A new healthcare giant is here! CVS has closed a 69-billion merger with Aetna, the nation’s third-largest health insurer. The companies have recently announced that all necessary approvals had been obtained (New York was the last state to sign off on the deal).

Several states opposed the merger due to potential antitrust issues (federal regulatory approval was obtained in 2017). As a result, CVS agreed to some concessions. For example:

  • in California, CVS agreed not to raise premiums as a result of acquisition costs;

  • In New York, CVS promised enhanced consumer and health insurance rate protections, privacy controls, cybersecurity compliance, and a $40 million commitment to support health insurance education and enrollment.

To remind, CVS also operates one of the largest pharmacy benefits managers through CVS Caremark and a major Medicare Part D plan sponsor through its SilverScript. With the acquisition of Aetna, CVS becomes a major conglomerate in the healthcare arena.

As CVS announced last year, the merger is necessary to revolutionize healthcare: make it local and accessible, simplify access, and lower cost. To test the model, CVS plans to open additional stores offering healthcare services, such as primary care, management of chronic conditions, providing guidance to discharged hospital patients. The stores are to open in early 2019 in selected locations.

This is a story (with a moral) of a Mississippi pharmacy that decided to make some money on its compounding pain and scar creams. To accomplish the goal of increasing its market share, it contracted with a marketing company to promote its compounds into other states. So far so good. The marketing company, however, insisted on a share of revenues that it would generate for the pharmacy, namely 35%. The pharmacy… agreed. The marketing company engaged a marketer and instructed him to focus on Tricare patients because “Tricare would pay tens of thousands of dollars per month per patient for compounded drugs.” (Press Release of the U.S. Department of Justice).

The marketer, in turn, paid patient recruiters to find Tricare beneficiaries to receive prescriptions, telling them a doctor would sign the prescriptions without consulting patients. Patient recruiters forwarded beneficiary insurance information to the marketer, who routed them to a local medical assistant, who was paid to file the prescriptions under the name of the doctor for whom she worked.

U.S. Attorney’s Office claims that in less than one year, “the scheme generated over $10 million in compound prescriptions for over 100 Tricare beneficiaries hailing from as far west as Chula Vista, Calif., to as far east as Foxborough, Mass.”

In addition to kickback allegations, the pharmacy is facing other fraud implications, such as waiving co-pays and dispensing unnecessary fills. The record in the case shows that the pharmacy issued monthly refills automatically without enforcing co-payment collections, allowing the beneficiaries to continue receiving monthly shipments at no cost.

So far, six people pled guilty in participating in the conspiracy. Under the terms of their plea agreements, each defendant faces up to five years in federal prison and forfeiture of nearly $1.9 million in illicit proceeds. More charges involving additional defendants are expected.

Compounding pharmacies will continue to be scrutinized by federal government and PBMs as Tricare paid nearly $2 billion for compound prescription drugs in 2015 (according to the U.S. Department of Justice), which constituted an 18-fold increase over previous years and prompted investigations around the country.

The moral of the story is to scrutinize all your marketing agreements, policies and procedures on collecting co-pays, soliciting patients, and billing federally-sponsored programs.

Walmart and RB Health started offering free access to Doctor-on-Demand to some of its customers. In a recent announcement, the parties emphasized their commitment to provide unprecedented access to low-cost high-quality healthcare. Customers who purchase Mucinex®, Delsym®, Airborne® or Digestive Advantage® at Walmart stores now receive a voucher for a no-cost telehealth medical consultation with a Doctor-On-Demand physician.

Inaccessibility to proper medical care prompted the parties to spread mHealth services to wide population. For example, the announcement cited a study showing that:

  • “It takes an average of 18 days to schedule an appointment with a doctor

  • It can take up to three hours from the time patients leave for an appointment to receive treatment and get back to your destination.”

The partnership is projected to change how the healthcare is delivered empowering patients to take matters in their own hands. Through Doctor-on-Demand patients can “see” a physician 24 hours a day, 7 days a week, with a typical wait time of five minutes.

Despite warnings of likely abuse, the FDA has recently approved a new form of an extremely potent opioid – Dsuvia – a fast-acting alternative to IV painkillers. Dsuvia is a tablet form of sufentanil, which has been used since 1980s. The critics, however, point that Dsuvia “is 10 times stronger than fentanyl a parent drug that is often used in hospitals but is also produced illegally in forms that have caused tens of thousands of overdose deaths in recent years.” See the New York Times report (11/2, A12, Goodnough).

Many consumer groups and advocates expressed well-reasoned concerns that the drug is likely to be diverted, abused, and possibly cause deaths due to its potency.

The FDA responded with a statement emphasizing that the drug is delivered through a “pre-filled, single-dose applicator” and is limited to hospitals, surgical centers and similar settings. The drug cannot be dispensed for self-use and will not be available at retail pharmacies.

Interestingly, Dsuvia’s testing and development was sponsored by the Department of Defense as a potential pain relief to injured soldiers who might not have access to IV painkillers.

Addressing diversion concerns, Dr. Gottlieb – the FDA commissioner – also explained the FDA’s powers to require post-market studies evaluating the efficacy of opioid medications. Using such powers, the FDA requested last year that the manufacturer of Opana ER (another potent opioid) take the product off the market due to potential abuse.

AcelRx, Dsuvia’s manufacturer, made an official statement that the company will strictly follow REMS guidance (a safety program for certain potent medications), such as monitor distribution and audit wholesalers’ data, perform drug’s DURs, and flag any indications of any diversion or abuse.

Many public health advocates met this statement with criticism, pointing that the drug is so potent that the first unsupervised injection may cause death. Some advocates are attempting to reverse the FDA’s approval on the procedural grounds. See: NPR (11/2, Harper);  The AP (11/2, Johnson).

Despite the opposition, the manufacturer intends to start selling the product in early 2019 at a price of $50 to $60 per tiny pill (but which provides the same pain relief as IV morphine).

Several pharmacy owners have recently asked me if they can start selling products infused or containing CBD (cannabidiol). After all, such products do not contain intoxicating properties of THC. And there is some solid research that CBD products alleviate anxiety, seizures, and chronic pain.

Nevertheless, the California Department of Public Health decided that products containing CBD cannot be sold by non-licensed retailers (non-dispensaries). According to the California Bureau of Cannabis Control, because CBD products are made from marijuana they should be sold only by licensed cannabis dispensaries. The same applies even if a CBD product is derived from a marijuana’s cousin – hemp – as long as it contains less than 0.3% THC.

Federal agencies have taken the same approach. The DEA considers CBD products Schedule I substances. And the FDA recently “has launched a crackdown on CBD products that make unproven medical claims.” Read more from the L.A. Times.

States, however, vary on their approach to CBD derived from hemp. For example, Colorado allows growers to extract CBD from hemp. California, on the other hand, decided to follow the federal guidance on the subject. See Los Angeles Times article “CBD-infused products are being sold everywhere in California – but are they legal?”

Up to this point, however, the Bureau of Cannabis Control had not taken any action against businesses selling products containing CBD. Also, very few local health agencies cite such businesses (according to Los Angeles Times, no citations were issued by the Los Angeles County Department of Public Health, San Diego county cited one facility, and Orange county cited 10 facilities so far). This could be a reason why we still see so many CBD-infused products being sold throughout the state.

In addition, many facilities selling CBD products are not regulated by health agencies and therefore not likely to come on the radar of the enforcement agencies. Because the facilities selling CBD products are mostly unregulated, there is no guarantee that the product is not mislabeled and adulterated (for example, it may contain larger amounts of THC then a typical CBD product, it may also contain harmful pesticides and metals).

So what do I say to the pharmacies planning to introduce CBD products to their patients? One word: wait. Such products are derived from cannabis and therefore under both state and federal laws they are classified as Schedule I products. Therefore, when the Board of Pharmacy comes to inspect pharmacies selling CBD products, it may issue citations for violating federal and state controlled substances laws.

I have to note one exception to the above – Epidiolex. So far, it is the only CBD product approved by the FDA and rescheduled into Schedule V by the DEA. In July 2018, Epidiolex was also approved for use under California law. Now California pharmacies may carry and sell this product to their patients. I anticipate that other manufacturers, following in Epidiolex’s manufacturers’ footsteps, will develop and introduce other similar products backed up by significant safety data. So if you want to carry more CBD products in the pharmacy, just wait – changes are coming.

See a similar blog post “Cannabis products are coming to a pharmacy near you.”

Below is the announcement directly from the California Department of Health Care Services (DHCS):

The DHCS will not extend the moratorium on the enrollment of pharmacy providers in Los Angeles (LA) County after the moratorium expires on October 28, 2018. This bulletin provides information for pharmacy applicants in LA County applying for enrollment in the Medi-Cal Fee-ForService Program.

State Medicaid Agencies are required to collect fingerprints and conduct criminal background checks from applicants or providers screened at the “high” categorical risk level. (Title 42, Code of Federal Regulations [CFR] §§ 424.518, 455.434, and 455.450).

Any pharmacy applicant located in Los Angeles County who is seeking enrollment in Medi-Cal for the first time or who is submitting an application for continued enrollment, with the exception of those operated by governmental entities, chain pharmacies, non-profit corporations and those operated by a Federally Qualified Health Center (FQHC), will be screened at the “high” categorical risk level. For the purpose of this bulletin, a chain pharmacy is defined as an entity with 20 or more service locations. Please refer to the bulletin titled “Designation of Categorical Risk Levels for Pharmacy Providers in Los Angeles County” for more information on pharmacy enrollment for pharmacy providers located in Los Angeles County.

Title 42, CFR, Section 455.450(e)(2) and Welfare and Institutions Code (W&I), Section 14043.38(b)(4) specify that a provider that would have been prevented from applying for enrollment due to a moratorium that has been lifted in the past six months, be screened at the “high” categorical risk level.

A “high” risk screening requires a provider or applicant to submit proof that fingerprints for all the required individuals have been submitted to an authorized State Identification Bureau (Bureau of Criminal Information and Analysis, Department of Justice [DOJ] in California). Providers and applicants must attach a copy of a prefilled DOJ Request for Live Scan Service (BCIA 8016) form for each required individual with their application, date stamped and show verification that all fees have been paid by either a “PAID” stamp from the public Live Scan operator or a receipt of payment.

For more detailed information on which individuals are required to submit fingerprints, please review the Informational Bulletin Regarding Medi-Cal Requirement to Submit Fingerprints for a Criminal Background Check and Medi-Cal Requirement to Submit Fingerprints for Criminal Background Check provider bulletins.

If you are not otherwise required to be screened at the “high” categorical risk level, and if you would have met one of the exemptions listed below, you do not need to be screened as “high” risk but you must submit a cover letter with your application advising which exemption you meet and include any necessary supporting documentation.

1. The enrollment of Chain Pharmacy providers. For the purposes of this moratorium, a Chain Pharmacy is defined as an entity with 20 or more service locations.

2. An application based on the purchase or a change of control interest of an existing Medi-Cal provider pharmacy in Los Angeles County, whether it constitutes a change of ownership or not. This exception is only available when the applicant has assumed or retained all debts, obligations, and liabilities to which the existing provider was subject prior to the transfer or sale and the Department confirms that an access to care issue exists.

3. Applications submitted pursuant to California Code of Regulations, Title 22, Section 51000.55, Requirements for Continued Enrollment.

4. Applications submitted pursuant to California Code of Regulations, Title 22, Section 51000.30(a), by an existing Medi-Cal enrolled pharmacy provider for the sole reason of changing its location, provided that its previous business address was located in Los Angeles County.

5. Applicants that are the exclusive persons or entities in the United States to provide a specific product or service that is a Medi-Cal covered benefit.

6. The enrollment of a County, State, or Federally owned and operated pharmacy.

7. Applications submitted pursuant to California Code of Regulations, Title 22, Section 51000.30(b)(6) with no change in the person(s) previously identified in the last complete application package that was approved for enrollment as having a control or ownership interest in the provider totaling five percent or greater.

8. Applicants who will be enrolled solely for reimbursement of Medicare cost sharing amounts.

9. Applications submitted by a provider to operate at the same business location as a Federally Qualified Health Clinic (FQHC). The pharmacy, in whole or in part, must be owned and operated by the same entity that owns the FQHC.

10. Applications submitted by an Academic Specialty Pharmacy. For purposes of this Moratorium, an Academic Specialty Pharmacy is defined as a specialty pharmacy that is owned or operated by a higher education institution that is currently a Medi-Cal pharmacy provider.

If the Department determines that you do not meet an exemption or if you do not want to go through an exemption review, you are required to be screened at the “high” categorical risk level and submit fingerprints for a criminal background check.

Failure to submit fingerprints for a criminal background check when required will result in the denial of the application package.(42 CFR § 455.416; W&I Code § 14043.26[f][4][E]).

If you have any additional questions, please contact the Provider Enrollment Message Center at (916) 323-1945 or submit your question via e-mail at PEDCorr@dhcs.ca.gov.

Natalia will be speaking at the largest pharmacy law conference organized by the American Society for Pharmacy Law.  The subject of her talk is “Your Pharmacy is Being Audited by DEA – Complying, Defending, and Prevailing!” Natalia will focus on:

– differences between DEA’s administrative actions and criminal prosecution;

– how to avoid the case being sent to the Department of Justice;

– tips on negotiating a DEA settlement;

– considerations affecting the decision to surrender the registration or continue with a hearing;

– pharmacies’ armed robberies, night burglaries, customer thefts, employee pilferage – prevention  techniques;

– common mistakes in controlled substances record-keeping;

– trends in controlled substances state laws, comparison with federal law;

– key components of risk management program and audit plan;

– DEA’s arsenal to enforce the Controlled Substances Act, such as False Claims Act;

– Recent DEA cases against pharmacies, common patterns.

A former DEA’s Special Agent in Charge – Dennis Wichern – will join her in discussing the DEA’s updates and trends.

A new report released by the U.S. Health and Human Services (Office of the Inspector General, “OIG”) expresses government’s concern about potential fraud and patient safety risks from compounded products used to treat pain. Medicare spending for such products has skyrocketed.

The OIG is currently investigating or plans to investigate pharmacies compounding and dispensing topical creams. The pharmacies are identified for investigation on the following basis:

  • Charging high dollar amounts for creams;

  • Large percentage of patients receiving identical products;

  • Increased billing;

  • Most prescriptions are coming from a single medical provider or a medical group.

Many of the pharmacies who are currently on the OIG investigative list are located in four cities: New York, Houston, Los Angeles, and Detroit. Most of the pharmacies compound pain medications using ingredients such as lidocaine or/and diclofenac sodium. These compounds are usually more expensive than non-compounded drugs with the same ingredients.

We have represented several pharmacies being audited and investigated only because they were compounding or/and dispensing expensive medications, prescribed by one or a few providers. This is an indication of potential fraud, waste or abuse. And the pharmacies must be prepared to defend themselves against such allegations. If you do compound pain creams, review the due diligence you perform in dispensing them: communicating with the prescribers and patients, documenting medical necessity for the compounds, etc. We recommend performing internal audit to determine whether you fall into this “flagged” category and adjusting dispensing practices accordingly.

Read a report prepared by Kaiser Health News.

On Wednesday, President Trump signed bipartisan legislation that would ban so-called “gag clauses” and allow “pharmacists to tell consumers when they could actually save money by paying the full cash price for prescription drugs rather than using health insurance with large co-payments, deductibles and other out-of-pocket costs.” The New York Times reports. Pharmacists “say they have often been forbidden to share information on drug pricing with customers” because of the gag clauses imposed on them “by companies that manage drug benefits for insurers and employers.” One bill bans gag clauses in commercial insurance and the other applies to outpatient drug coverage in Medicare, either through its fee-for-service program or Medicare Advantage plans. Both were passed by Congress in nearly unanimous votes last month.

According to research published in JAMA in March, people with Medicare Part D drug insurance overpaid for prescriptions by $135 million in 2013. Copayments in those plans were higher than the cash price for nearly 1 in 4 drugs purchased in 2013. For 12 of the 20 most commonly prescribed drugs, patients overpaid by more than 33 percent.

NBC News reports that during the signing, Trump said of drug prices, “It’s way out of whack. It’s way too high.” He continued, “You look at prices in our country and for the exact same drug in other countries, it’s much lower – made in the same plant by the same company – and I said, ‘What’s going on?’”

Critics argue that the bills do not address the causes of high prices and do not require pharmacists to disclose cheaper alternatives. See Kaiser Health News coverage.

At least now, pharmacists can discuss with their patients easy way to save money on prescription drugs without fearing PBM retaliation. The legislation prohibiting gag clauses in commercial insurance contracts will go into effect immediately. However, the bill affecting Medicare beneficiaries wouldn’t take effect until Jan. 1, 2020.

Last week the U.S. Department of Justice (DOJ) announced its largest settlement with a drug distributor – AmerisourceBergen (ABC) – in the combined amount of $885 million.

ABC, through its Pre-Filled Syringe Program, allegedly caused numerous false claims to be submitted to the federal healthcare programs (1) for unapproved new drugs; (2) for drugs that were defective, contaminated or otherwise compromised, whose quality and/or purity fell below that which they were purported or represented to possess; (3) by causing double billing for the same vial of drug product as a result of exploiting overfill; and (4) for Procrit® purchased as a result of the ABC’s kickback to physicians for Procrit® Pre-Filled Syringe purchases.

Misbranded Drugs

ABC, through its subsidiary Medical Initiatives (MI), broke the sterility of the original sterile vials of the manufactured products, pooled the contents, and repackaged the product into plastic syringes. Some of the Pre-Filled Syringes contained visible particles of unknown origin, which MI sought to filter out before shipment. However, MI did not conduct any tests to confirm that the filtering process removed the foreign particles. The ABC Defendants represented to physician customers that MI’s repackaging procedures followed aseptic technique and complied with all applicable laws when, in fact, that was not uniformly the case. On the few occasions when samples of Pre-Filled Syringes were tested for sterility, some of those samples tested positive for bacteria. The ABC never recalled any Pre-Filled Syringes.

Double Billing

ABC used overfill and salvaged vials for resale, which caused double-billing for the same vial of drug product. The ABC’s repackaging operation at MI allowed some vials to remain unopened. ABC resold the unopened vials to other healthcare providers. These unopened vials were billed to payors, including the federal healthcare programs. The second purchaser was either another physician ordering vials to be made into Pre-Filled Syringes or a hospital or pharmacy that purchased the unopened vials with the representation from ABC that the unopened vials were purchased directly by ABC from the manufacturer and sold directly to the second purchaser. ABC failed to disclose to the second purchasers that the unopened vials were extra vials accumulated by MI as a result of the Pre-Filled Syringe Program and billed to payors, including federal healthcare programs.

Kickbacks

ABC paid kickbacks to physicians to induce them to purchase Procrit® in Pre-Filled Syringes rather than the original vials by providing a rebate to physician-customers who purchased the drug in syringe form. The rebate was disguised on the invoice as a general pharmacy credit and not associated with Procrit®. Customers who bought Procrit® in a vial rather than Pre-Filled Syringes did not receive the additional rebate. The ABC Defendants did not properly disclose the rebate to customers in writing at the time of the initial sale of Procrit®.

The prosecution points out that ABC never registered MI as a repackager or manufacturer with the FDA. But instead portrayed it as a state-regulated pharmacy (however MI’s operation did not fit within 503A definition of a traditional pharmacy). In addition, the Pre-Filled Syringes did not have approved New Drug Applications or Biologics License Applications in effect.

To assure future compliance, ABC entered into the Corporate Integrity Agreement with the federal government.

Interestingly, there was almost identical suit against McKesson Corporation, which was accused of repackaging cancer drugs in conditions that were not sterile.