OptumRx has recently announced that it is easing its prior authorization (PA) requirements on about 80 drugs for renewed prescriptions. The program is planned to start on May 1, 2025 and will include various drugs such as Aimovig, Kalydeco, and Praluent. The list of drugs is anticipated to increase based on the success of the pilot implementation this year. OptumRx estimates that the program would eliminate about 10% of all pharmacy prior authorizations.

The change is likely to streamline dispensing of the initial 80 drugs, making it easier and less costly for the pharmacies to fill them.

I will be speaking at the upcoming American Health Law Association, Institute on Medicare and Medicaid Payment Issues on the impact of the Inflation Reduction Act of 2022 on healthcare providers, specifically pharmacies.

Overview of the presentation:


On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 (IRA)—the law’s “Prescription Drug Pricing Reform” provisions represent the most significant changes to Medicare payment for drugs and biologicals in decades.

  • Among other provisions, the law authorizes the Medicare program to negotiate prices for certain Medicare-covered drugs, and requires manufacturers that raise their drug prices faster than the rate of inflation to pay a rebate to Medicare and reduces Part B coinsurance for these drugs for people with Medicare.
  • The law also contains several other provisions intended to reduce out-of-pocket expenditures for Medicare beneficiaries for drugs and certain vaccines
    CMS’ ongoing implementation of the IRA’s Prescription Drug Pricing Reform provisions for initial price applicability year (IPAY) 2026 and beyond.
  • The key statutory provisions, timelines, and the steps CMS has taken to implement them to date, with a primary focus on the drug price negotiation provisions.
  • Legal considerations for pharmaceutical companies, pharmacies, and providers as a result of the changes under the IRA, and how those changes will affect patients in the coming years.

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.

Join the Fight to Save Our Pharmacy

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.