Since the new United States Pharmacopeia (USP) guidelines went into effect on November 1, 2023, I have been receiving many inquiries regarding their impact on compounders. Because the changes are fairly recent, compounders want to know how and when they must be fully compliant, what enforcement vehicles are in the government arsenals, and what types of resources they must have to comply with the new requirements. This post answers some of these questions by summarizing major changes and discussing some of the pitfalls on the way to compliance. On the other hand, this post does not go into any of the technicalities of the USP requirements, nor does it detail the requirements of each new rule. For the full text of USP chapters, please visit the USP’s website , which contains many resources and training materials.  And if you have a specific question regarding your or your client’s practice, you can reach USP directly at CompoundingSL@USP.org.

Does USP guidelines apply to your or your client’s practice?

If you do not compound on a regular basis or do not run into the USP chapters often, you might be wondering if the new USP requirements apply to your practice. The USP chapters mostly apply to hospitals and compounding pharmacies. But they also apply to healthcare facilities where compounding takes place, such as hospitals, 503A and 503B compounders, vet compounding, and pharmacy schools. The USP provides a comprehensive framework for compounding sterile, non-sterile, and hazardous drugs, including training, cleaning and maintenance of work areas in such compounding facilities. Most state board of pharmacies ensure that their compounding regulations match the USP guidelines.

Summary of the 2023 USP Changes:

The latest update went into effect on November 1, 2023 and still causes many questions, such as when compliance is due. Full compliance was due back on November 1, 2023. The USP clarified that it would no longer give any extensions for full compliance.

BUD assignments: Most of this year changes pertain to the beyond-use date (BUD) assignment. For example:

  • the USP has clarified how BUD is computed for water containing products. Due to water’s susceptibility to microbial contamination and hydrolytic degradation, the revised chapter clarifies what actually constitutes a “water-containing” product and how BUD should be assigned to such products.
  • It also provided instructions on BUD assignability when compounders add flavors to commercially manufactured nonsterile products.
  • The USP made changes to BUD assignment to compounding products under Category 2 and 3 (which are medium and high risk products in terms of susceptibility to microbial contamination). To facilitate patient access, the BUD for aseptically prepared Category 2 preparations is extended if only sterile ingredients at room temperature were used. In addition, for Category 3 sterile compounding, the USP provided more stringent standards for personnel training, garbing, and environmental monitoring frequency.
  • BUD is extended up to a maximum of 180 days when sterility and stability tests have been performed.

Personnel training: The USP increased requirements for compounding staff training, such as additional training, testing, documentation, and practical evaluations on the job. The supervising pharmacist now must also be trained to demonstrate competency in aseptic manipulation, core compounding skills, and garbing every year. Compounding staff now must undergo regular competency evaluations on the job to ensure they are capable of performing sterile compounding procedures safely.

Garbing: garbing requirements now apply to anyone involved in compounding. No exposed skin is allowed in the buffer room. Garbs must be sterile, low-lint, re-sterilized each time after washing. Gloved fingertip and thumb sampling must be taken to assess microbial contamination and garbing competency evaluations. It must contain zero colony-forming units on the gloved fingertips. The USP set specific timeframes when such tests must be performed (depending on the products being compounded).

Aseptic manipulations and environmental monitoring: to reduce microbial contamination, the USP now requires that compounding staff obtains a work surface sample with a maximum of 3 colony-forming units (CFUs) before compounding and then repeat every 6 months. For Category 3 compounding, compounders must test hood surface weekly at the end of each batch and perform monthly air sampling.

Cleaning: for non-sterile compounding, cleaning and sanitization must be performed at the beginning and end of every compounding activity/shift. For sterile compounding, on the other hand, only daily surface cleaning is required.

USP 800 changes (compounding hazardous drugs): unlike, Chapters 795 and 797, Chapter 800  protects not only the consumers but compounders, environment, staff, and the patients. While an image of very dangerous drugs comes to mind when we talk about hazardous drugs, these drugs could be simple hormonal creams. What dictates whether a drug is hazardous or not is determined by the National Institutes for Occupational Safety and Health (NIOSH), which is a branch of the CDC. They create and publish a list of hazardous drugs. The USP provides standards on how these drugs should be handled. Some of the changes pertain to training, cleaning, receiving, labeling, packaging, transport and disposal of hazardous drugs, as well as spill control and decontamination.

What does it all mean to your or your client’s practice?

Hospitals and compounding pharmacies now must update or develop policies addressing the USP changes. Some of the changes are extensive, such as the above mentioned BUD reevaluation, cleaning, staff training and garbing. This means that smaller compounders may be struggling to find additional resources to comply. Compounding providers must reevaluate facilities, equipment, processes , and staffing capacity, which could potentially cost compounders – according to the USP’s representatives – millions of dollars. Here is a link to the USP’s team analysis of the changes, published by Pharmacy Times.

For example, let’s take training: your facility now needs to evaluate whether there is enough staff to perform training, evaluations, and observations on the job. Plus, you will need additional compounding supplies for training for practice, tests, and evaluations.  Failure of any portion of the evaluation requires repeating the entire competency hands-on training.

Or air sampling: because this is required for Category 3 compounding involving more complex processes, most providers now need to hire a third party company or invest in expensive instruments to monitor air quality.

I anticipate that FDA’s oversight will increase and we will see more compliance audits from the FDA and state boards. Thus, hiring consultants and performing mock inspections could be a helpful preventative measure. In response, many online resources sprouted offering assistance with the USP compliance by providing policies, competency evaluation templates, and other guidance.

If state boards increase their number of inspections to ensure compliance with the new requirements, many smaller independent compounders could be exposed to enforcement actions. For example, following the New England Compounding Center’s meningitis outbreak, the California State Board of Pharmacy  increased its scrutiny and toughened its compounding regulations (as most state boards did). This effectively eliminated the majority of sterile compounders in the state. Will the number of sterile and non-sterile compounders further decrease with the new USP requirements? Time will show.

Due to the new Medicare Part D requirements effective the next year, direct and indirect remunerations (DIR) fees – that are so favored by PBMs – must be included and deducted from reimbursements at point-of-sale. In other words, starting with 2024 (still unclear when exactly), there will be no more retroactive DIR fees. Currently PBMs recoup DIR fees at a much later date after the actual claim adjudication.

In 2024, PBMs will be implementing something known as “Double DIR Cliff” when PBMs will be deducting DIR fees retroactively but at the same time at the point-of-sale. Many experts anticipate that this would leave pharmacies with negative cash flow.

For example, in January 2024, PBMs will be collecting DIR fees for May-August of 2023 and in March 2024, PBMs will still be collecting  fees for the claims submitted for the last quarter of 2023. But at the same time, PBMs will be collecting DIR fees at point-of-sale. This double DIR issue has been a great concern for my independent pharmacy clients.

Terry Cater (RPh, MBA) – who has helped many of my clients with improving cash flow, compliance, and pharmacy every-day operations – is asked the questions of “What to do with the upcoming DIR changes” on a daily basis. Below are some of his tips to the independent pharmacies on how to minimize their financial exposure. With Terry’s permission, I would like to share them with my audience.

Tips on facing DIR Double Cliff from Terry Cater, RPh, MBA:

Here is my take on dealing w/ the DIR “Hangover” or “Cliff” or DIR Armageddon,” which will likely occur towards end of first quarter 2024.

This is a cash flow issue.

Build liquidity – Hoard cash.

Start Tax planning NOW !!!

Meet with your banker and set up a line of credit.

This is HUGE:  Inventory management.

Take a look at technology like Datarithm or CIM (Cardinal customers).

You can free up a lot of cash by managing what you have on the shelves.

Make sure your financial documents are up to date, ESPECIALLY your P&L.

Do you know what DIR fees are as percentage of revenue?

Do you use a reconciliation program for A/R?

This will show you DIR & service fees & claims adjustments.

It’s Med Part D open enrollment. Review various plans in your

locale and work with patients to assist them in finding the best

plan that they can use at their pharmacy (that would be you).

Diversify revenue sources ie OTC, immunizations, DME, etc

To reduce DIR fees on an ongoing basis:

Understand how DIR fees are part of Star ratings.

Easiest (but NOT easy!) path is to drive adherence.

Suggest offer Med Sync or Auto Refill program.

Consider offering Compliance Packaging to seniors.

Call me if you need to discuss.

Terry Cater, R.Ph., M.B.A.
Pharmacy Executive

If you would like to discuss this complex issue with Terry, you can contact him through his website.

“Climate change is the single biggest threat to our world and health.”
The International Pharmaceutical Federation’s address to the WHO

A recent episode of “The Business of Pharmacy” podcast made me think about the environmental impact and sustainability of a pharmacy. In the episode, Mike Koelzer interviewed Melinda Su-En Lee – a co-founder of Phill Box – about her company’s mission to make pharmacy packaging more sustainable. This made me think of the environmental impact and all the waste generated by the pharmacy industry.

I am very thankful to Mike and Melinda for bringing up this subject and for urging the listeners to take every step possible toward making a difference in their pharmacy, community, and the environment. I am surprised at how little is talked about the environmental crisis on the professional level where profits are being prioritized over the health of our planet that is on a verge of the environmental catastrophe. During the last state elections, I was eager to vote for those who prioritized environmental changes. But no candidate made it their number one priority. Most talked about job, safety, politics – which are all important things to address – but without healthy soil, air, water.. there would be nothing.

After the podcast, I googled “pharmacy sustainability” and most of the articles I found or policies on reducing pharmacy waste were coming from Canada or Europe. This country is still mostly silent about the elephant in the room. Climate change is the greatest threat to our health, our children’s future, and the planet. Yet, it is not prioritized in businesses, households, or in the U.S politics.

If greenhouse gas emissions rise more than 1.5C above pre-industrial levels, the planet’s ecosystem will start to collapse. (See Helmer’s article). If we do not reduce emissions by at least 40 percent by 2030 and get them to zero by 2050, we will pass that threshold in about seven years. Id.

So what could be done by the pharmacy industry?

– Choose equipment that uses energy efficient technologies (e.g. low or ultra-low GWP refrigerators)

– Reduce plastic pollution (that takes up to 1000 years to disintegrate)

– Use sustainable packaging

– Install drug take-back receptacles and remind patients to return their unused or expired medications

– Implement “green workplace” practices (less printing, recycling bins, no single use plastic in break rooms)

– Make better ordering choices. (e.g. a pharmacy can order 1 bottle of 500 tablets instead of 5 bottles of 100 tables)

– Ensure that patients do need their medications prior to refills

– Recycle certain devices and other materials (such as blister packs, while it is typically not recyclable, Terracycle has just implemented the medicine packet recycling program).

Just think of the potential impact some of these practices could make. With over 6 billion prescriptions filled each year in U.S., pharmacy environmental impact is a serious matter. While some may say that pharmacies with all regulatory compliance, audits, and low reimbursement rates simply do not have enough resources for reducing or even monitoring their environmental impact, I have to point out that most of the practices do not require much recourses (such as switching to more sustainable packaging vendors, or printing less, or ensuring patients still need their medications, etc.).

Pharmacies are heavy consumers of plastic and paper. I was surprised to find out that my county does not recycle pill bottles or other medication containers. Billions of them end up in landfills. I came across some statistics regarding pharmacy’s use of paper and the numbers are shocking. A single prescription uses the following paper products: the bag, the pamphlet, the label, the receipt. For example, in 2018, CVS used 54,500 tons of paper (See APhA’s post). How about switching to e-receipts/pamphlets and recycling stock bottles?

There is even a conference on reducing environmental impact of pharmaceutical industry – Clean Med Conference. There are also companies that specialize on greening pharmaceutical business (just google “pharmacy sustainability”) and additional resources on how pharmacies can reduce their carbon footprint:

I even found a database – Janusinfo – which categorizes each medication by their environmental hazard. Here is an example I got from running a report on Clopidogrel:

While changes towards environmental practices might not be easy for some pharmacies, it is necessary to make a difference (no matter how small it looks) and slow down or reverse climate change. But it will work only if all of us are committed to making a change.

This year the American Society for Pharmacy Law (ASPL) is organizing its annual conference in San Antonio November 2-5. To register or to check out the schedule, please go to the conference website. Some of the highlights of the conference:

  • a discussion of the impact of Rutledge v PCMA by Arkansas Lieutenant Governor Leslie Rutledge
  • an overview of pharmacy law changes presented by the Executive Director of the National Association of Boards of Pharmacy
  • a discussion of the post-Dobbs arena
  • a presentation on the 340B program compliance
  • pharmacy pricing compliance.

and many more. This is one of a very few conferences that I still attend because of the superb content and networking opportunity to meet those who shape the industry. I hope to see you there.

As many of you know, the U.S. Department of Health and Human Services (HHS) has recently recommended rescheduling marijuana from Schedule I to Schedule III under federal law.

The DEA has the final say here but a review of healthcare news shows that most commentators believe that the DEA will follow the recommendation and will start the rescheduling process, which involves a notice and comment period (so it will not happen any time soon).

What happens if marijuana is rescheduled? I haven’t considered all the implications involved until I came across an article by Harris Bicken “Marijuana as Schedule III: Woe is Me?” I encourage you to read it if you are interested in the topic as it covers such aspects as collision between state and federal laws, complicated tax and regulatory compliance, possible battles for cannabis drug development domination, etc. It is an excellent read and an eye opener on some of the issues.

Rescheduling also does not necessarily mean that doctors will be able to prescribe marijuana products. It appears that the biggest advantage of rescheduling is the ability to do research using marijuana products. Researching Schedule I drugs is virtually impossible but moving marijuana into Schedule III will open doors for many drug manufacturers, universities, and research facilities who wish to develop drugs containing cannabis.

Stay tuned.

DEA regulations require DEA registrants to notify their local Field Division Office, in writing, of any theft or significant loss of any controlled substances within one business day of discovery of such. Registrants must complete and submit to their local DEA Field Division a DEA Form 106 regarding the theft or loss.

Prior to July 24, 2023, registrants were submitting Form 106 within one business day of discovery of the theft or loss. But effective July 24, 2023, registrants have 45 days to submit the form.

An important caveat: registrants must still report the theft or significant loss within one business day of discovering it by notifying their local DEA Division Office (in writing, such as by email or fax). After providing the notice to the local DEA branch, the registrant has 45 days to properly prepare Form 106 and submit it with all supporting documentation through the DEA’s online system (DEA no longer accepts hardcopies of Form 106).

To clarify, this is a two-step process consisting of the preliminary one-day reporting and filing Form 106. For more information, please review Federal Register summarizing the final rule on reporting theft or significant loss of controlled substances.  

In addition, manufacturers and wholesalers need to perform a third step and report theft/loss to ARCOS through ARCOS Online Reporting.

I recently assisted a pharmacy in a PBM audit where we had to address unauthorized refills. The PBM was recouping a substantial amount of money because a medical assistant was signing refill authorizations. While medical assistants often sign for refills, they need do so with their supervising prescriber’s credentials.

California law defines medical assistants as persons who may be unlicensed and who perform basic administrative, clerical, and technical supportive services for a licensed prescriber. This means that they cannot prescribe and cannot authorize a refill.

The California Medical Board has the following provision explaining the role of medical assistants in the refill process:  

Can medical assistants call in refills to a pharmacy?

“Medical assistants may call in refills to a pharmacy, under the direct supervision of the physician or podiatrist. The medication refills must be exact and have no changes in the dosage levels. The refill must be documented in the patient’s chart as a standing order, patient specific. Medical assistants may not call in new prescriptions or any prescriptions that have any changes.”

In addition, most PBM pharmacy provider manuals discuss prescriber authorized refills (not prescriber’s agents). The DEA regulations also require only prescribers to authorize refills for controlled substances.

Next time when you receive a refill authorization, ensure that it is signed with the prescriber’s credentials and not by a medical assistant or an agent of the prescriber without actual authority to prescribe.

The Drug Supply Chain Security Act (“DSCSA”) was enacted in 2013 with the goal of creating an interoperable electronic system to trace certain prescription drugs as they are distributed in the United States.

The DSCSA’s requires[1]:

  • Product identification (such as a bar code)
  • Product tracing (trading partners, such as manufacturers, wholesalers, and pharmacies must trace the product from creation until dispensing)
  • Product verification (trading partners must establish a system and processes to be able to verify products)
  • Product investigation (trading partners must quarantine and promptly investigate a drug that has been identified as suspect (i.e. counterfeit, unapproved, or potentially dangerous))
  • Notification (trading partners must notify FDA if they suspect that the product is illegitimate).

The Act sets six compliance deadlines. The last one is coming up on November 27, 2023 and pertains to enhanced product tracing.

Currently, pharmacies are required to ensure that they receive 3Ts (transactional information, transactional statement, and transaction history) from their wholesalers. Starting November 27, 2023, wholesalers must provide 2Ts in an electronic format (EPCIS) with serial number of the product. Product labels will need to have:

  • serial number
  • NDC
  • Lot Number
  • Expiration date

To be able to log in to EPCIS, pharmacies must obtain a GLN (global location number).

The EPCIS will be used to track the movement of the products. Some wholesalers issued letters explaining that pharmacies with no technical capabilities to access EPCIS will be able to access 2Ts via wholesalers’ portals.

So is there anything that pharmacies need to start doing now to comply with the last stage of the DSCSA?

There are two things pharmacies can start doing now:

(1)       update their policies and procedures on how they verify legitimacy of the product received starting November 27, 2023[2] and

(2)       contact their wholesalers who should be able to assist with obtaining GLN and provide further information on how to log in into EPCIS.

Most of the wholesalers have sent letters and other notices on how they will be providing 2Ts and what assistance they will be providing to pharmacies regarding compliance with the last stage of the Act. If you need new policies and procedures addressing this upcoming change, our RxPolicy platform has templates available for download.

[1] Visit FDA’s website for more information.

[2] If you a subscriber to our RxPolicy, we will be sending the updated DSCS policy shortly.

The DEA’s administrative action against Truepill is what first prompted me to write this blog post. Initially, I thought “interesting,” but I deal with over-dispensing allegations on a daily basis, so I didn’t think of writing about it. Then I started digging into the bedrock of this case. And the Truepill case has morphed into a national issue of a new “opioid crisis,” but this time relating to overprescribing of ADHD medications. The Truepill case is much more complicated than I originally thought and has a few important lessons.

The case illustrates potential issues that pharmacies often encounter when working with telehealth companies.

Truepill was a pharmacy contracted with Cerebral, a telehealth company marketing various ADHD treatments including Adderall and its generic forms.

Cerebral connected patients with prescribers via a telehealth visit and Truepill filled the scripts if such were prescribed. The problem with this set-up was the fact that Cerebral prescribed way too many ADHD medications and potentially failed to establish proper provider-patient relationship.  According to the Department of Justice (the “DOJ”) – which is currently investigating Cerebral’s prescribing patterns – the company was marketing and pushing ADHD medications to as many people as possible to increase its revenues. Ironically, Cerebral’s own employees complained that they were forced into over-prescribing.  For example, Cerebral’s ex-employees alleged that the company had implemented a policy of growth-at-all-cost when practitioners had to prescribe stimulants to up to 30 new patients a day, based on online evaluations that lasted as little as 10 minutes.

Because Truepill was providing Cerebral’s patients with the ADHD medications, it now found itself in the midst of a DEA administrative action and may potentially lose its DEA registration. By the way, the DEA alleges that Truepill has violated the Controlled Substances Act by exceeding the 90-day supply limits and/or filling scripts written by prescribers who did not possess the proper state licensing.

Truepill is not the only one who became a target of government investigations due to improper online prescribing. During the pandemic, telehealth providers enjoyed relaxed prescribing abilities which led to increased controlled substance prescribing. Many pharmacies were targeted due to increased dispensing of controlled substances for scripts coming from telehealth prescribers.

For instance, Trilliant Analytics published data that during the pandemic, 40% of all Adderall medications were prescribed via telehealth versus 2% during the pre-pandemic times.

Due to the suspension of the Ryan Haight Act (which requires an in-person examination before a controlled substance prescription is written), many telehealth providers targeted ADHD patients with new convenient means to obtain their prescriptions via mobile apps without much effort. As a result, we are facing a new “opioid crisis” when too many people are becoming dependent on large volumes of ADHD medications.

If you would like to read more on this issue and on the start-ups that sprouted due to the relaxed requirements during the pandemic, check out The Guardian’s coverage on mental health start-ups monetizing this problem and them going down due to the increased investigations.  

The case is a good illustration of new priorities for investigations and audits.  

Several government agencies (including the DEA) expressed concerns about aggressive prescribing and marketing of ADHD medications by telehealth companies. According to the Washington Post, prescriptions for Adderall have increased by 30%.

As a result, many enforcement agencies are trying to prevent a new crisis by getting ahead of it.   And there is no better way to prevent a crisis than by increasing supervision and scrutiny.  Fearing such scrutiny, most large pharmacy chains stopped filling Adderall prescriptions coming from telehealth companies.

This, in turn, resulted in increased volume of ADHD prescriptions being sent to  independent pharmacies. As a result, they need to be ready for increased PBM audits and government investigations. To avoid adverse determinations, pharmacies should understand whom they are working with by investigating telehealth companies, questioning their prescribing practices and obtaining as much information as possible on how telehealth prescribers establish provider-patient relationship.

All this increased prescribing of the ADHD meds resulted in significant shortages for those who need them most. Last year, the DEA refused to increase manufacturing quotas for 2023, which means that we have an increased demand but our supply stayed the same. In case you want to read more on this issue, The Wall Street Journal has published an article on the DEA’s letter to the manufacturers warning of increased investigations due to “the sheer volume of ADHD medications on the market coupled with aggressive marketing practices.”  

Finally, the case reminds that if you fill too much of one type of drug, an investigation (or an audit) is almost guaranteed to happen.

Stimulants, including generic forms of Adderall, amounted to 60% of all Truepill’s controlled substance fills. Moreover, one of its wholesaler cut its controlled substances supplies to a Truepill’s pharmacy due to this unproportionate dispensing of stimulants.  Similarly, I represented too many pharmacies in PBM audits, which stemmed from dispensing high amounts of a specific type of medications (such as compounding creams, Oxycodone, weight-loss medications, etc.). If you think your pharmacy has a similar concern, run an internal report on all your dispensing and determine if a specific type of product constitutes more than 25% of your overall volume (of claims or reimbursements). See a related blog post on aberrant products.

The bottom line…

The Truepill case serves as a good reminder to monitor Adderall and other ADHD medications due to heightened scrutiny by various government agencies as well as by PBMs. In addition, if you are working with telehealth companies, pay increased attention to their prescribing practices, scrutinize each prescription, and inquire how telehealth company establishes provider-patient relationship.

By way of illustration, last year, I represented a pharmacy who had to pay a large chargeback to a PBM because allegedly the scripts from a specific telehealth company were not based on a legitimate provider-patient relationship. (The prescribers working for this telehealth company prescribed non-controlled substances based on online questionnaires). Our appeal that the pharmacy had no means to verify how the relationship was established fell on deaf ears.

Plus, we – as society – are facing a new dilemma on how to protect people who really need the ADHD medication and to prevent a potential crisis. I am concluding with The Guardian’s words:

“Cerebral may have damaged the mental health profession’s credibility by overprescribing medication. But if the DEA takes the opposite tack – restricting the supply before it understands the demand – it, too, distorts patients’ access to care.”

Navigating the 340b universe: critical developments and practice points

This year’s conference organized by the California Society for Healthcare Attorneys was a success, as always. Thank you to all who helped put together this event and make it memorable, productive, and fun. Educational sessions covered a vast array of healthcare legal issues, some examples are: current challenges faced by long term care facilities, healthcare litigation update, ethical issues that outside counsel encounters when working with inhouse legal teams, requirements of public hearings, California’s update on involuntary psychiatric holds, and many more.

I was joined by Emily Jane Cook in discussing the updates on the 340b program. Emily is a national expert on the program and was invaluable for this presentation.

The next CSHA conference will take place in Northern California (in beautiful Tahoe). Please help spread the word among your healthcare attorneys practicing in California. This is a tremendous opportunity for healthcare attorneys to learn, socialize, and share their knowledge.