“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.

Safety-net providers play a critical role in delivering healthcare services in this country. Recognizing their importance and to help them face escalating drug prices, Congress created the 340B Drug Pricing Program back in 1992. The program, however, is currently undergoing significant changes and facing serious challenges.

On one hand, the program is challenged by drug manufacturers, who argue that the program is being abused by 340B covered entities. On another, Medicare Part B recently challenged payments to 340B providers. In addition, we have multiple pending legal actions and legislation that seek to clarify and challenge the program. No wonder the attention of the healthcare community is glued to the latest developments in the 340B arena.

Medicare reimbursement cut

In 2018, CMS implemented a 28.5% reduction to payments for most drugs purchased through the 340B Program and paid under the Outpatient Prospective Payment System (“OPPS”).

Hospitals subject to the reductions sued the Department of Health and Human Services (“HHS”) in federal district court, alleging that HHS did not have the authority to reduce 340B reimbursement rates. Ultimately, the hospitals prevailed in the Supreme Court. Further litigation related to the remedies for the past payment cuts is continuing in the US District Court for the District of Columbia.

Manufacturers’ restricting use of contract pharmacies

In 2010, the HHS’s issued guidance that covered entities could use unlimited number of contract pharmacies (See 75 Fed. Reg. 10,272 (Mar. 5, 2010). As a result, the use of contract pharmacies increased twentyfold. (Sanofi Aventis U.S. LLC v. United States HHS (3d Cir. 2023) 58 F.4th 696, 700.)

Such growth of the 340B program concerned drug manufacturers who argued that it increased duplicate discounts and diversion. Starting with 2020, certain drug makers commenced implementing restrictions on the use of contract pharmacies. For example, some manufacturers refused to ship to contract pharmacies, some limited distribution to only one 340B pharmacy per covered entity, some placed geographical restriction on where such contract pharmacy could be located; some agreed to ship to contract pharmacies if covered entity provide claims data.

Due to these restrictions, in December 2020, HHS released an Advisory Opinion declaring that such restrictions violate the 340B program requirements. It also sent letters to specific manufacturers stating that their policies were unlawful and ordering the manufacturers to rescind them and reimburse covered entities for any overcharges.  

As a result, several manufacturers sued HHS to invalidate its guidance and interpretation of the 340B program.  District courts, however, issued inconsistent decisions. For example, the District of Delaware held that the HHS Advisory Opinion was arbitrary and capricious because it wrongly called Section 340B unambiguous. (Sanofi Aventis U.S. LLC v. United States HHS (3d Cir. 2023) 58 F.4th 696, 702.)

HHS, however, prevailed in the District of New Jersey. The court, relying on the 340B statute’s purpose and legislative history, held that Section 340B requires delivery to at least one contract pharmacy.
(Sanofi Aventis U.S. LLC v. United States HHS (3d Cir. 2023) 58 F.4th 696, 702.)

The parties appealed to Circuit courts and as of the day of this writing, only the Third Circuit court issued decision. It held for the drug manufacturers explaining that HHS’s efforts to enforce its interpretation of Section 340B are unlawful because the statute is silent on the issue of drug delivery.
(Sanofi Aventis U.S. LLC v. United States HHS (3d Cir. 2023) 58 F.4th 696, 699.)

Two other cases on the same issue are currently pending in the Seventh and D.C. Circuits. While unlikely that these courts interpret requirements of Section 340B differently from the Third Circuit, if they do, the case is likely to head to the U.S. Supreme Court.

New 340B ADR Rule

Under the 2010 amendment to Section 340B, HHS was required to set up the administrative dispute resolution process for drug makers and covered entities to resolve disputes pertaining to 340B program. HHS, however, did not issue a notice or proposed rule-making until 2016. Moreover, after the comment period, it seemed to abandon it. (Sanofi Aventis U.S. LLC v. United States HHS (3d Cir. 2023) 58 F.4th 696, 702.) But in 2020, HHS revived it by responding to the four-year old comments and issuing the final ADR rule. At the end of 2022, HHS introduced a new proposed rule.

In addition to the above mentioned developments, there are state and federal legislation pending impacting the 340B program. For example, on the federal level, we have the Inflation Reduction Act of 2022 that impacts the program by providing for Medicare Part B and Part D rebates.

On the state level, several states have introduces 340B non-discrimination laws prohibiting drug makers/PBM/certain payors from discriminating against 340B entities and treating them differently (such as reducing their reimbursements or refusing to deliver products to such entities).

With such an eventful 2022 and early 2023, we expect to see more developments and changes continuing into 2023 and 2024 (namely: new proposed rules, Circuit court decisions, interpretation of HRSA’s enforcement authority, and new state 340B laws). This will be an interesting topic to monitor and analyze how the new developments impact the 340B clients.

The California Court of Appeal, First Appellate District has just affirmed the holding of a trial court that Optum’s arbitration clause in its manual is unconscionable and unenforceable.

I have previously covered this case here. But in a nutshell, a group of California pharmacies brought a case against Optum alleging misrepresentation, fraud, and breach of contract. Optum filed a motion to compel arbitration (arbitration is a part of Optum’s contract with PSAOs and Optum’s pharmacy manual).

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 appealed and lost. The Court of Appeal affirmed that the arbitration provision set forth in an online manual were unconscionable  because they were a part of the document that was not signed or agreed to by the pharmacies and it established procedures that favored Optum over the pharmacies. Among such one-sided provisions were Optum’s unilateral ability to:

– change arbitration terms

– deny the pharmacies remedies that were available to Optum

– impose high arbitration costs on the pharmacies

– limit pharmacies’ ability to engage in discovery.

Click here for the Court’s decision.

The parties will be back in the trial court arguing the merits of the case. This case could be a game-changer for pharmacy reimbursements and PBM industry.

This favorable decision opens the door for other pharmacies to bring actions against Optum in court versus by arbitration. Going forward, Optum is likely to change their practices of contracting with pharmacies and is likely to revise its arbitration clause. Because the case was brought and decided in a state court of appeal, the decision is not binding on other courts, not even other state courts. Still, this decision is a persuasive authority for other courts which are likely to follow the lead.