, AB 1503 expanded California's nonresident pharmacy provisions to reach out-of-state pharmacies involved in the preparation, dispensing, shipping, mailing or delivery of medications into California and expressly authorized the Board to inspect a licensed nonresident pharmacy. Those provisions address at least part of the oversight concern previously cited by the Board in support of requiring central fill pharmacies to be physically located in California.

Stakeholders Have Until October 2 to Comment

The Board is accepting written comments on the second modified text through October 2, 2026. Because this is a 15-day modified-text comment period, comments should focus on the most recent modifications, addressing the removal of the geographic limitation on central fill pharmacies. Stakeholders operating or developing interstate central fill arrangements involving California pharmacies may wish to submit comments addressing the practical impact of allowing California-licensed nonresident pharmacies to participate in these models.

The revision is a positive development for interstate pharmacy operations and would provide greater flexibility for national and regional central fill networks while preserving the Board's licensing and oversight authority. Our team will continue to monitor the rulemaking and related shared pharmacy services developments in California and other states.

For any questions on the modified version of the proposed amendments contact your Quarles attorney or:

• Nick Meza: 602-229-5439 / nicholas.meza@quarles.com
• Susan Trujillo: 602-229-5318 / susan.trujillo@quarles.com