The SUPPORT Act (Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act) requires that controlled substances prescriptions covered under Medicare Part D be transmitted electronically. The effective date for compliance was set for January 1, 2021. Does this mean that pharmacies can no longer accept paper/faxed prescriptions?

First of all, the Act only applies to prescribers (not pharmacies) and requires them to have technology that supports e-prescribing. There are a number of exceptions to the requirement that a controlled substance prescription must be transmitted electronically. For example: prescriptions for hospice patients, for dual patients residing in skilled nursing facilities, emergency circumstances (as determined by the prescriber), or if a prescriber has a waiver. The Act and its guidance specifically states that pharmacies can continue filling scripts issued for a legitimate medical purpose by an individual practitioner acting in the usual course of their professional practice. Therefore, the responsibility for compliance rests on the prescribers and not on pharmacies.

Secondly, CMS announced that due to the Covid outbreak, it will delay compliance until 2022 to allow prescribers ample time to install and test the technology. The announcement states that no penalties will be imposed until that time.

Pharmacies may continue accepting Part D prescriptions for controlled substances transmitted by means other than e-prescribing platforms as long as all other requirements are met.

The news are full of excitement regarding a recent US Supreme court decision in Rutledge v PCMA. But there is still lots of confusion what this decision means for independent pharmacies.

So let’s look at what the case is really about.

It all started in Arkansas when the state passed Act 900, which provided that:

  1. PBMs are to tie reimbursement rates to pharmacies’ acquisition costs by timely updating their MAC lists when drug prices increase in a timely manner.
  2. PBMs must provide administrative appeal procedures for pharmacies to challenge MAC reimbursement prices that are below the pharmacies’ acquisition costs.
  3. PBMs must allow pharmacies to reverse and rebill each reimbursement claim affected by the pharmacy’s inability to procure the drug from its typical wholesaler at a price equal to or less than the MAC reimbursement price.
  4. The Act permits a pharmacy to decline to sell a drug to a beneficiary if the relevant PBM will reimburse the pharmacy at less than its acquisition cost.

The Pharmaceutical Care Management Association (PCMA) representing the 11 largest PBMs in the country, challenged the Act arguing – like in many other state cases – that ERISA pre-empted it and the state could not regulate PBMs in how they administer pharmacy benefit. The Eight Circuit (the appeal court) agreed with the PCMA. The state appealed the case to the U.S. Supreme Court which held that ERISA does not necessarily interfere with state objectives: “ERISA does not pre-empt state rate regulations that merely increase costs or alter incentives for EIRSA plans without forcing plans to adopt any particular scheme of substantive coverage.”

While the case is a strong step towards effective PBM regulations, a lot of work still remains to strengthen and enact proper regulations that would protect independent pharmacies and reduce drug cost. Also remember, Rutledge only deals with a narrow issue whether ERISA  preempts state laws regulating PBMs. After losing this argument, PCMA may come up with other arguments why states cannot interfere with PBM practices.

 Due to extremely high demand, we created a second webinar on regulatory compliance. So, if you have not registered for our November 24th, 2020 webinar, we encourage you to register for this one, which will take place on December 2, 2020 at 6:30 pm PST. Both seminars have the same agenda. But we want to make sure everyone has an opportunity to ask questions and participate.

This webinar is geared towards pharmacy owners, managers, and pharmacists-in-charge, focusing on regulatory compliance.

Webinar’s Agenda:

1. PBM changes for 2021: formulary changes, aberrant quantities updates and strategies, preferred networks.

2. California regulatory changes: New CURES regulations, new prescription pads, collaborative practice agreements, Independent HIV Preexposure and Postexposure Prophylaxis Furnishing.

3. Medi-Cal managed care pharmacy benefit transition into fee-for-service.

4. Independent pharmacies’ plan to survive: overview of legal actions against PBMs, updates on PSAOs, national trends.

5. Q-&-A session

Please register here or email us directly:

We are looking forward to seeing you there!

In the most recent Script newsletter, the California State Board of Pharmacy explained that it received multiple complaints and observed practices where non-pharmacist staff were initiating the immunization process. It reminded that the authority to independently initiate and administer a vaccination extends only to pharmacists.  The Board strongly encouraged pharmacies, designated pharmacists-in-charge, and pharmacists to evaluate their practices of initiating and administering vaccinations and take immediate corrective actions. Based on some of our cases, the Board has issued multiple citations/fines to non-compliant pharmacies.

If your pharmacy administers immunization, review your policies, train your staff, update any written procedures, and prepare immunization forms, if necessary.

To remind, Cal, Business & Professions Code 4052.8 requires that pharmacists performing immunization (1) complete an immunization training program endorsed by the CDC or the Accreditation Council for Pharmacy Education; (2) be certified in basic life support, (3) comply with all state and federal recordkeeping and reporting requirements.

You can download our Immunization policy and procedure here. 

Currently, California pharmacies must report dispensing of Schedules II-IV to CURES (California’s PDMP database) “as soon as reasonably possible, but no more than 7 days after a controlled substance is dispensed.”

Effective January 1, 2021, California pharmacies will have to report the dispensing of a controlled substance prescription to CURES no more than one working day after the medication is dispensed (some exceptions apply). Also effective January 1, 2021, pharmacies must report dispensing Schedule V controlled substances to CURES.

For other healthcare providers, the new rule will mandate CURES review at least once every 6 months after the first time the substance is prescribed and the prescriber renews the prescription (with some exceptions). The rule would also establish a review and documentation requirement for a health care practitioner who receives the CURES database information from another authorized user.

For the full text of the new regulation, please go to AB 528.

Every healthcare provider has at least one problematic patient who demands extra attention. Some of these patients continue to cause troubles even after they are “discharged.” A recent case coming from Utah illustrates this.

Ms. Reynolds was a regular customer of Kent’s Market pharmacy. On many occasions, she complained to the pharmacy staff about the wait time (she alleged that her usual wait-time was about 45 minutes). According to the pharmacy manager, his staff spent numerous hours on the phone with Ms. Reynolds’ insurance. As a result, the pharmacy informed Ms. Reynold that they no longer would fill her scripts.  The pharmacy also notified the state Medicaid agency of a potential insurance fraud that Ms. Reynolds was allegedly trying to commit.

The enraged patient filed a legal action against the pharmacy under the American with Disabilities Act (ADA) and Utah’s Consumer Protection laws.

During the litigation, the pharmacy argued that the decision to “discharge” Ms. Reynold was based on the amount of time it took its staff to accommodate her requests. The Pharmacy called Ms. Reynold “a very difficult and demanding costumer,” who demanded large amounts of employees’ time. The pharmacy further explained that Ms. Reynolds made unreasonable requests such as demanding prescriptions “in amounts and doses higher than written” and requiring the employees to spend anywhere from 20 minutes to an hour on the phone with her insurance company.

The court ruled for the pharmacy holding that Ms. Reynolds failed to present sufficient evidence that the pharmacy discriminated against her based on her disabilities.

While the case resulted in a favorable outcome for the pharmacy, it still spent time and money defending itself and putting its reputation on the line. So while you may be right when you do not want to deal with difficult patients, before “discharging” them, consider collateral damage that they may cause. Any “discharge” should be done in a very careful non-confrontational manner to avoid any implications of violating patients’ right to care.

On October 1, 2020, the California State Board of Pharmacy amended Title 16, Cal. Code of Regulations, Section 1707.2. The section explains the requirements for providing patient consultations when medications are delivered or mailed. Pharmacies that deliver or mail must provide their patients with a written notice of the hours of availability for consultation and a phone number patients can call to consult with a pharmacist who has ready access to the patient’s records.

The amended section now requires a pharmacist to be available to speak to the patient or the patient’s agent “during regular hours of operation within 10 minutes, unless a return call is scheduled to occur within one hour.” Most importantly, the new section requires a pharmacist to be available to provide consultation at least six days a week and at least 40 hours a week. This new requirement may present a problem for pharmacies that are open only 5 days a week.

We learned from a few recent Board inspections that the inspectors are requiring pharmacies to update their policies and procedures reflecting these changes. If you do not have the updated policy, you can download it here.

Last week, California pharmacies filed a legal action against OptumRx alleging patient steering and violations of California law by paying low reimbursement rates.

Independent pharmacies allege that OptumRx is paying them substantially less than to chain pharmacies and Optum’s mail-order pharmacy for the same prescriptions. Pharmacies also complain that OptumRx reimburses them below acquisition cost.

Mark Cuker from Jacobs Law Group represents the pharmacies. This is not the first case filed by Mark, in which he represents the interest of independent pharmacies. In May, 2020, he filed a similar action in Pennsylvania and Illinois. In 2015, he also filed a similar action against Catamaran for breach of contract and bad faith in setting prices for prescription drugs.

Jacobs Law Group’s press release regarding the case explains:

“Sometimes for a prescription filled by the pharmacy, Optum charges the patient’s health care plan the brand price while paying pharmacies the lower generic price for each prescription. This allows Optum to collect huge profits on prescriptions merely by changing their classification.

Optum built a wall of secrecy around its conduct by forcing network pharmacies into confidentiality agreements that conceal the truth – specifically how much Optum is paid by insurance plans for prescriptions, how much Optum receives in rebates from drug manufacturers, and how little Optum pays to pharmacies who actually serve the patients and dispense the drugs.

Optum illegally takes patient information it receives from independent pharmacies through the claims process and uses it to steer those customers to Optum’s own mail-order pharmacy.

The survival of independent pharmacies in the U.S. healthcare system is seriously threatened by the unethical, predatory business practices of PBMs. This lawsuit seeks to break this wall of secrecy and hold Optum accountable.”

We will continue covering the developments in the case.

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.