This month, the American Medical Association, American Pharmacist Association, and American Society of Health-System Pharmacists issued a joint release urging prescribers and pharmacists to stop ordering, prescribing, and dispensing ivermectin to prevent or treat Covid-19 outside of clinical trials. The reason for issuing this plea is a 24-fold increase in prescribing and dispensing of ivermectin since before the pandemic. According to the release, calls to poison control centers due to ivermectin ingestion have increased five-fold from their pre-pandemic baseline. The associations reminded the public that (1) ivermectin is not approved by the FDA for human use to prevent or treat Covid-19 and (2) Clinical trials and observational studies to evaluate the use of ivermectin to prevent and treat COVID-19 in humans have yielded insufficient evidence to recommend its use.

What is even more important for retail pharmacies is that many payors consider dispensing ivermectin to treat or prevent covid-19 as clinically inappropriate. Any such dispensing is likely to result in recoupments. To ensure appropriate use, virtually all payors require prior authorization for dispensing products containing ivermectin.

While some pharmacies (such as CVS) refuse to fill ivermectin prescriptions for non-FDA approved uses, others fill these scripts for cash patients.

Keep in mind that if your pharmacy does dispense ivermectin and bills third party payors for it, the prescription must have a diagnosis code showing that the product is used as approved.

But if your pharmacy dispenses ivermectin for the off-label use (to treat/prevent covid) to cash patients, you still have a duty to ensure that the prescription is written for a legitimate medical use. The biggest issue with these prescriptions is that they are often prescribed by “online doctors” for large doses.  It is the pharmacist’s responsibility to verify that the prescription is coming from a legitimate source and does not present danger to the patient’s health. For example, currently, ivermectin is approved as a one-time treatment with a follow-up dose several months afterwards. However, some ivermectin prescriptions are for daily intake for a period of a few months.  Such extended use may cause serious side effects ranging from nausea to coma and death. Ivermectin can also negatively interact with other medications. So a full review of the patient’s drug regimen is recommended.

Just for your entertainment, here is how some of prescriptions for ivermectin look like (notice the chicken soup and hot lemonade).


In addition to checking the dosage and reviewing patient’s current medication intake, the pharmacist should educate and inform the patient (in writing) of the potential side effects and risks associated with taking ivermectin.

This informed consent should also contain a release of the pharmacy and acknowledgement that the patient understands the risks involved and wishes to proceed with the treatment at their own risk.

While such releases may minimize pharmacy’s exposure to liabilities, they will not shield the pharmacy from any government investigations. For example, some state boards indicate that dispensing ivermectin may constitute unprofessional conduct. Recently, the California Department of Consumer Affairs, the Medical Board of Board of California, and the California State Board of Pharmacy issued a joint statement reminding health care professionals that inappropriately prescribing or dispensing medications constitutes unprofessional conduct in California. The statement specifically addressed improper prescribing and dispensing of medications related to treatment of Covid-19.

Most boards, however, do not prohibit ivermectin dispensing as long as the pharmacists use their professional judgment in dispensing valid prescription while meeting all applicable federal and state laws and regulations.

In addition, the FDA issued several warning letters to companies selling ivermectin to treat/prevent Covid. The most recent warning was issued to RxMedKart for selling “Ziverdo Kit” containing Acetate 50 mg, Doxycycline 100 mg & Ivermectin 12 mg  as a treatment/prevention of Covid. The FDA’s warning explained that this company was selling misbranded and unapproved drugs and requested to cease any further activity.

While it is important to accommodate patients and drugs are permitted to be used off-label, remember that you have a right to refuse to fill any prescription if doing so is contrary to your professional judgment. It is better to err on the side of caution and refuse the fill if in your professional judgment there is a question as to the safety for the patient.



Compounded medications have been under government radar for quite some time. So a recent inditement and prosecution of two pharmacists and a marketer implicated in allegedly fraudulent scheme involving compounded medications comes as no surprise.  The individuals allegedly defrauded TRICARE and private insurances by:

  • price-testing and adjusting prescription formulas to ensure the highest reimbursement;
  • using marketers to procure prescriptions for high-margin compounded medications and paying commissions to these marketers;
  • waiving or reducing copays to “falsely make it appear as if [the] pharmacy… had been collecting copayments;”
  • paying kickbacks to prescribers;
  • manipulating and deceiving insurance audits to maintain the ability to submit claims for reimbursement for medically unnecessary high-adjudication compound medications.

According to the indictment, the conduct resulted in more than $180 million in fraudulent billing. One of the pharmacists plead guilty and is currently facing five years in prison and restitution.

Let’s dissect the case to understand the alleged scheme.

Two pharmacists owned a pharmacy in Missouri. When they learned of potential profits that could be made by submitting claims for compounded medications, they aggressively expanded their compounding business by acquiring several other pharmacies in various states and contracting with other pharmacies to dispense and bill for compounded medications. Profits were split between these affiliated pharmacies and businesses owned by the pharmacists (red flag # 1: kickbacks).

Simultaneously, the pharmacists formed six business entities to receive and distribute the profits generated by compounding business (red flag # 2: potential money laundering).

The pharmacists also formed two telemarketing companies to cold-call patients to solicit their business for compounded medications. According to the indictment, these telemarketing companies were paid about 50% of what pharmacies received in reimbursements for the claims secured by these cold-calls (red flag # 3: kickbacks). Allegedly, the telemarketing companies used an array of fraudulent tactics to generate prescriptions including pretending to be representatives of the patients and referring prescriptions to the affiliated pharmacies without the patients’ knowledge or approval.

To assist patients with copays, the pharmacists also formed a business entity (Affordable Medication Solution LLC aka “AMS”) (red flag # 4: the “non-profit” was under the common ownership with the dispensing pharmacies). Because copayments for compounded medications are often hundreds and even thousands of dollars, many beneficiaries balked at receiving these high-adjudication meds. AMS was created to make it appear that the pharmacies collected copayments through AMS (which supplied the coupons) when in reality they had not.

But that’s not the end in a myriad of business entities formed by these two “entrepreneurial” pharmacists. They formed another entity to allegedly pay kickbacks to the prescribers. To avoid  restrictions imposed by the anti-kickback statutes, the pharmacists formed an “investment” company and paid dividends to the affiliated prescribers. (red flag # 5: the “investment” company was under the common ownership with the pharmacies and rewarded the prescribers for sending and/or authorizing high-dollar prescriptions).

To receive the highest reimbursement possible, the pharmacies submitted “dummy” claims to PBMs to ascertain the potential reimbursements and ultimately to find formulas for high-dollar medications. (red flag # 6: most PBM manuals prohibit or curb claim-testing). According to the indictment, the pharmacies adjusted the formulas by including some ingredients solely to increase the reimbursement amounts despite these ingredients having no medical efficacy. Moreover, the pharmacies created preprinted “check-the-box” prescription pads containing these previously determined high-adjudication compound medications and provided these pads to marketers who would then distribute the pads to prescribers. Marketers received  commission payments (red flag # 7: marketers were acting as independent contractors). During the investigations, some prescribers denied that they wrote or authorized prescriptions generated by these marketers (red flag # 8: potentially fraudulent prescriptions created by marketers to receive commissions).

During PBM audits, the pharmacies allegedly used white-out to conceal or alter information on requested documents. When Caremark discovered these practices and terminated one of the pharmacies, the prescriptions were sent to the affiliated pharmacies.

After reading the indictment, it appears that the pharmacists were creating various business entities attempting to conceal potential issues and to compensate marketers and prescribers, as well as assist patients with copayments for these expensive compounded medications. While independent pharmacies are struggling to stay afloat amidst a very strong competition and diversifying business and specializing might be a good idea, it does not excuse blunt violations (such as paying commissions to prescribers and marketers). The case is a good reminder for pharmacies to keep it simple and to consult with the legal team when diversifying and marketing services.

In my last post, I covered a recent settlement of $2.75 mil where an LTC pharmacy – AlixaRx – was allegedly improperly filling “emergency” scripts for LTC patients. A part of this settlement also included an allegation that AlixaRx billed Medicare Part D for claims that had already been reimbursed through claims paid to long-term care facilities under Medicare Part A. Today, I want to elaborate on this issue and touch on the proper billing practices when a pharmacy works with hospice or skilled nursing facilities.

A rule of thumb: federal law requires hospices to provide drugs related to the palliation and management of the terminal illness. Medicare Part A pays for these drugs. Therefore, for medications covered under Part A (hospice benefit), the pharmacy negotiates a fee with the hospice. For medications unrelated to the treatment of the terminal illness, the pharmacy bills Part D. Likewise, Part A applies to skilled nursing claims for certain condition and under certain circumstances. Pharmaceutical care provided to qualifying patients should be billed through Part A.

Sounds pretty straightforward? As AlixaRx case illustrates, it is not all that simple.

Hospice claims: The CMS has determined that the following categories of drugs are generally payable under Medicare Part A when prescribed to patients that have elected hospice: laxatives, antiemetics, antianxiety agents, and analgesics (nonnarcotic, opioid, and anti-inflammatory). However, if the hospice or non-hospice prescriber determines that a drug within one of these four categories is unrelated to the terminal illness, the drug would be eligible for coverage under Medicare Part D. In this case, a prior authorization (submitted by hospice) is required.

Skilled Nursing Facility coverage: it applies to newly admitted or re-admitted patients who are coming for a hospital stay of at least three days. Part A pays up to 100 days of coverage for prescription drugs.

While pharmacies are ultimately responsible for ensuring that claims eligible for coverage under Part A or Part B are not adjudicated under Part D, the responsibility for proper claim classification should be on the hospice/facility provider. Therefore, your contract with the facility should expressly states that the facility shall designate claims as not covered by part A and indemnify the pharmacy in case of a retroactive audit and chargeback identifying discrepant claims. And – what I see as often missing – there should be a provision allowing you to renegotiate your fee if Part A fees have increased. For example, this year Medicare increased hospice payment rates by 2.4% but I don’t think many pharmacies increased their rates under hospice contracts.

If a pharmacy erroneously bills Part D for a drug where coverage is available under Part A or Part B, PBMs will recoup any money incorrectly paid through the pharmacy audit process. The PBM may refer the case to the government for further investigation (if the discrepant amount is substantial).

In the case of AlixaRx, the complaint alleged that it submitted Part A claims to Part D, which warranted investigations by the OIG and FBI.  The complaint explains that Medicare Part A “SNF coverage applies to newly admitted or re-admitted beneficiaries who are coming for a hospital stay of at least three days… and provides 100 days of coverage for prescription drugs…” But AlixaRx allegedly assigned such claims a Part D status.

To recap and to give you some food for thought: (1) ensure that hospice and LTC claims are properly billed; (2) your contracts with the facilities should shift the billing responsibility to the facility and properly protect you; (3) and such contracts should be timely updated and revised (and rates renegotiated).

A national LTC pharmacy – AlixaRx – agreed to pay federal government $2.75 mil to resolve allegations that it improperly dispensed controlled substances at long-term care (LTC) facilities. AlixaRx dispensed prescriptions drugs to LTC patients primary through its on-site automatic dispensing units (ADU). According to the complaint, the pharmacy violated the federal Controlled Substances Act (CSA) in its dispensing pursuant to purported “emergency prescriptions.”  Federal investigators alleged that the pharmacy routinely abused the emergency prescription provisions of the CSA by requesting and obtaining verbal “emergency” refills from prescribers, in the absence of any true emergency.

To remind, the CSA requires a written prescription by a physician for dispensing Schedule II drugs and refills are not permitted by law.  Pharmacists may dispense controlled substances without a written prescription only in true emergencies and, even then, only for the quantity of drugs necessary to treat the patient during the emergency period.  Emergency prescriptions must promptly be reduced to writing and signed by an authorizing physician within seven days of issuance.  See 21 CFR § 1306.11.

The complaint against the pharmacy alleges that the purported emergency was created by the pharmacy’s ADU machines, which did not alert nurses when the medication was about to end. When LTC staff realized that there were no more fills, they called the hub pharmacist responsible for the remote operation of the ADU and asked for a “refill.” The pharmacist, in turn, called the LTC’s Medical Director and obtained a verbal authorization to program the ADU to dispense additional controlled substances for the patient as “emergency” fills. Allegedly, the pharmacy did not receive follow up written prescriptions to document the new fills for most of its “emergency” dispensing. Later – when the investigation was ongoing – the pharmacy attempted to obtain backdated written prescriptions for these fills.

As a result of this practice, the pharmacy faced several federal investigations conducted by the U.S. Attorney’s Office, the DEA, the OIG, and the FBI and agreed to settle the case for $2.75 million.

This case is a good reminder that even if a pharmacy is pressured to dispense immediately, it must follow all regulatory requirements (in this case, obtain the prescriber’s written authorization within 7 days of the fill). Many LTC pharmacies face the same issues.

The California law mirrors federal requirements and allows emergency dispensing only when failure to dispense a controlled substance may result in loss of life or intense suffering (and of course, this must be documented). These requirements do not apply to terminally ill patients (See Health & Safety Code § 11159.2).



Automatic refills is a landmine. Some states prohibit them outright. Medicare requires patient consent before each delivery. Most PBMs also place some conditions on auto-refills, such as obtaining authorization from the patient for each refill (to prevent fraud, waste and abuse and to ensure that patients receive only medications that they have requested). PBM manuals usually require pharmacies to complete a drug regimen review on all prescriptions filled as a result of the auto-fill program. Some PBM manuals even spell out proper procedures for auto-refill programs, such as:

  • Auto-refill programs should be voluntary, on opt-in basis only;
  • Patient consent is for refills only and shall not apply to any new prescriptions (new consent must be obtained);
  • The pharmacy must provide patients with information on how to disenroll from its auto-fill program and must promptly respond to all disenrollment requests;
  • The pharmacy must confirm at least annually that the patient still wishes to participate in the auto-refill program;
  • The pharmacy must promptly discontinue automatic fill program upon notification that the patient entered a skilled nursing facility or elected hospice coverage.

Recently, California joined the states that place similar restrictions on auto-fill programs. This month, the California State Board of Pharmacy approved a new regulation that requires  pharmacies who offer auto-refills to comply with the following:

  • to have written policies and procedures addressing the auto-refill program;
  • to provide its patients with the information on how the program operates: instructions about how to withdraw a prescription medication from refill through the program or to disenroll entirely from the program. The patient or patient’s agent shall enroll by written, online, or electronic informed consent to participate in the program for each new prescription wherein there is a change in the prescription medication, strength, dosage form, or directions for use;
  • to obtain annual renewal of each prescription from the patient or patient’s agent no later than 12 months after the prescription was enrolled in the program;
  • to keeps a copy of the written or electronic informed consent to enroll on file for one year from date of dispensing;
  • to complete a drug regimen review for each prescription refilled through the program at the time of refill;
  • to provide a written or electronic notification to the patient or patient’s agent confirming that the prescription medication is being refilled through the program;
  • to allow the patient to withdraw a prescription medication from automatic refill or to disenroll entirely from the program. The pharmacy shall document and maintain such withdrawal or disenrollment for one year from the date of withdrawal or disenrollment and shall provide confirmation to the patient or patient’s agent.
  • to provide a full refund to the patient, patient’s agent, or payer for any prescription medication refilled through the program if the pharmacy was notified that the patient did not want the refill, regardless of the reason, or the pharmacy had been notified of withdrawal or disenrollment from the program prior to dispensing the prescription medication.

This new regulation, which becomes effective in 2022, mirrors PBMs’ requirements. Most pharmacies do not need to add anything to their compliance plan. If your pharmacy, however, does require assistance with drafting policies and procedures as required by this new regulation, please contact our firm directly: and we will be happy to help.

I am very excited to announce a release of Gavel & Pestle podcast where I speak on PBM audits, trends, and litigation. With Brooke Kulusich we discuss the most common compliance mistakes that pharmacies make, the implications of Rutledge v. PCMA decision, and how independent pharmacies can think outside-the-box in their approach to PBMs.

Please note that the podcast was recorded in January and a few things have changed since (e.g. Indy Health no longer operates (unfortunately!) due to some unexpected losses).

Thank you to the host Brooke Kulusich for this interview and thought-provoking questions.

Click here to listen to the podcast.

This year we saw some positive litigation outcomes for independent pharmacies. Let’s talk about two recent victories in PBM litigation. (Both cases were brought by Mark Cuker who represents several groups of pharmacies across the nation).

One of the cases was brought in California against Optum alleging misrepresentation, fraud, and breach of contract. Optum filed a motion to compel arbitration. California Superior court in Alameda denied the motion on procedural and substantive unconscionability. The court ruled that Optum had not demonstrated the existence of an enforceable arbitration agreement. The court reasoned that Optum had provider agreements with PSAOs and pharmacies were not provided with copies of the provider agreements, did not sign them and have not even seen them. Therefore, the pharmacies were not party to the provider agreements. In additional to this procedural unconscionability, the court found substantive unconscionability because arbitration provisions unreasonably limited discovery, precluded the presentation of live testimony, imposed costs greater than the cost of a court proceeding.

Optum argued that even if the provider agreement was unconscionable, pharmacies operated under Optum’s Pharmacy Provider Manual, which also had an arbitration provision. The court also dismissed this argument on procedural and substantive unconscionability grounds. The court explained that the manuals are a take-it-or-leave with Optum reserving the right to unilaterally change the terms without notice. The arbitration provision in the manual is also substantially unconscionable because it allows Optum to exercise “self-help” but requires the pharmacies to use the arbitration process. For example, the manual allows Optum to withhold the funds as deemed necessary. It also places unreasonable constrains on discovery in violation of the state law (precludes presentations of live testimony and does not allow cross-examination). In addition the arbitration clause in the manual requires that the arbitration is presided by a panel of three arbitrators, each with at least a 10-year experience in healthcare law. The court noted in its decision that the cost (to pay for such arbitrators) is likely to run into hundreds of thousands of dollars, effectively precluding smaller providers from bringing arbitration in the first place.

Mark Cuker, who is of counsel at Jacobs Law Group says that this victory “…opens the door for independent pharmacies to hold Optum publicly accountable in court for its violations of California’s MAC law, breach of contract, steering patients to mail order and underpaying on certain brand drug prescriptions.”

Recently he also defeated a similar motion to arbitrate in a federal court in Pennsylvania against OptumRx. The federal court ruled – as California state court did – that Optum’s arbitration provisions are unconscionable. Mark could be contacted at


We have been following Amazon in its attempts to enter the pharmaceutical market. See related blog posts:

Amazon-PillPack deal – a pharmacy shakeout?

Why Amazon shelved its plan to enter the pharmaceutical distribution chain. 

Is Amazon ready to enter pharmacy business? 

This month, Amazon made headlines when it announced its 6-month prescription plan starting at $6 (for maintenance medications). Customers can pay as low as $1 per month for some medications, including diabetic and blood pressure drugs, with free 2-day delivery. This is a real industry shaker.

Since its acquisition of PillPack, Amazon has been making gradual steps towards acquiring a larger chunk of pharmaceutical business by making medications more affordable and delivery faster. But what does this mean for independent community pharmacies who simply cannot compete with Amazon? As many pharmacies are realizing, it is difficult to make profits on maintenance medications. More and more pharmacies are turning into closed door, long term care, or specialty pharmacies (or selling files and closing its doors).

Many chain pharmacies are also affected by this move. For example, Walgreens announced that it will launch its own prescription savings program for its members.

About eight years ago, I represented Pharmacists Planning Services Inc (“PPSI”) (led by the late Fred Mayer) in front of the Board of Pharmacy regarding medication errors and working conditions of the pharmacists.

Fred was advocating for the reduction of errors due to difficult working conditions of the pharmacists employed by chain drug stores. We prepared and drafted a regulation  prohibiting chain stores of imposing stringent requirements on the minimum amount of prescriptions to be filled per day. Our survey showed that many pharmacists were deprived of bonuses or even demoted if they did not fill their weekly quota. We presented the case to the Board, which decided not to act on this issue at the time.

And now – almost ten years later – the Board is commencing its own investigation into these practices. It is conducting a workforce survey to determine if working conditions in pharmacies may contribute to medication errors. The survey is anonymous. If you feel like the working conditions in your pharmacy are likely to trigger errors (e.g. you are required to work at a high pace, you do not have enough ancillary staff, etc.), I strongly encourage you to fill out the Board’s survey (available on its website) or contact the Board to participate in this survey.

I would like to think that we have planted a seed with Fred and his legacy will live on.

Pharmacy terminations based on aberrant quantities and products are becoming more and more prevalent. It is difficult to appeal such terminations due to broad definitions of aberrant products/quantities and PBMs’ excessive discretion on what constitutes such products and volumes.

For example, PBM manuals usually state that Provider “must not dispense aberrant quantities of” certain products “and/or high volume of claims within a therapeutic category (e.g. topicals, dermatologicals), as measured by number of claims, quantity dispensed or dollars, inconsistent with the habits of local Prescribers or Plan Sponsors formularies.” This is a very broad definition and does not give much guidance to the providers. Plus, it gives PBMs an exclusive discretion to determine what aberrant quantities are.

Based on my experience, anything above 10% could be classified as aberrant. In most cases, however it’s 25% or more  of the provider’s claims or dollars.

Also watch your reversals, as PBMs usually count them towards calculating aberrant volumes. While there is nothing in the manuals clarifying this issue (besides a provision that aberrant volume may be calculated on a number of claims), this issue has not been clarified in a legal proceeding. Therefore, it is recommended that the amount you bill to PBMs (not necessarily dispense) does not exceed 25% of your total claims billed (including reversals).