Natalia Mazina, Emily Do, Eman Kirolos

This year’s American Society for Pharmacy Law (ASPL) conference was as always full of opportunities to connect with pharmacy leaders, superb lawyers, and government representatives. The lineup of presentations featured a range of topics from the key Supreme Court decisions impacting pharmacies to animal drug compounding (with many more in between). A few sessions were focused on dispensing and handling controlled substances. While the most recent wave of increased DEA audits and enforcement actions has passed (or at least it seems so), this topic is as relevant today as ever.

In fact, the day after the conference, I received an email announcing an indictment of a man who purchased cocaine and fentanyl for his two girlfriends while they were out in San Francisco. One of the women died due to the interaction between the two substances, while the other woman is still hospitalized. These cases are still happening on a daily basis and while this specific situation did not involve a pharmacy, purchasing illegal substances online or on the streets still kills people.  

One of the presentation at the ASPL conference focused on DEA’s efforts to curb illegal distribution of controlled substances. Joel A. Ferre (Assistant United States Attorney, District of Utah) discussed pharmacy enforcement cases. Although Mr. Ferre had explained that intent or “knowingly” requirement must be present, my firm had several cases where the DEA had lowered the threshold of what constitutes “knowingly” dispensing controlled substances in violation of the Controlled Substances Act (CSA). Dispensing without resolving (and documenting) all the red flags was enough for the DEA to commence administrative and civil actions. For example, in one of the cases, we presented ample evidence that the dispensing pharmacist personally knew his patients (it was a rural community), their diagnoses, and discussed treatment plans with the prescribers. Nevertheless, the DEA imposed a very large monetary penalty because the patients were taking “suspicious” combinations of controlled substances, which the pharmacist should have resolved with prescribers and properly documented reasons for these combinations.

A good resource, mentioned during the presentation, is the “Pharmacist’s guide to Prescription Fraud,” available at https://www.deadiversion.usdoj.gov/GDP/(DEA-DC-002R1)(EO-DEA009R1)_RPH_Guide_to_RX_Fraud_Trifold_(Final).pdf

Some recent pharmacy cases highlighted during Mr. Ferre’s presentation are:

WeCare Pharmacy (Florida) case resulted in a temporary restraining order against the pharmacy and its pharmacist-in-charge for not resolving red flags while dispensing controlled substances.

A very similar case but in Ohio resulted in $375,000 civil penalty and a consent judgment to cease dispensing certain opioid prescriptions, including combinations of opioid and benzodiazepine prescriptions (Toledo Pharmacy case).

And a case on almost identical facts but in North Carolina resulted in $600,000 as civil penalty and a consent judgment and permanent injunction against the corporation and its pharmacist  prohibiting them for ever again dispensing or handling controlled substances. (Farmville Discount Drug, Inc).

As you can see from the above examples, depending on the DEA district, penalties and enforcement actions vary greatly. The DEA is equipped with various tools of enforcing the CSA and sometimes uses them creatively. Our firm is in the San Francisco (Bay Area) DEA district, which, for example, uses civil penalties as the most preferred mechanism against pharmacies.

Two more presentations at the ASPL’s conference focused on controlled substances, such as “Distribution, Dispensing, and Digital Health” (presented by Cory Kopitzke and Libby Baney),  discussing online dispensing of controlled substances, and “Recent DEA Rules Every Pharmacist Should Know” presented by Jonathan A. Keller.

Another notable presentation discussed where the DEA stands with rescheduling cannabis “A Detailed Review of DEA’s Proposed Rescheduling of Marijuana” presented by Karla Palmer and Kalie Richarson, which was another insightful presentation of a hot topic.

The amount of sessions on controlled substances stresses the need for vigilance and thorough review of DEA updates, recent cases, and state actions regarding controlled-substances dispensing. That leads me to my usual mantra that I teach in DEA seminars: “resolve and document all red flags.” And if you want to stay abreast of the developments in pharmacy law, the ASPL annual conference is a great place to start. Hope to see you there next year.

Our April 29th post discussed the introduction of SB 966 that would have required PBMs doing business in California to be licensed and regulated. The Bill had passed all relevant committees and landed on the Governor’s desk in September of 2024. Surprisingly, Governor Newsom did not sign SB 966.

According to the Governor’s message we need “a clearer understanding of how much PBM practices are driving up prescription drug costs.” The message mentions (1) the new prescription program implemented by the State – CalRx – that is designed to curb rising pharmaceutical costs, and (2) the creation of the Office of Health Care Affordability that (according to the Governor) should address transparent pricing.

While acknowledging that PBM “must be held accountable to ensure that prescription drugs remain accessible throughout pharmacies across California,” Governor Newsom expressed doubt that SB 966’s expansive licensing scheme will achieve such results.

On a more positive note, the Governor has directed Cal Health and Human Services to gather data on PBMs’ practices by the end of 2025. “We need more granular information to fully understand the cost drivers in the prescription drug market and the role that PBMs play in pricing.”

According to many patient advocates, the bill would have helped lower the rising costs of prescription drugs through pro-consumer requirements and regulations of PBMs.

Governor’s veto came as a surprise in light of FTC’s legal action against PBMs and other public exposures of PBM practices.

As a side note: last year Governor Newsom vetoed SB 90 that would have capped the price of insulin at $35/month.

On July 26, 2024, the California Department of Healthcare Services (“DHCS”) – which administers California’s Medicaid program – sent Notices of Medi-Cal Desk-Audit (“Audit”) to numerous California pharmacies. It appears that pharmacies that bill expensive specialty medications to Medi-Cal are subjects of these audits.

The Audit requests an overwhelming amount of information: from business ownership/ affiliations to detailed general ledgers for the last three years. It also requests dispensing data encompassing non-Medi-Cal patients. Any pushback from the pharmacies is met with the DHCS’s threats of immediate suspension for non-compliance. Many independent pharmacies are already struggling with financial resources and these audits add just another hurdle in pharmacy operations.

On the other hand, on June 27, 2024, the Justice Department announced its prosecution of a Southern California pharmacy that billed over 300 million in allegedly fraudulent Medi-Cal claims. In its press release, the Justice Department alleges that the pharmacy billed for medically unnecessary medications, which were often not provided to patients or “obtained through the payments of tens of millions of dollars in illegal kickbacks.” This prosecution explains a more aggressive stance that the DHCS is taking regarding the Audit and pharmacy compliance.

It is unclear whether there will be another wave of such audits but we recommend that pharmacies review compliance, policies and procedures, billing practices and other operational aspects in preparation for potential Medi-Cal audits.

I am very excited to announce that Mazina Law has partnered with The California Society of Health-System Pharmacists (CSHP) to offer exclusive benefits for the members of the CSHP. I have previously heard a lot of praise to the CSHP’s annual seminars and their educational webinars and finally we will be a part of it. The first joint event is a CE webinar on compliance with the Controlled Substances Act with the focus on DEA audits of hospital pharmacies.

When I teach DEA webinars, I am often asked questions regarding how DEA regulations or compliance with the state and federal regulations apply to hospital pharmacies because the dispensing process is so different. If you are one of the people who want to know the difference, we hope that you will join us on September 11, 2024 at 6pm.

Some of the topics that I will be covering include:

  • DEA’s tools for enforcing the Controlled Substances Act;
  • potential record-keeping issues in the hospital pharmacy setting;
  • the most cited DEA violations in hospital pharmacies;
  • effective practices in preparation for a DEA audit;
  • practical tips to avoid diversion in a hospital pharmacy context.

To register: https://www.cshp.org/page/CSHP_Webinar9-11-2024

Last week, many pharmacy and healthcare industry organizations sent announcements that FDA granted a two-year exemption to small dispenses for complying with the Drug Supply Chain Security Act (“DSCSA”). However, many pharmacies still have questions whether the exemption applies to them and how it affects them.

To remind, the DSCSA was enacted in 2013 with the goal of creating an interoperable electronic system to trace certain prescription drugs as they are distributed in the United States.

The DSCSA’s requires:

  • Product identification (such as a bar code)
  • Product tracing (trading partners, such as manufacturers, wholesalers, and pharmacies must trace the product from creation until dispensing)
  • Product verification (trading partners must establish a system and processes to be able to verify products)
  • Product investigation (trading partners must quarantine and promptly investigate a drug that has been identified as suspect (i.e. counterfeit, unapproved, or potentially dangerous))
  • Notification (trading partners must notify FDA if they suspect that the product is illegitimate).

DSCSA has six compliance deadlines. The last one was to commence on November 27, 2023 and pertained to enhanced product tracing. Starting with November 27, 2023, wholesalers were to provide 2Ts (transactional information and transactional statement) in an electronic format (EPCIS) with serial number of the product. Before that date, drug products had to list 3Ts (transactional information, transactional statement, and transaction history) from their wholesalers.

Prior to the implementation deadline, many stakeholders sent comments to FDA explaining that many pharmacies had no technical capabilities to access EPCIS. As a result, FDA postponed the implementation to November 27, 2024.

On June 12, 2024, FDA granted yet another extension but only for small dispensers. This time the extension is for two years until November 27, 2026.  FDA defined “small dispensers” as pharmacies with 25 or fewer full-time licensed employees (such as pharmacists or technicians).  Most independent pharmacies fit within this definition.If they don’t, they can request an extension by sending a waiver request to FDA no later than August 1, 2024 (as recommended by FDA).

If you are a small pharmacy with less than 25 full-time licensed employees, you can continue with your current practices of not including package-level product identifiers until November 27, 2026.

If you are following opioid litigation across the nation, you probably wouldn’t be surprised by another billion dollar settlement. But this latest case against Endo Health Solutions Inc. (Endo) is different. It is a criminal fine (not a settlement) with criminal forfeiture. The degree of culpability and burden of proof is very different from the previous settlements with opioid manufacturers and distributors.

On April 18, 2024, Endo pleaded guilty to one misdemeanor count of introducing misbranded drugs into interstate commerce. According to the U.S. Department of Justice press release, Endo admitted that from April 2012 through May 2013, certain Endo sales representatives marketed Opana ER to prescribers by touting the drug’s purported abuse deterrence, tamper resistance and/or crush resistance, despite a lack of clinical data supporting those claims. The company also admitted that it marketed the drug with a label that failed to include adequate directions for its claimed abuse deterrence use, in violation of the Federal Food, Drug and Cosmetic Act.

Endo withdrew Opana ER from the market in 2017 and filed for bankruptcy. The now-reorganized Endo has agreed to pay $1.086 billion in criminal fines and $450 million in criminal forfeiture. Going forward, Endo and its affiliates are prohibited from selling or marketing opioids.

A similar trajectory was followed in the case against Reckitt Benckiser Group PLC (Reckitt) that resulted in the largest criminal penalty relating to opioid distribution. Back in 2019, Reckitt agreed to pay $1.4 billion for its role in marketing of the opioid addiction treatment drug Suboxone.

In terms of settlements, the largest one in opioid litigation was against the three largest pharmaceutical distributors: McKesson, Cardan Health, and AmerisourceBergen and manufacturer Janssen Pharmaceuticals, Inc (including its parent Johnson & Johnson). In 2021, these companies settled collectively with states and local governments for $26 billion.

Some other large settlements with opioid manufacturers and distributors:

  • Teva: $3.34 billion
  • Allergan:  $2.02 billion
  • CVS: $4.90 billion
  • Walgreens: $5.52 billion;
  • Walmart: $2.74 billion.

These numbers are simply mind-blowing and make one wonder (again and again) how much money is involved in opioid and drug industry. Due to these large settlements, many pharmacy chains and distributors implemented drastic changes in how they distribute and dispense opioids, often resulting in patient hardship and drug shortages. The pendulum is swinging in a completely different direction now. The current trend set by these settlements and criminal fines is to err on the side of caution and minimize any government scrutiny

Earlier this year, California Senator Scott Wiener (D-San Francisco) introduced SB 966 that would require PBMs doing business in California to be licensed and regulated. The objective is to curb PBMs anticompetitive practices  contributing to rising drug costs. The press release calls the effort “the most comprehensive regulation of PBMs yet attempted by any state.”

In 2022, drug spending in California grew by 12%–much faster than the overall rate of inflation–while total health premiums rose by just 4%. Last year, more than half of Californians either skipped or postponed mental and physical healthcare due to cost, putting their safety and wellbeing at risk.” 

The three largest PBMs in California (and nationally) are CVS Caremark (operated by Aetna CVS Health), Express Scripts (Cigna), and OptumRx (UnitedHealth Group). Their market power allows them to generate significant profits with very little transparency. Some of the abusive practices that PBMs often engage are:

            – spread pricing;

            – steering patients to more profitable and higher-priced branded medications;

            – steering patients to PBM owned mail order and specialty pharmacies;

– engaging in other anticompetitive practices, such as aggressive pharmacy audits and unsubstantiated fraud investigations against independent pharmacies.

Most of the states – aware of such practices – have enacted some sort of PBM regulations. For example: about 15 states ban spread pricing and 25 states require PBMs to be licensed by state boards of pharmacy. For further information on national PBM legislation by state, see National Academy for State Health Policy’s report.

California, however, has less stringent requirements for PBMs operations. It requires PBMs to be registered (not licensed) with the Department of Managed Healthcare and has legal requirements on PBM audits of pharmacies. In addition, effective January 1, 2024, California now has a law prohibiting PBMs from discriminating against 340b entities (which I plan to cover in my next blog post).

Now –  if enacted – SB 966 would require PBMs to be licensed and to disclose basic information regarding their practices. Other pro-consumer requirements are:

            – anti patient-steering provisions;

            – no spread pricing;

            – passing all negotiated drug rebates to the payor or patients;

            – no exclusive deals with the manufacturers;

            – transparency in fee charged to the plans.

For the complete text of SB 966, visit LegInfo.

Current status:

On April 15, 2024, the Bill passed but was referred to the Committee on Health.

On April 24, 2024, the Bill was amended and referred to the Committee on Appropriations.

Source: Digital Democracy CalMatters

The Bill is definitely making its way through the California legislature and has many supporters determined to codify it.

The California Pharmacists Association has expressed strong support for the bill and conducted a series of events to raise awareness among pharmacy owners and patients. It has a webpage that could be forwarded to the patients and other interested individuals to support the bill.

It has also provided information and flyers to educate pharmacy patients regarding PBM practices and how to voice their support for the Bill.  For more information and to request such materials, please contact CPhA.

While it is very possible that the Bill, as written, will be heavily amended due to some of the requirements; if it passes, California is likely to be the next state that takes PBM abusive practices seriously. Let’s make it happen.

By Bhavesh Desai, PharmD, J.D.

DIR fees have been a focus of debate since their implementation and for the past decade, they have been increasingly scrutinized in congress as well as at the state level. The companies (Pharmacy Benefit Manager – PBMs) responsible for reporting true and accurate drug prices to the CMS have used loopholes in legislation to their advantage. A select few PBMs control a vast majority of the prescription volume in our country and they operate with minimal oversight.  This coupled with vertical integration has allowed them to grow their sphere of influence and use DIR fees to clawback monies from pharmacies through retroactive fees. 

Many pharmacy and patient advocacy groups have spoken out against the obscure methods employed by PBMs to increase their profits. These groups have advocated for the fees to be applied at the time a patient picks up the medication at the pharmacy rather than subjecting pharmacies to these fees months later. CMS finally mandated that PBMs implement the DIR fees at the point of sale starting January 1, 2024. While this is a win for patients, pharmacies and CMS, recent reports indicate that PBMs have increased the fees against the pharmacies and have placed pharmacies in precarious position as they strive to care for the public. Now more than ever, advocacy groups need to highlight the detrimental effect these PBM policies are having on their ability to provide the services necessary to manage the health conditions of the population.

What are DIR fees?

DIR stands for Direct and Indirect Remuneration. DIR fees were implemented with the creation of the Part D program through the passage of the Medicare Modernization Act of 2003. Congress intended the DIR fees to encompass Medicare Part D sponsors and their Pharmacy Benefit Managers (PBMs) to include the true costs of drugs to determine the net amount paid by CMS and the Medicare beneficiaries. When a pharmacy processes a prescription for a Medicare beneficiary, the out-of-pocket cost paid by the beneficiary and the reimbursement amount shown in the claim detail is generally not the actual cost of the drug paid by the Pharmacy Benefits Managers (PBMs). The true cost of the drug is determined by factoring in manufacturer rebates, any subsidies, or any price concessions from any manufacturers, pharmacies, or any other person (42 C.F.R § 423.308).

How are DIR fees determined?

Due to lack of CMS guidance on how DIR fees are to be determined and lack of any other oversight, individual PBMs have implemented their own DIR fee designs, resulting in no standardized method of determining DIR fees. Each PBM has a different methodology in determining the DIR fees collected from the pharmacy. Instead of calling DIR fees, the PBMs generally call them “performance fee”. Some PBMs charge DIR fees to pharmacies based on a percentage of the drug ingredient cost, while others charge based on a percentage of average wholesale price, whereas some charge a flat fee per prescription. Other criteria utilized by PBMs include medication adherence rates, generic compliance ratios, generic effective rate, and medication therapy management implementation. These are the different “performance” matrix used by PBMs to determine DIR fees.

Why are DIR fees controversial and what is their impact on Pharmacies, Patients and CMS?

There are several issues related to DIR fees and their application to pharmacies. PBMs opaque and vague tactics to determine how DIR fees are calculated, and these “fees” are assessed months after the prescription has been dispensed to the patient. Because the fees are assessed against the pharmacies months after the prescription is dispensed, they are termed “clawback” fees.

Despite the retroactive nature of these fees, the Pharmaceutical Care Management Association (PCMA) notes that Pharmacy DIR is NOT a retrospective “fee” associated to pharmacies. They further note that Pharmacy DIR is NOT a clawback of payment to pharmacies.1 it is helpful to keep all perspectives in mind irrespective of how divergent the view is to what pharmacy groups have been advocating for years.

Another concern related to the DIR fees is when these fees are assessed against the pharmacy, the PBMs generally do not include claim level details and hence the pharmacies are unable to reconcile claims with any degree of certainty. This lack of transparency interferes with the pharmacy’s ability to make operational decisions. Given the lack of details provided by PBMs, the pharmacies are unable to predict the fees they are to likely incur, and many times results in negative reimbursements for drugs previously dispensed. What compounds these issues further is the fact that PBMs are not required to define or explain how the fees are levied against the pharmacies or to CMS.

The intent behind CMS implementing the DIR fees was simply to account for the true cost of drug paid to the Part D sponsor. Unfortunately, the PBMs have used DIR fees as a means to enrich themselves. While there is lack of most current available data, DIR fees have increased by double digits year over year.2 As of 2018, DIR fees have increased to over six percent of the overall Medicare drug sales. 3

While the PBMs benefited from the manufacturer rebates and other fees that they collected, those savings were never passed down to the Medicare beneficiaries. This resulted in the beneficiaries sharing a higher out-of-pocket burden as a result of the retroactive DIR fee structure in place up until January 1, 2024. It wasn’t just the Medicare beneficiaries who were subjected to higher cost, CMS also was saddled with higher costs. There are three coverage phases in a Medicare recipient’s drug design. The initial coverage phase where the beneficiary generally pays a deductible and a co-pay for the drugs they received.  During the coverage gap phase, the beneficiary generally pays a significantly higher out-of-pocket cost. In the catastrophic phase, Medicare pays 80% of drug costs while the PBMs cover 15% of the cost. With DIR fees being applied on a retroactive basis, the Medicare beneficiaries enter the catastrophic phase earlier and thus require Medicare to subsidize the higher drug costs.

Given the negative impact on Medicare beneficiaries, Medicare and the pharmacies, CMS along with many patient and pharmacy groups for years have advocated a change in how DIR fees were calculated and collected. On April 29, 2022, the Centers for Medicare & Medicaid Services (CMS) issued the highly-anticipated Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs Final Rule (“Final Rule”).  This rule went into effect on January 1, 2024.5

What is the new CMS final rule and how will it impact pharmacies?

The final rule will prohibit Medicare Part D plan sponsors and their PBMs from retroactively assessing DIR fees for prescriptions adjudicated under the Part D benefit. By removing the retroactive nature of fee assessment, this rule eliminates the “clawback” and improves the predictability of pharmacy cash flow. This rule neither eliminates the DIR fees nor does it remove the loopholes which the PBMs use to their advantage.

The pharmacies will be subject to a double whammy for the first six months of 2024. While the elimination of retroactive fees is a welcome change, there are many PBMs who have not assessed DIR fees from June 2023 through December 2023. These will now be collected through June 2024 along with point-of-sale DIR fees for claims adjudicated beginning January 1, 2024. As previously noted, these fees represent a substantial cost to the viability of a pharmacy’s survival. With nearly 12 months of fees being assessed within a six-month period, pharmacies will notice a significant negative impact on their cashflow and operations. CMS is aware of the cash flow concerns faced by pharmacies and have issued a letter expressing concerns “about the sustainability of these businesses, especially small and independent pharmacies, and their potential closures that may leave pharmacy services out of reach for many people, especially those in rural and underserved areas.”4 

The final CMS rule also does not address the numerous unilateral below-cost reimbursements dictated by the PBMs, it does not prevent PBMs from steering patients to their own pharmacies and, pharmacies remain blind to the “negotiated price” calculations employed by the PBMs.

Conclusion

Pharmacies operate on slim margins. Every below-cost reimbursed prescription can have a detrimental impact on the sustainability of a pharmacy. While the point-of-sale DIR fees have been implemented as of January 1, 2024, and the pharmacies are able to see the total reimbursement they are to receive for a particular Part D drug, their woes are far from over. The PBM reimbursements have plummeted to a new low.  The PBMs continue to use obscure methodology to determine DIR fees and many of the pharmacists I spoke with are more concerned now than ever before. They see numerous negative reimbursements daily, especially on branded medications. When a pharmacy receives a reimbursement that is several hundred dollars below cost for a single prescription, the pharmacy struggles to survive. But when you have scores of prescriptions a day that are reimbursed below a pharmacy’s cost, the pharmacy is likely to shudder its doors.

CMS in their final rule “requires Part D plans to apply all price concession they receive from network pharmacies to the negotiated price at the point of sale, such that the beneficiary can also share in the savings.” 5 This negotiated price is the lowest possible payment to a pharmacy and with the uncertainty of any additional “performance” payment to be received by a pharmacy, the pharmacies remain in a precarious position. The PBMs continue to dictate unilateral terms given the lack of significant regulatory oversight. Many states have begun to scrutinize PBM practices and bring them under their purview, but the challenges faced by pharmacies are imminent. While there is hope of more PBM reform in the future, the pharmacies will need to find ways to survive in the interim. Pharmacies will need to seek out additional sources of revenue and not rely solely on cost of goods reimbursement.

References:

  1. https://www.pcmanet.org/dir-2/
  2. https://www.cms.gov/newsroom/fact-sheets/medicare-part-d-direct-and-indirect-remuneration-dir#:~:text=Examples%20of%20such%20compensation%20include,payments%20to%20Part%20D%20plans.
  3. Inmar white paper
  4.  https://www.cms.gov/newsroom/fact-sheets/cms-letter-plans-and-pharmacy-benefit-managers
  5. https://www.cms.gov/newsroom/fact-sheets/cy-2023-medicare-advantage-and-part-d-final-rule-cms-4192-f

Even if your state has legalized cannabis products, it does not mean that your pharmacy can start selling them. This axiom has been tested and proven again and this time in Georgia.

Georgia took an interesting approach regarding expanding medical marijuana access. As far as I know, it is the only state that specifically allows its pharmacies to be registered as dispensers of  low-THC cannabis oil (containing under 5% THC). Its Board of Pharmacy has approved about 23 pharmacies to carry and dispense such products in attempt to expand access to medical marijuana (primary to rural patients). At some point, it became necessary to involve pharmacies because Georgia allows only a very limited amount of dispensaries (only seven as of the date of this writing) and they are concentrated in urban areas. As a result and to provide rural patients with access to medical marijuana, the state has approved special registration for pharmacies as dispensers of medical marijuana.

Shortly after this implementation, however, DEA sent the following letter to the pharmacies across the state warning that if they dispense THC products they will be in violation of the Controlled Substances Act:

Pharmacies should avoid distributing cannabis products precisely due to federal restrictions. The only exception would be distributing FDA approved CBD products (such as Epidiolex). Likewise, prescribers do not stock or prescribe cannabis. Instead, they issue recommendations regarding medical conditions that may justify consuming cannabis products.

Now Georgia is at a loss. It is facing a dilemma: the need to provide access to medical marijuana and avoid non-compliance for its pharmacies.  Frankly, it has only one way to proceed. It needs to wait until the DEA reschedules marijuana or until any other federal green light to dispense marijuana from federally licensed facilities. Of course, Georgia can file a legal action against DEA but marijuana remains a Schedule I substance and DEA is enforcing the Controlled Substances Act (I feel like it would be a very tough uphill battle).

A legal counsel for Georgia Access to Medical Cannabis Commission (“Commission”) explained in an interview that a congressionally approved budget rider prevents federal agencies from interfering with state approved medical marijuana programs. And it appears that DEA is interfering with Georgia’s state program to expand access to medical marijuana.

But as far as I remember, the rider is expiring shortly and pharmacies are registered by the DEA who exercises broad discretion on whether to renew/issue registration to dispense controlled substance. (Besides, dispensaries remain available to dispense marijuana in Georgia). So an argument could be made that DEA is not interfering with the state program but it warns its registrants against non-compliance with federal law.

So the only feasible approach is to push for rescheduling of marijuana. To remind, the Department of Health and Human Services (HHS) has recommended to reschedule marijuana into Schedule III. (See a related blog post). DEA has not responded to the HHS’s recommendation in any way yet. But many analysts predict (based on various precedents) that DEA will follow the HHS’s recommendation. Several governors also wrote letters to the Biden administration recommending rescheduling by the end of this year and highlighting the benefits of removing cannabis from Schedule I.

Question arises: if marijuana is rescheduled, will pharmacies be able to dispense products containing cannabinoids? It still seems unlikely because the FDA will need to approve pharmaceutical preparations containing cannabis and this could take a long time.

As of today, however, DEA’s warning is clear: if pharmacies dispense cannabis products, they risk having issues with their DEA registration.