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.




Facts: Jan Tyler was regularly filling his scripts for several controlled substances at a local Walgreens pharmacy. Due to heat exposure at work, Jan succumbed to an increased level of fentanyl. During the proceedings, his estate established that the cause of death was acute Oxycodone, Fentanyl, and Alprazolam intoxication. Therefore, the question became: had  Walgreens violated the standard of care to be expected of a reasonably competent pharmacist under the circumstances. Please note, Jan’s estate presented evidence that the pharmacist knew that Jan worked in a high heat environment.


What do you think? Should Walgreens be held accountable for filling legitimate scripts but knowing that the patient may be at risk due to his specific work circumstances?

Holding: If you have decided in favor of the pharmacy, you are not alone. Ohio Court of Appeals held that that there was no evidence tying Jan’s cause of death to any failure by Walgreens. The court held that the pharmacist did not know specific details of Jan’s work, properly and timely filled Jan’s script, and therefore, the pharmacist did not breach his duty of care.

I actually have mixed feelings about this case. On one hand, it is not a duty of the pharmacist to inquire into the nature of patients’ jobs or life circumstances. The pharmacist’s duty is solely limited to review of the fill history and patient’s profile. But on the other hand, if a pharmacist knows of my specific circumstances and that they could interfere with the medication, shouldn’t he warn me or contact my prescriber?

Recently I attended a webinar “Managing COVID-19: Key Labor & Employment Issues” presented by LexisNexis. The speakers were two attorneys from Locke Lord LLP specializing in employment law. They covered and touched upon some important considerations that you need to keep in mind when running a business in these strange times.

Many pharmacies are attempting to go back to “normal” and often ask me about COVID-related issues in the workplace. Because I do not practice employment law, I usually refer them to the OSHA’s Guidance on Preparing Workplaces for COVID-19, which recommends the steps employers can take to reduce workers’ risk of exposure to SARS-CoV-2.

Another guidance I usually send to my clients is CDC’s “Guidance for Pharmacists and Pharmacy Technicians in Community Pharmacies during the COVID-19 Response.” In a nutshell, this guidance recommends pharmacy staff to wear face-masks, require customers to wear face coverings, provide hand sanitizer containing at least 60% alcohol on counters for use by patients, install barrier protection at the patient contact area, clean surfaces often, discontinue the use of magazines/brochures (same recommendations apply to any other business).

Some pharmacy-specific provisions are:

  • Encourage prescribers to submit prescriptions via telephone or electronically and avoid handling paper prescriptions;
  • Limit patient contact: place medication on a counter instead of handing it directly to the patient, provide phone consultations, avoid handling insurance cards (instead, have the patient take a picture of the card for processing or read aloud the information that is needed), and limit physical contact as much as possible.
  • Consider offering home delivery, curbside pick-up, and drive-through services.

I would also add: do not accept returns or patient bottles for refills, encourage patients to call in refills to avoid extended waiting at the pharmacy, advise patients to have enough medication to limit exposure by coming to the pharmacy, and remove all customer seating.

Virtually all Boards (and many PBMs) have waived certain in-person requirements, such as physical signatures, and other procedures involving direct patient communication, in addition to allowing remote order entry (enabling your employees to work from home).

The webinar, however, focused on some less familiar recommendations, such as shift rotations, tenancy issues (how to work with the landlord to implement social distance in common-use areas, staggered entry time for the tenants, and cleaning common areas), testing of the employees and reporting (and record-keeping) requirements in case an employee tests positive.

Another common problematic area is hours and salary reduction. According to the speakers, under the Fair Labor Standards Act, salaried employees are entitled to full salary for weeks in which any work is performed. However, many employers are now switching their employees to a reduced compensation (e.g. 20% reduction in hours would result in a 20% reduction in salary). This could be problematic with salaried employees. Therefore, it might be necessary to convert salaried employees’ status to hourly work, paying for actual hours worked. If you are planning to implement such changes, consult your employment counsel.

While we are going into the next phase of the quarantine, continue following OSHA and CDC guidance, and if you are planning to implement new employment policies, do not forget to consult an employment attorney, who can help you navigate through these uncertain times.

A group of independent pharmacies filed a lawsuit against OptumRx alleging various unfair/illegal business practices, such as reimbursements below cost,  price manipulations, discriminatory treatment. Mark Cuker of the Jacobson Law Group filed the case in Pennsylvania and Illinois on behalf of independent pharmacies, and he is looking into filing a similar action in California.

This is not the first case filed by Mark, in which he represents the interest of independent pharmacies. In 2015, he filed a similar action against Catamaran for breach of contract and bad faith in setting prices for prescription drugs. Most of the pharmacies, however, had an arbitration clause in their contracts with Catamaran. Only one pharmacy had no arbitration clause and continued with the litigation.

Later in the proceedings, the Court found that the factual allegations were enough to establish a plausible claim that the MAC pricing appeals were not reasonable and were conducted “arbitrarily, capriciously, or in a manner inconsistent with the reasonable expectations of the parties.”

Subsequent to the court’s decision, the pharmacy added two additional claims against OptumRx: (1) setting reimbursement prices below acquisition costs; (2) failure to set a single reimbursement for similar drugs. The case is currently in its discovery stage.

The present 2020-case against Optum also alleges below-cost reimbursements, which are arbitrary and unilaterally set by Optum unrelated to the actual wholesale price. The lawsuit also alleges unfair business practices relating to (1) billing plans for brands but reimbursing pharmacies for generic; (2) paying independent pharmacies less than what it pays large chains or its own mail order pharmacy. We will continue covering the case as it advances through litigation.

Mark also plans to bring a similar action in California, which is a favorable forum due to our strong precedent on “Unfair Competition and Unfair Business Practices” litigation, as well as California’s MAC law. If you are interested in participating in such an action in California, please contact Mark Cuker at (215) 531-8522.


Recently, I’ve been inundated with offers to purchase N95 masks and PPE, as well as with offers to order COVID test-kits. Most of these offers come through my firm’s website and I suspect it is because my website has “pharmacy” written all over it. After reading the APhA’s article on new scams targeting pharmacies, I realized that a reason why I receive these offers is because I work with pharmacies. Apparently, pharmacies are dealing with more scams during the COVID-outbreak due to  their unique position to distribute needed medications, offer treatment, and advise on prevention. Therefore, many scammers or substandard companies (e.g. unlicensed wholesalers) target pharmacies hoping that their offers could not be resisted due to the desperate situation many communities experience.

Below is the summary of the APhA’s article regarding scams targeting pharmacies.  The article explains red flags and prevention techniques. First of all, potential scammers may reach your pharmacy offering to sell:

  1. Fake or substandard N95 masks
  2. COVID-19 vaccine
  3. COVID test-kits
  4. Drugs preventing or treating COVID infections

Note: I would like to add offers to assist with small business loans.

The APhA reminds of the following red flags to spot a scam:

  1. An offer that is too good to be true;
  2. Offering products that are in short supply;
  3. Offers from unknown sources;
  4. Requesting personal or confidential information.

To verify whether you received a legitimate offer, verify if a product offered for sale is FDA approved ( you can check FDA’s approval for drugs here).

To avoid pharmacy scams, discuss the red flags with your staff and explain reporting requirements (to FDA, FTC, and FCC).

Remember, you can spot most of scams by paying close attention to the way the offer is made (professionalism, price, method of communication, sense of urgency, etc.). Always verify the source and keep in mind state and federal laws/regulations that come into play (such as HIPAA, wholesale licensed distribution, etc.).

Recently I was reviewing client’s compliance on sending advertisements via fax.  Because the pharmacy industry is still extensively utilizing fax machines (and e-faxes), I decided to remind how to properly send promotional materials through fax.

First of all, a recent case prompted my compliance review. Last year, a doctor filed a legal action against a pharmacy who advertised its services and products by fax. Dr. Katz brought a class action against Benzer pharmacy for violating the Telephone Consumer Protection Act (“TCPA”).

The TCPA forbids sending unsolicited advertisement for goods or services via facsimile without the recipients’ prior express invitation and to recipients with whom the sender does not have an established business relationship. The TCPA requires that even if you send fax advertisements to those with whom you have an established business relationship, the fax must include an opt-out notice. In order to comply with the TCPA’s Opt-Out Notice requirements, each fax advertisement must include all of the following:

  • Clear and conspicuous language on the first page stating that recipients may opt out from receiving any further fax communication;
  • A toll free phone number (or any other no-cost method) that the recipient may use to submit an opt-out request.

The TCPA provides for statutory damages in the amount of $500 – $1,500 per violation.

In the Benzer Pharmacy case, the pharmacy was fax-blasting advertisements of its services to many prescribers with whom it had no prior contact or established business relationship (red flag No. 1). In addition, its faxes had no opt-out language (red flag No. 2).  As a result, the pharmacy is now in the middle of a very expensive litigation (to remind, this is a class action with many complex legal issues).

To avoid similar problems, review how and to whom you send faxes, and whether any of your faxes could be classified as “advertisement.” Does your fax (if it is an advertisement) contain an opt-out notice on the first page of the fax? If so, does the notice list a toll-free number to opt out. Do you send faxes only to the established business contacts?

California bonus: If you are located in California, even more stringent rules apply (no surprises here). California law requires an express permission to fax advertisement even if you are faxing to your established business contacts.


Pharmacists – being the most accessible healthcare providers – can prove to be invaluable during the current pandemic.  With the passage of the Public Readiness and Emergency Preparedness Act (PREPA), pharmacists now can order and provide COVID-testing. Many pharmacies have already started providing testing through their drive-up stations and home visits to quarantined patients.

Why is this a crucial time for pharmacists?

Because pharmacists are not recognized by the federal government as health care providers, they could not be reimbursed by Medicare or Medicaid for providing medical services. Without the PREPA, pharmacists would not have been able to offer COVID-testing. With the passage of PREPA, the federal government specifically acknowledged the role pharmacists play in public-health emergencies. See “Guidance for Licensed Pharmacists, COVID-19 Testing, and Immunity under the PREP Act.” Please note that it is still unclear how pharmacies should bill for testing.

Another constructive move was the inclusion of pharmacists in Helping Emergency Responders Overcome Emergency Situations (HEROES) Act of 2020. Initially it did not include pharmacists, which changed after various pharmacists advocacy groups stepped in.

These developments and acknowledgement of pharmacists as healthcare providers on the federal level may change the playing field in terms of pharmacy reimbursement (where pharmacies may be reimbursed for direct patients care services) and potentially could lead to a provider status.

Thank you to all the pharmacists and other healthcare providers that are on the frontlines of the pandemic!



On March 10, 2020, CMS issued guidance to Part D sponsors urging them to relax some of the requirements that could disrupt access to medications due to the coronavirus outbreak. It recommended that Part D sponsors take the following steps:

  • Relax “Refill-Too-Soon” and provide maximum extended day supply;
  • Reimburse beneficiaries for prescriptions obtained from out-of-network pharmacies;
  • Allow and reimburse pharmacies for home or mail deliveries;
  • Waive prior authorization for drugs to treat or prevent COVID-19.

Most of PBMs are following this guidance or discussing the guidance with plan sponsors. For example:

Express Scripts, Inc (ESI) published a notice to pharmacies explaining the following changes due to COVID-19:

  • Pharmacies may override early refills. ESI cautions that overrides will be monitored and may be audited. It also requires that all documentation of the circumstances for the Refill Too Soon (RTS) override to be documented on the prescription or within the prescription’s annotation notes.
  • Signature requirements. Pharmacies within the ESI network are not required to obtain signatures from patients during the COVID-19 pandemic, unless required by law (such as for home dialysis drugs/devices, sale of products containing ephedrine, pseudoephedrine & PPA that could be used to manufacture methamphetamine). ESI recommends to document delivery or dispensing in other ways, such as log entry, the cash register receipt that includes prescription numbers, a text message or email from the patient, a note on the hard copy, or an electronic annotation.


  • Mail orders. Due to the COVID-19 pandemic, on March 10, 2020, OptumRx suspended its mailing prohibition. This suspension applies directly to retail pharmacies who require shipping or mailing of medications via common carrier to members and does not apply to central fill operations.
  • Signature requirements. Additionally, OptumRx has temporarily waived the signature requirement of mailed medications. It recommends to include the verbiage “Impacted by COVID-19” on the delivery logs. If medications are picked up, then the signature logs of impacted claims should be documented with the verbiage “Impacted by COVID-19” and initialed by the pharmacy staff. It further clarifies that audit teams have been instructed to waive the signature requirement for delivered and picked up prescriptions filled on and after March 1, 2020 with the aforementioned documentation.


Caremark announced that it is working with plans to offer 90-day supply for non-specialty medications. It also sent a notice to pharmacies that Caremark will be temporarily allowing pharmacies to document the word “COVID” on its signature log with delivery date and delivery time for retail pharmacy patients that choose not to directly sign. If the pharmacy is delivering the Covered Item directly to the patient’s home, document by writing “COVID Delivery” when capturing direct signature is not possible.


Pharmacies may also reach out to PBMs and PSAOS regarding additional waivers or individual waivers depending on the pharmacy’s community and needs.

Federal law requires an in-person medical evaluation before a practitioner may prescribe a controlled substance. Some exceptions, however, exist. One of them is a declared public health emergency.

On January 31, 2020, the Secretary of the Department of Health and Human Services issued such a public health emergency.

On March 16, 2020, the Secretary and the Acting DEA Administrator announced that practitioners may prescribe controlled substances via Telehealth in all areas of the United States. Accordingly, as long as the Secretary’s designation of a public health emergency remains in effect, DEA-registered practitioners in all areas of the United States may issue prescriptions for controlled substances to patients without an in-person evaluation provided all of the following conditions are met:

  • The prescription is issued for a legitimate medical purpose by a practitioner acting in the usual course of his/her professional practice;
  • The telemedicine communication is conducted using an audio-visual, real-time, two-way interactive communication system; and
  • The practitioner is acting in accordance with applicable Federal and State laws.

The practitioner may issue a prescription either electronically (for schedules II-V) or by calling in an emergency schedule II prescription to the pharmacy, or by calling in a schedule III-V prescription to the pharmacy.

DEA further clarifies: If the prescribing practitioner has previously conducted an in-person medical evaluation of the patient, the practitioner may issue a prescription for a controlled substance after having communicated with the patient via telemedicine, or any other means, regardless of whether a public health emergency has been declared, so long as the prescription is issued for a legitimate medical purpose and the practitioner is acting in the usual course of his/her professional practice. In addition, for the prescription to be valid, the practitioner must comply with applicable Federal and State laws.



So far, the California State Board of Pharmacy has issued the following waivers relaxing some requirements due to the coronavirus outbreak:

  1. Sterile compounding renewal requirements for facilities located within a hospital

This waiver provides that a sterile compounding pharmacy whose license expires on or before May 1, 2020, may have its license renewed without being subject to the renewal requirements. The sterile compounding facility must be located within a hospital or satellite location regulated by the California Department of Public Health and issued a General Acute Care Hospital License and be in good standing with the Board of Pharmacy.

  1. Drug acquisition from an unlicensed supplier

This waiver provides that a California-licensed pharmacy may receive dangerous drugs and dangerous devices from an unlicensed pharmacy, wholesaler, or third-party logistics provider located in another state to alleviate a temporary shortage of a dangerous drug or device that could result in the denial of health care as long as:

  • The unlicensed location is appropriately licensed in its home state, and documentation of the license verification is maintained by the California pharmacy.
  • The pharmacy maintains documentation of the temporary shortage of any dangerous drug or device received from any pharmacy, wholesaler, or third-party logistics provider not licensed in California.
  • The pharmacy complies with all record-keeping requirements for each dangerous drug and device received from any pharmacy, wholesaler, or third-party logistics provider not licensed in California.
  • All documentation and records required above shall be maintained and readily retrievable for three years following the end of the declared emergency.
  • The dangerous drug or device was produced by an authorized FDA registered drug manufacturer.

3.     Staffing Ratio of Pharmacists to Intern Pharmacists and Technicians

The ratio of pharmacists to intern pharmacists and to technicians may increase to allow for one additional pharmacy intern or technician for each supervising pharmacist as long as the pharmacy documents the need for the ratio modification due to the COVID-19 public health emergency. Examples of documentation may include, but are not limited to, an increased prescription volume or limitation on staff availability because of quarantine.

4.     Remote Processing

Pharmacists are permitted to conduct remote processing. Pharmacy interns and pharmacy technicians are also permitted to conduct nondiscretionary tasks related to remote processing.

The waiver provides that:

  • a California-licensed pharmacy may allow staff to engage in remote processing provided the pharmacy has policies and procedures that outline the authorized functions to be performed.
  • Policies and procedures must include methods for protecting the confidentiality and integrity of patient information and must expressly prohibit the printing or storage of protected health information on a device that is outside of the licensed pharmacy.
  • A pharmacy must ensure that any pharmacist performing remote processing shall have secure electronic access to the pharmacy’s patient information system and to other electronic systems that an on-site pharmacist has access to when the pharmacy is open.
  • Each remote entry record must comply with all record keeping requirements for pharmacies, including capturing the positive identification of the pharmacist involved in the remote review and verification of a medication order or prescription.
  1.     Signature requirement for receipt of delivery of drugs

This waiver applies only to the signature requirement for the pharmacist accepting delivery. It waives the signature requirement for the receipt of the delivery of drugs as required by California law under the following conditions:

  • The delivery personnel confirm that the employee accepting the delivery is a pharmacist.
  • The delivery personnel input the pharmacist’s name and license number conveyed to them by the pharmacist directly into their signature capture device in lieu of the pharmacist physically signing the tablet as part of the delivery process.

6.     Requirement for consulting pharmacist to make quarterly visits to clinic

It waives the requirement for a consulting pharmacist to perform quarterly visits to a clinic under the following conditions:

  • The consulting pharmacist, using his or her professional judgment, determines that the quarterly inspection is not required during the declared emergency.
  • When making such a determination, it may be appropriate to consider prior consultation report findings, potential impact to patients receiving care in the clinic, etc.
  • A consulting pharmacist performs a desk audit of the clinic’s procedures and records in lieu of the visit.
  • A consulting pharmacist generates a report outlining any findings resulting from the desk audit and provides that report to the professional director or his or her designee.
  • The consultant receives confirmation to his or her satisfaction, that the corrections outlined in the findings of the audit have been made.
  1.    Reuse of personal protective equipment (PPE)

The waiver allows masks and gowns to be reused by staff performing sterile compounding under the following conditions:

  • The pharmacist-in-charge has made a determination that the current and potential stock of PPE on hand is insufficient to maintain the single-use provisions established in USP 797.
  • The pharmacy has developed a policy that details the conditions under which PPE may be reused.  Such policies shall be consistent with standards of practice used during emergency situations.
  • Documented training on the policy is provided to all staff.
  • Master formulas are evaluated to determine if changes are necessary to the criteria for establishing beyond-use dating.
  • Surface sampling schedule was reviewed for the possible need to increase the frequency.
  • Documentation is maintained indicating the duration of time the pharmacy is operating under the waiver approval.
  1.    Provision related to use of alcohol sanitizer before donning sterile gloves

This waiver allows for hand cleaning with the use of non-persistent activity alcohol sanitizer prior to donning sterile gloves.

The waivers could be found on the California Board of Pharmacy website.