It is not uncommon for pharmacies to apply manufacturer’s coupons to assist patients with high deductibles. But when applied incorrectly, the pharmacy may face recoupments, audits/investigations, and large settlements as recent cases illustrate.

The U.S. Attorney’s Office has recently reached a $3.5 million settlement with specialty pharmacy Advanced Care Scripts, Inc. (ACS), to resolve allegations that it conspired with Teva for paying kickbacks to Medicare patients taking Copaxone (a Teva drug approved for treatment of multiple sclerosis). The press release issued by the government reminded that “the Anti-Kickback Statute prohibits pharmaceutical companies from offering or paying, directly or indirectly, any remuneration – which includes money or any other thing of value – to induce Medicare patients to purchase the companies’ drugs.”

The government alleged that ACS served as a contracted vendor for Teva and provided, among other things, benefits investigation services to certain patients who had been prescribed Copaxone. ACS acknowledged certain facts, including that it relayed data from two foundations, Chronic Disease Fund (CDF) and The Assistance Fund (TAF), to Teva so that Teva could correlate its payments to the foundations with the amounts of money the foundations spent on Copaxone patients. ACS further acknowledged that, when the foundations lacked funding and were not accepting new applications for Medicare co-pay coverage, ACS provided regular updates to Teva on the number of Medicare Part D patients serviced by ACS who had prescriptions for Copaxone, met the criteria for foundation co-pay coverage, and were awaiting foundation co-pay coverage. Teva sometimes provided ACS with advance notice of its payments to CDF or TAF. Once ACS learned that CDF or TAF had re-opened its co-pay fund, ACS promptly would send the foundation a “batch file” that consisted almost entirely of Copaxone patients’ applications for Medicare co-pay coverage. In other words, Teva was funding CDF and TAF based on the amount of patients that needed assistance with Teva’s drug.

FBI’s special agent in charge working on the case said in the press release: “Advanced Care Scripts (ACS) willingly served as a pawn in a kickback scheme, putting profit over patient needs, by helping Teva to time its foundation payments to boost sales of Teva’s own drug, which ACS then dispensed…Today’s settlement should be a warning to others that the FBI will continue to aggressively go after vendors like ACS who conspire with pharmaceutical companies to disguise kickbacks as charitable contributions, at the expense of hard-working taxpayers who support the Medicare program.”

The government has also settled with CDF and TAF and filed a complaint against Teva under the False Claims Act.

Another recent large settlement ($7.8 million) was with a Nashville pharmacy to settle allegations that the pharmacy routinely and improperly waived Medicare co-payments without an individualized assessment of those beneficiaries’ inability to pay, and improperly used pharmaceutical manufacturers’ copayment cards to pay the co‑payments of certain Medicare recipients in violation of the Anti-Kickback Statute and False Claims Act.

As these cases illustrate, any arrangements with manufacturers should be scrutinized by your legal counsel. Probably the most important point to remember is that financial assistance should not be used for any government sponsored programs. For example, the Office of Inspector General (OIG) has prepared a survey analyzing manufacturers’ compliance with copay programs.  All surveyed manufacturers provide notices to beneficiaries and pharmacists that copayment coupons may not be used in Federal health care programs. Most manufacturers also had certain safeguards to prevent copayment coupon use for drugs paid for by government plans.

A manufacturer may, however, sponsor a charitable foundation which assists patients with copays as long as:

  1. The manufacturer or its affiliate does not exerts any direct or indirect influence or control over the charity or the subsidy program;
  2. The charity awards assistance in a truly independent manner that severs any link between the pharmaceutical manufacturer’s funding and the beneficiary (i.e., the assistance provided to the beneficiary cannot be attributed to the donating pharmaceutical manufacturer);
  3. The charity awards assistance without regard to the pharmaceutical manufacturer’s interests and without regard to the beneficiary’s choice of product, provider, practitioner, supplier, or Part D drug plan;
  4. The charity provides assistance based upon a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner; and
  5. The manufacturer does not solicit or receive data from the charity that would facilitate the manufacturer in correlating the amount or frequency of its donations with the number of subsidized prescriptions for its products.

More information on the OIG’s analysis on how manufacturers may sponsor charitable programs.





Since the inception of the 340b program, drug manufacturers have been attempting to curtail it to avoid offering discounts or to prevent double discounts (which occurs when a 340b drug is billed to a Medicaid program). This year, however, there were multiple coordinated attempts by manufacturers to exit the program. For example:

  • AstraZeneca will stop offering 340b discounts to on-site hospital pharmacies starting October 1, 2020.
  • Eli Lilly will no longer offer 340b discounts on drugs shipped by a covered entity to its contracted pharmacy. The manufacturer now requires that the drug be shipped only to approved locations.
  • Merck started auditing covered entities for 340b duplicate discounts. It is asking data in excess of Medicaid claims.
  • Bausch is implementing a “direct distribution” requirement (340b products must be purchased only from the manufacturer’s preferred wholesaler).
  • Other manufacturers – such as Sanofi and Novartis – also challenge 340b program by requiring additional information and audits or limiting 340b discounts.

Many 340b advocacy groups believe that such actions by manufacturers violate federal and state laws, including 340b regulations, Medicaid state and federal regulations, and HIPAA. Several legal commentators are concerned that increased audits and shipment requirements constitute contractual violations between pharmacies and covered entities. It is likely that the 340b program administration will significantly change in the years to come, unless we see a legal action to enjoin the manufacturers from modifying the 340b program, which protects the most vulnerable patient base.

The U.S. Department of Health and Human Services (HHS) has issued an amendment to the Public Readiness and Emergency Preparedness Act (PREPA) allowing pharmacies to perform vaccination to children ages three through 18 as per ACIP’s standard immunization schedule.

In July, 2020, Centers for Disease Control and Prevention (CDC) conducted a survey to assess the capacity of pediatric health care practices to provide immunization services to children during the COVID-19. The survey showed that 21.3 percent of pediatric practices responded that they are unlikely to provide immunization or the practice was permanently closed or not resuming immunization services for all patients. Another 20 percent responded that they were unsure. In response to these troubling developments, CDC and the American Academy of Pediatrics have stressed: “well-child visits and vaccinations are essential services and help make sure children are protected.” More information on the survey.

As a result, the HHS issued an amendment to include pharmacists in the PREPA for provision of vaccination to children (above 3 years of age).

Many States already allow pharmacists to administer vaccines to children of any age. Such states are: Alabama, California, Georgia, Idaho, Indiana, Iowa, Louisiana, Michigan, Mississippi, Montana, Nebraska, Nevada, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, Virginia, New Hampshire.

Other states permit pharmacists to administer vaccines to children depending on the age. Some states, however, restrict pharmacist-administered vaccinations to only adults.

But all states require children to be vaccinated against certain communicable diseases as a condition of school attendance. With a school season upon us, it is unclear where these children will obtain their necessary vaccination. Now, with this federal amendment, hopefully more pharmacists will start providing vaccines to children. According to the HHS, pharmacists are well positioned to increase access to vaccinations, particularly in certain areas or for certain populations that have too few pediatricians and other primary-care providers, or that are otherwise medically underserved.

Pharmacist vaccination should be performed pursuant to the following requirements:

  • The vaccine must be FDA-authorized or FDA-licensed.
  • The vaccination must be ordered and administered according to ACIP’s standard immunization schedule.
  • The licensed pharmacist must complete a practical training program of at least 20 hours that is approved by the Accreditation Council for Pharmacy Education (ACPE). This training program must include hands-on injection technique, clinical evaluation of indications and contraindications of vaccines, and the recognition and treatment of emergency reactions to vaccines.
  • The licensed or registered pharmacy intern must complete a practical training program that is approved by the ACPE. This training program must include hands-on injection technique, clinical evaluation of indications and contraindications of vaccines, and the recognition and treatment of emergency reactions to vaccines.
  • The licensed pharmacist and licensed or registered pharmacy intern must have a current certificate in basic cardiopulmonary resuscitation.
  • The licensed pharmacist must complete a minimum of two hours of ACPE-approved, immunization-related continuing pharmacy education during each State licensing period.
  • The licensed pharmacist must comply with recordkeeping and reporting requirements of the jurisdiction in which he or she administers vaccines, including informing the patient’s primary-care provider when available, submitting the required immunization information to the State or local immunization information system (vaccine registry), complying with requirements with respect to reporting adverse events, and complying with requirements whereby the person administering a vaccine must review the vaccine registry or other vaccination records prior to administering a vaccine.
  • The licensed pharmacist must inform his or her childhood-vaccination patients and the adult caregivers accompanying the children of the importance of a well-child visit with a pediatrician or other licensed primary-care provider and refer patients as appropriate.

These requirements are consistent with those in many states that permit licensed pharmacists to order and administer vaccines to children and permit licensed or registered pharmacy interns acting under their supervision to administer vaccines to children.

Please note, that the PREPA also provides immunity from tort liability claims (except willful misconduct) to individuals or organizations involved in the manufacture, distribution, or dispensing of medical countermeasures. This could incentivize pharmacists to perform vaccination.



This month, President Trump signed an executive order mandating that certain drugs and medical supplies purchased by federal agencies are U.S.-manufactured. The objective of the order is to reduce our dependence on foreign manufacturers for “Essential Medicines, Medical Countermeasures, and Critical Inputs” to ensure sufficient and reliable long-term domestic production of these products. The order is apparently aimed at plugging gaps in the medical supply chain that have been revealed during the coronavirus crisis.

(By the way, if you are wondering what constitutes “Essential Medicines, Medical Countermeasures, and Critical Inputs,” you are not the only one. Currently, we are waiting for a definition from the FDA.)

The order mandates that within 180 days of its date, the Secretary of Health and Human Services identifies vulnerabilities in the supply chain for “Essential Medicines, Medical Countermeasures, and Critical Inputs and to mitigate those vulnerabilities.”

The potential impact of this order is still unclear. But the effect could be very substantial. To remind, the U.S. currently imports approximately 80% of active pharmaceutical ingredients. Critics argue that the quality of medication could potentially decrease while the cost is likely to rise. Some trade organizations are also worried that the order will cause a disruption in the supply chain, including causing a shift in manufacturers’ priorities taking vulnerable resources away from the priority of combating the COVID-19 outbreak.



Recently, we have seen many cases filed by whistleblowers against pharmacies for not properly reporting their Usual-and-Customary Drug Prices (U&C). The cases are usually filed under the False Claims Act (FCA) for manipulating U&C to receive greater reimbursements from government payors.

First of all, what is U&C? There is no uniform definition. Instead, third-party payor contracts and Medicaid state statutes define U&C, which is usually the lowest net price a cash patient would have paid on the day that the prescription was dispensed inclusive of all applicable discounts. The reporting requirements also vary by plans. For example, some payors may require U&C reporting on a daily basis while others may require annual reporting.

The most recent U&C case was filed by a former employee of Safeway alleging that Safeway increased its margins by not reporting its price matching program as U&C. The court, however, issued a ruling in favor of Safeway because there was no clear guidance at the time of Safeway’s price matching program whether such discounts should be included in reporting U&C. (See U.S. et al. v. Safeway, Inc. No. 11-cv-3406, C.D. ILL., June 12, 2020).

The case started in 2006 when multiple pharmacy chains launched a $4-generic programs. To avoid losing its customers, Safeway implemented a price-matching campaign. To avoid reporting $4 as its U&C price – which would had negatively affected Safeway’s reimbursement rates – this price matching campaign was available only to Safeway’s members. During the litigation, Safeway argued that because the club membership discount prices were not Safeway’s retail prices, Safeway did not have to report them to third-party payors as its U&C.

The majority of PBM contracts have a clause that they reimburse at the agreed contract price or U&C, whichever is cheaper. Safeway’s executives admitted that the main reason for going to a membership program was to protect U&C which would have had a positive impact on the gain. Despite this admission, the court ruled that at the time of Safeway’s price matching program, there was no authoritative guidance as to how to define U&C in conjunction with membership or discount programs. The ruling would have been different if Safeway continued its program into 2017, when the Seventh Circuit decided a ground-breaking case (Garbe decision) that held that discounted programs and membership programs should be included in reporting U&C. The court found that participants in such discount programs are considered the “general public,” and the discounted prices charged to those participants are considered the pharmacy’s U&C, which the pharmacy must also charge Medicare.

The bottom-line is: if a pharmacy offers a discount drug program, it must include such discounts into its U&C reporting and charge the same prices to Medicare. Most state Medicaid programs have a similar requirement. For example,  California Medicaid reimburses the lower of Actual Acquisition Cost (AAC) plus a professional dispensing fee, or usual and customary charges. More on Cal. Medicaid reimbursements.  Each pharmacy – especially if offering any discounts or membership prices – should implement a U&C tracking system to avoid potential fraud liability for failure to accurately report U&C pricing.




Due to low reimbursement rates, many pharmacies are struggling to maintain their profit margins. Some turn to specialty medications, some convert into veterinary pharmacies, and some close their doors to retail patients and start working with long-term care facilities. And there is a category of pharmacies that step into the murky waters of adjusting patient therapies in favor of their bottom lines. Such practices, however, may cost more in the long run than any potential monetary gain derived from this activity.

To illustrate: recently several cases where filed against PharMerica[1] throughout the nation by the federal government and individuals (qui tam actions) alleging that the pharmacy systematically altered essential elements of prescriptions to increase its profits. The most recent case against PharMerica was filed by its former employee based on intentionally incorrect data input. Sturgeon v. Pharmerica Corp., 438 F. Supp. 3d 246 (E.D. Pa. 2020).

The case explains that nursing home physicians submit prescriptions to PharMerica electronically through a “widely-used nursing home platform” called PointClickCare. PharMerica also uses its own “proprietary medicine dispensing system known as the LTC400” to fill prescriptions received through PointClickCare. Prescription data transmitted via PointClickCare is not migrated automatically to the LTC400 to create an order for filling a prescription. Instead, when a prescription is received through the PointClickCare system, a pharmacy technician or data entry clerk at PharMerica manually inputs the prescription information into the LTC400.

The problem arose when an operator of nursing homes notices that the cost of medication significantly increased after it started working with PharMerica. The investigation showed  “significant discrepancies” between prescription order data received via PointClickCare and prescription fill data in the LTC400. It appeared that on some occasions PharMerica had dispensed medications different from those prescribed. These discrepancies “consistently favored PharMerica’s bottom line.”

The case alleges that PharMerica tampered with the prescriptions “so to enhance its profit margins and increase its rebates from manufacturers and suppliers” and that the use of both the PointClickCare system and the LTC400 made this possible in two ways. First, the system of manually entering prescription data received via PointClickCare allowed PharMerica to direct its clerks to alter the data intentionally. That is, in some instances, the data as originally entered in the LTC400 did not match the prescription data received via PointClickCare. Second, the LTC400 itself was programmed so that whenever an ordered drug was out of stock, the platform would prompt clerks to replace it with the most profitable alternative, even if the data was correctly transcribed. “In either case, PharMerica did not comply with applicable laws and regulations requiring that pharmacists get the prescribing physician’s consent before altering any essential element of a prescription.” Allegedly, PharMerica often altered the drug’s dosage and other times altered its form (i.e., tablet vs. capsule) or the drug itself (i.e., brand name vs. generic).

In its defense, PharMerica cited CMS Review of Current Standards of Practice for Long-Term Care Pharmacy Services (Dec. 30, 2004) that explains that a pharmacy may make adjustments to a therapy to avoid therapeutic duplication, drug-disease contraindications, drug-drug interactions, incorrect drug dosage or duration of drug treatment, and drug-allergy interactions. Plus, pharmacists in long-term care also check Medicaid’s Preferred Drug Lists prior to the fill. If a prescription is dispensed for a noncovered drug, the pharmacy is at risk for the cost of the drug and the dispensing fee.

This is not the first action brought against PharMerica that stem from similar allegations. PharMerica attempted to dismiss the case due to other related and similar cases pending against it. However, the PharMerica’s motion was denied.

This case illustrates the danger of adjusting or tweaking prescriptions to increase the reimbursement. Some changes to prescriptions, however, are allowed depending on state laws.

Generally there are only a few things pharmacists are allowed to change:

  • Brand name drug to a cheaper alternative (generic);
  • Medication change to a therapeutic equivalent;
  • changing the form or taste of the drug to make it easier for the patient to take.

Any other changes should be made only after consulting with a prescriber.



[1] PharMerica is the second largest institutional pharmacy in the United States. It fills prescription orders only for nursing homes and other long-term care facilities and is not open to the general public.

Last week, DEA proposed two new rules regarding (1) reporting theft or significant loss of controlled substances and (2) registration fees.

1.     15-day requirement for reporting drug loss or theft.

This proposed rule would amend DEA regulations regarding Form-106, used by the registrants to report thefts or significant losses of controlled substances, to clarify that all such forms must be submitted electronically. In addition, the proposed rule would add new requirements for the form to be submitted accurately and within a 15-day time period. This proposed rule will not change the requirement that registrants notify the DEA Field Division Office in their area, in writing, of the theft or significant loss of any controlled substances within one business day of discovery of such loss or theft. The comment period is now open. If you would like to address this proposed rule, submit your comments by following these instructions.

    2.       Increased registration fee

A new registration fee will take effect for all new applications and all renewal applications submitted on or after October 1, 2020. Current registration fee for a pharmacist is $731, which will increase to $888 (for a three-year cycle).

In addition to raising fees, DEA also made a comment regarding its refund policy.  Currently, DEA’s policy is that it will not issue a refund of registration fees, including if the payment was made in error based on guidance provided by DEA personnel. The Notice of Proposed Rulemaking now includes provisions that “will give DEA’s Administrator discretionary authority to refund registration fees.” The circumstances warranting consideration of a refund include: “applicant error, such as duplicate payments, payment for incorrect business activities, or payments made by persons who are exempt under this section from application or renewal fees; DEA error; and death of a registrant within the first year of the three-year registration cycle.”

While this is not a new case, nevertheless it must be revisited to remind the importance of verifying all licensure, credentials, and records of pharmacy employees. This straightforward and easy step could potentially save pharmacies millions of dollars, as this case and many enforcement actions illustrate.

Earlier this year, Walgreens agreed to pay $7.5 million to resolve a lawsuit contending that the company allowed an unlicensed employee to handle over 745,000 prescriptions.

For over 15 years, Walgreens employed a pharmacist who handled more than 100,000 prescriptions for controlled substances such as oxycodone, fentanyl, morphine and codeine.

This “pharmacist,” who was never licensed, used the license of someone else with the same first name to obtain promotions, according to a consumer protection lawsuit filed by the Santa Clara County and Alameda County district attorney’s offices. (How was it possible for a non-pharmacist to fill and consult patients on prescription medications?)

The unlicensed practice was discovered by the Board of Pharmacy during a routine audit. The “pharmacist” has been criminally charged by the State Attorney General with criminal identity theft, false personation, and false pretenses.

Walgreens has agreed to pay a hefty monetary penalty for its failure to verify licensure. The final judgment requires Walgreens to ensure licensure compliance by implementing a verification program, posting proof of licensure, conducting annual audits, and submitting an annual compliance report.

In addition to criminal investigations, a pharmacy may face recoupments and other penalties if it fails to verify licensure of its employees and contractors. Pharmacy should also verify that all its employees, contractors, and agents are not listed on the OIG’s List of Excluded Individual/Entities (LEIE) or the DHCS’s exclusion database. For certain protections against negligent hiring, the Pharmacy shall also perform education and employment verification, a Social Security number validation, and an appropriate criminal records history check.

Need a policy for verifying licensure and exclusion databases? Click here to access RxPolicy to download a policy and procedure.

Many pharmacy owners wonder if contracting with Medicare directly (as a Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) provider) adds value to a pharmacy business. The answer depends on whether the sale of the pharmacy is structured as an asset or a stock purchase.

Asset purchase

To become a DMEPOS provider under Medicare Part B, a pharmacy must obtain accreditation, post a surety bond, and obtain a Medicare contract by filing form CMS-855S. (The pharmacy does not need to obtain accreditation if it bills Medicare only for the items that are not subject to CMS Quality Standards, such as immunosuppressive drugs, oral anti-emetic drugs, etc.). If the Medicare Administrative Contractor (“MAC”) approves the pharmacy’s application, it assigns a Provider Transaction Access Number (PTAN) to the pharmacy and it can start billing Medicare directly.

When the pharmacy owner sells the assets of the pharmacy, the PTAN and accreditation could not be assigned to the buyer. Therefore, the buyer will have to (1) obtain a new accreditation (if billing for the items subject to CMS Quality Standards, such as DME, diabetic shoes, parenteral and enteral items, etc.), (2) submit a new CMS-855S form to the MAC, (3) post a new surety bond (unless reassigned); and (4) obtain a new PTAN. These could take a substantial amount of time and cause potential gaps in Medicare billing. The buyer, however, could complete these steps before the closing of the deal or request that the new PTAN be retroactive to the date of the closing. Here is an example of the latter scenario: when the deal closes, the buyer continues serving Medicare beneficiaries but does not bill Medicare until it obtains a PTAN. On the day its application is approved and a PTAN is issued, the buyer then bills for all accumulated claims. The risk is obvious: Medicare might not approve some (or even all) of the claims. 42 CFR 424.57 establishes the criteria DMEPOS suppliers must meet in order to be eligible to receive payment for a Medicare-covered item. Therefore, if the buyer does not comply with any of the requirements, Medicare may deny reimbursements leaving the provider in a vulnerable financial position.

Stock purchase

By contrast, when the buyer purchases stock or 100% interest in the existing DMEPOS pharmacy business, it will continue using the same TIN, PTAN, accreditation, and all third-party payors’ (3PP) contracts. The buyer simply steps into the shows of the previous owners and continues to operate the business as is. The buyer, however, will need to notify all 3PP (including its MAC) of the change of ownership (CHOW). The caveat is that the new owner assumes all liabilities of the existing business. If the business was in operation for a number of years, it may have existing issues for which the buyer might end up paying a hefty price. For example, we have recently assisted a DMEPOS pharmacy which was acquired by our client through a stock purchase about 2 years ago. Subsequent to the purchase, the federal government became interested in the prior owners’ marketing practices. As a result of the investigation – which determined that improper kickbacks were paid to marketers – our client had to endure payment suspension and an administrative action because he purchased the stock of this business. That’s why you do not see many stock purchases of a healthcare business (mergers and asset purchases are much more common).

The buyer may attempt to protect his business from the liabilities stemming from the prior owner’s conduct by drafting a strong indemnification language in the stock purchase agreement. But it does not guarantee that the seller would comply with the indemnification request and cooperate, especially if a long time has passed since the CHOW.


If you are selling stock of your company – provided that you find a buyer willing to assume the liabilities – adding a Medicare part B contract to your arsenal would potentially increase the value of your business. If it is an asset purchase, however, a Medicare Part B contract is not likely to increase the value of your pharmacy (because the buyer will have to obtain its own contract with possible gaps in billing).

Please note that nothing in this post constitutes legal advice. Each business and pharmacy sale is different and you should consult an experienced transactional attorney, tax specialists, and other professionals prior to making any decisions regarding a business sale.


While many sources say that the DEA audits registrants every three year, in my experience as a pharmacy attorney it usually happens less frequently. But if you are a pharmacy owner or manager, it is likely that your business would be (or was) audited by the DEA at some point.

In the pharmacy context, the DEA conducts an audit for the following reasons:

  • It received a tip regarding potential violations of the Controlled Substances Act (“CSA”) (such tips may come from the Board of Pharmacy, wholesalers, prescribers, or even patients);
  • It flags the pharmacy as an outlier compared to similarly situated pharmacies; or
  • It randomly audits to ensure compliance with CSA.

Many of my clients often say: “I have nothing to hide, DEA can audit me at any time.” This statement comes from misunderstanding of how the DEA conducts its audits. While the DEA focuses on over-dispensing (pill-mills) and diversion, most of the audits result in monetary penalties due to simple and apparently innocent record-keeping errors. Almost every single DEA audit that I worked on resulted in record-keeping fines.

There are two types of monetary penalties in the DEA’s arsenal:

  • One is a hefty fine of $64,820 per violation, found in 21 U.S.C. Sec. 842(a) (all subsections other than 5, 10, 16). Most commonly cited violations under this section are failure to exercise corresponding responsibility, dispensing on invalid prescription blanks, purchasing controlled substances under invalid or missing power of attorney.
  • Another one is a smaller monetary penalty of $15,040 for violations of Sec. 842(a)(5) and (10) only. These are all record-keeping errors, such as failure to list patient addresses or failure to keep complete and accurate records. It is not uncommon that such record-keeping violations add up to millions of dollars.

If, for example, the prescriptions are missing patients’ addresses and you have 10,000 of such prescriptions, the monetary penalty may reach $150,400,000 (which is reduced depending on the pharmacy’s ability to pay). Therefore, I cannot stress enough how important record-keeping and compliance with the CSA to the letter are.

Here are some of the issues that often come up during DEA audits and which usually result in large monetary penalties:

  • Improperly performed inventories. It’s common for the pharmacy inventory to omit necessary requirements (such as a date/time or finished form of the substance) or some controlled substances on inventory forms;
  • Records of receipt and dispensing. CSOS receiving records must document the quantity received and the date of receipt. Dispensing records must state number of units dispensed, name and address of the person to whom it was dispensed, the date of dispensing, the name or initials of the individual who dispensed or administered the substance. Very often, pharmacy records omit patients’ addresses or/and the DEA number of the prescriber (or list incorrect number).
  • Power of attorney. All ordering personnel must properly execute a power of attorney with the registrant. Often, the power of attorney is not dated, not coming from the registrant or missing altogether.
  • Employee screening. Per federal regulations, pharmacy shall not employ anyone who has access to controls, if such person has been convicted of a felony relating to controlled substances or whose application with the DEA had been denied, revoked, or surrendered for cause. Pharmacy should run state, county, and federal background checks on all the employees with access to controls.
  • Corresponding Responsibility. Pharmacists usually run into this problem when they do not run PDMP reports on new and existing patients or they are filling scripts coming from problematic prescribers who are already on the DEA’s or Medical Board’s radar.

Always keep in mind that every record-keeping violation could potentially turn into a monetary penalty. Therefore, training staff on proper record-keeping and following every regulation of Title 21 Code of Federal Regulations (starting with § 1300, which is available on the DEA’s website) is a part of a solution to comply with federal regulations and to avoid administrative actions and monetary penalties.