The free-drug hypothesis states that pharmacological activity depends only on the unbound drug concentration in plasma, since only free drug molecules are mobile enough to interact with receptors. When a drug binds reversibly to a plasma protein such as albumin, it forms a complex that is pharmacologically silent, it neither stimulates nor blocks a receptor, while it stays bound. The bound and free forms exist in equilibrium, so as free drug is used up at the site of action, more is released from the protein to replace it, meaning the bound fraction still eventually contributes to drug action, just not while attached.
This makes "pharmacodynamically inert" the accurate description, since the deficiency is specifically in producing a pharmacological effect while bound, not in being transported or eventually metabolised.
Therefore, the correct answer is Pharmacodynamically inert.