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

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

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

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

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


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


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


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

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

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

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

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

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

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



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

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

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

  1. Drug acquisition from an unlicensed supplier

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

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

3.     Staffing Ratio of Pharmacists to Intern Pharmacists and Technicians

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

4.     Remote Processing

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

The waiver provides that:

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

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

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

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

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

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

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

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

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

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

Many prescribers’ offices are closed due to the coronavirus outbreak, leaving many pharmacies unable to obtain fill authorizations for patients.

Under California law, pharmacies may refill prescriptions without prescriber authorization if:


  • the prescriber is unavailable to authorize the refill;
  • in the pharmacist’s professional judgment, failure to refill the prescription might interrupt the patient’s ongoing care and have a significant adverse effect on the patient’s well-being.

Under Cal. Bus. & Prof. Code 4064, when dispensing under the above circumstances, the pharmacist must

  • inform the patient that the prescription was refilled pursuant to emergency-fill regulations;
  • inform the prescriber within a reasonable period of time of any refills dispensed pursuant to this section;
  • make every reasonable effort to contact the prescriber and document the attempts to contact the prescriber’s office.

In case of a follow-up audit or an inspection, documentation would be essential in showing that the pharmacy complied with California law in dispensing medications without obtaining prescriber’s authorization (especially in cases of controlled substances). Therefore, pharmacies are advised to make a note in the patient profile that the drug was dispensed per Cal. Bus. & Prof. Code 4064 and “The drug is essential to sustain the life of the patient or continue therapy for a chronic condition of the patient” or “Failure to dispense or sell the drug to the patient could result in harm to the health of the patient.”

Emergency dispensing of controlled substances (Schedule III – V) is usually limited to 72-hour supply or up to a thirty-day supply for a non-controlled dangerous drug.

California Law also provides that a “pharmacist may in good faith furnish a reasonable supply of dangerous drugs/devices to patients in emergency conditions without a prescription.” (Bus. & Prof. Code 4062 and Health & Safety Code 11167).

The Board of Pharmacy has issued a guidance on dispensing without prescription, recognizing that during emergencies or disasters, patients might not be able to produce prescription documents and it might be impossible to contact a prescriber. “To enable these patients to obtain medications needed to prevent the loss of life, intense suffering or interruption in therapy, the board advises pharmacists to exercise their professional judgment on whether to provide a reasonable quantity of medications to prevent untoward symptoms resulting from a lapse in therapy. To establish the legitimacy and accuracy of the requested medications, the pharmacist may want to consider the following:

  • Is the original prescription container(s) available?
  • Does the patient have any written prescriptions with him or her?
  • Can a prescriber with knowledge about the patient be reached?
  • Can the dispensing pharmacy be contacted? Other options to assist the patient can include a referral to an urgent care center for evaluation and new prescriptions, or to the local county emergency medical services center for a listing of available medical services in the area.”

When dispensing medications in an emergency situation, records must be maintained that include the name of the patient, the patient’s local address, the name of the prescriber, and the name, strength, dose, directions, and quantity of the medication(s) and dangerous devices dispensed and the date dispensed.

Take care and stay healthy!



We are very excited to announce a launching of a website for pharmacy compliance: RxPolicy. It assists pharmacies with ever-growing compliance requirements. Pharmacies can download the pharmacy operational manual in full with automatic yearly updates or can just pick one policy. Policies will be updated on a yearly basis and new policies and documents to be added to comply with new requirements. At the moment, we are covering only California and federal/PBM requirements but we are expanding into other states. California policies – which are sent to pharmacies in Word via a downloadable link – could be used as templates for pharmacies located in other states (policies must be edited to reflect different states’ requirements).

The idea to create a compliance platform arose when we had too many requests from clients to provide compliance documents required by new PBM manuals (such as a cultural competency training or PA agreements). Such documents are usually not a part of the pharmacy manual. There are other platforms providing compliance documents. Most of them, however, require yearly subscriptions and do not allow pharmacies to purchase only one policy. So we saw a need for a platform where pharmacies can obtain and customize various policies and documents. Each purchase comes with a 15-minute consultation to discuss customization.

Besides policies and procedures, additional documents are available from RxPolicy, such as prior authorization agreements, Board of Pharmacy inspection checklists, cultural competency training, and others. If you do not see what you are looking for, we want to hear from you.





In 2016, CMS published its Final Rule regarding Medicaid drug reimbursements for covered outpatient drugs. Under the Rule, each state Medicaid agency was required to adopt an actual acquisition cost (AAC) methodology for outpatient prescription drug reimbursement. To satisfy this requirement, California adopted CMS’s National Average Drug Acquisition Cost (NADAC) as the basis for AAC for drug ingredient reimbursement.

Per the Final Rule, the new reimbursement methodology became effective on April 1, 2017. California, however, did not update its claims processing system until much later (February 2019). As a result, the Department of Health Care Services (DHCS) plans to make retroactive adjustments (a.k.a. chargebacks) for impacted claims with dates of service from April 1, 2017 through the implementation date.

The implementation date, however, keeps changing. Originally, the DHCS announced the chargebacks in February 2019. But in May 2019, California pharmacies filed a lawsuit against the DHCS alleging irreparable harm to pharmacies and “a looming public health crisis” due to this new reimbursement methodology. Pending a hearing on the pharmacies’ injunction, the DHCS agreed to postpone the implementation of the chargebacks.

In October 2019, however, the DHCS informed California pharmacies of soon-to-be implemented chargebacks. As of today, the DHCS has not commenced the chargebacks. The California Pharmacists Association representing pharmacies in the underlying legal action recently announced that the DHCS is scheduled to resume the chargeback on February 13, 2020.  It is unclear whether the DHCS will further delay the recoupment.

Do you purchase test strips from suppliers authorized by manufacturers to distribute these products? If not, you may face significant chargebacks and contractual termination when PBMs audit your pharmacy’s test strips invoices.

Virtually all PBM  require test strips to be purchased from the suppliers expressly authorized by manufacturers to distribute their products. Most PBM manuals also provide that when “the supplier is not recognized by the manufacturer as an authorized wholesaler of its DME products, including but not limited to diabetic supplier, testing strips, lancets, and glucometers, the supplier’s invoices will be rejected.” Therefore, if PBMs reject such invoices, they find drug shortages, which justifies immediate contractual termination. PBMs argue that such purchases raise well-founded concerns that the pharmacy bought products at deeply discounted prices on the gray market without the proper chain of custody while billing PBMs as for authentic products. Usually PBMs do not accept any documentation on the chain of custody of such test strips and any arguments that the test strips were purchases in compliance with all state and federal laws are fruitless.

The New York Times described the black market for test strips in its article “The Strange Marketplace for Diabetic Test Strips.” According to the article, a test strip is a lucrative commodity with highly manipulated prices. Many entrepreneurial suppliers purchase strips from insured patients who have unused strips and resell them to uninsured patients. But, as the article explains, the biggest profits come from returning strips to pharmacies, which sell them as new and bill the patient’s insurance the full price.

Some states have addressed this issue by enacting legislature mandating pharmacies to purchase test strips only from an authorized list of distributors. California is one of such states. AB 602 – signed into law on July 31, 2017 – classifies any purchases of test strips from unauthorized supplies as unprofessional conduct for which the California State Board of Pharmacy may start a disciplinary action. The law also authorizes a Board inspector to embargo nonprescription diabetes test devices that were not purchased directly from an authorized distributor or manufacturer.

So, who is an “authorized distributor”? It is a supplier expressly authorized by the manufacturers to distribute test strips. Manufacturers usually list such suppliers on their websites.  Some states also publish lists of authorized test strips distributors. In California, such list could be found on the Board of Pharmacy’s website.

Despite PBMs policies, state laws, and Boards guidance, many wholesalers continue to sell test strips without being accepted as authorized wholesalers by manufacturers. To avoid significant recoupments, contractual terminations, and Board of Pharmacy administrative actions, pharmacies must ensure that all test strips are purchased from the authorized suppliers by verifying this information on the manufacturers’ or Board of Pharmacy’s websites.





Many pharmacies ask if they need to notify PBMs of a disciplinary action and if so, when? Many fear that PBMs may terminate their contracts with the pharmacy. As a result, only some end up providing notices, while some are terminated for failure to provide a timely notice of a disciplinary action.

If we look at PBM agreements and manuals, virtually all of them require a notice of a disciplinary action. Some even require a notice of any audit or investigation that may potentially lead to a disciplinary action. Most PBM manuals require immediate notice, while some require a notice within 5-14 days.

So what happens if a pharmacy does not notify PBM in fear of being terminated? After all, most manuals provide that PBM may terminate the pharmacy if in PBM’s judgement it “may jeopardize the health of the members.” And a disciplinary action implies that the pharmacy engages or has engaged in some sort of wrongdoing. Therefore, it makes sense to keep quiet.

A disciplinary action usually becomes apparent during a re-credentialing process (most PBMs perform them on a 12-36 month cycle). During re-credentialing, the pharmacy must answer  questions regarding any disciplinary action. It will have to disclose such or deny. If the pharmacy discloses it, the PBM may terminate the pharmacy for breach of contract for failure to promptly notify the PBM (because the notice was not provided at the time the Accusation was filed).

On the other hand, if the pharmacy wrongly denies it, the PBM is likely to obtain this information through its own investigation. (PBMs must validate the credentials of pharmacies to ensure they are in good standing with state and federal laws and meet quality performance standards.) Therefore, if the pharmacy misrepresented any information on its re-credentialing application, the PBM is very likely to terminate the contract with the pharmacy and it will be difficult to get reinstated any time in the future.

This is why, notifying PBMs  is recommended. But when should a pharmacy notify PBMs? When the Accusation is filed or when the disciplinary action is finalized? The answer will depend on the contractual language. Most PBMs provide that the pharmacy must “immediately notify … if any disciplinary action has been taken against the pharmacy.” A disciplinary action arguably begins when the Accusation is filed (some PBMs have argued that it starts with the Board of Pharmacy’s inspection if any alleged violations were discovered).

Some manuals, however, require a notice when the pharmacy “receives notice of any proceedings related to Pharmacy Services that may lead to disciplinary action.” This requirement is too broad and unclear. Any Board of Pharmacy inspection may lead to a disciplinary action. Does it mean that the pharmacy must provide a notice to the PBM as soon as it is inspected by the Board? Not likely, as it would lead to a notice each time the pharmacy is inspected. I doubt that PBMs want to be notified of every inspection. Therefore, a notice when an Accusation is filed or when a settlement is reached is a right time to provide a notice (depending on the exact requirements of each PBM).

However, be careful in how you provide notice. I recommend that your legal counsel write a letter describing the Board’s allegations and mitigating evidence. If you provide a notice after a settlement has been reached, explain that the settlement was entered solely for financial considerations and does not constitute an admission of any quilt.

The main take-away point: make sure you understand your PBM contracts.  If you had a disciplinary action taken against your pharmacy, review all the contracts to determine the notice requirements.

As prescription drug spending continues to increase, governments continue to scrutinize arrangements between pharmaceutical companies, healthcare providers, assistance programs, and patients. For example, recently, two non-profit foundations – Chronic Disease Fund, Inc. (“CDF”) and Patient Access Network Foundation (“PANF”) – have agreed to pay $2 million and $4 million, respectively, to resolve allegations that they violated the False Claims Act by enabling pharmaceutical companies to pay kickbacks to Medicare patients taking their drugs.

The press release issued by the Department of Justice describes government allegations that CDF and PANF “worked with various pharmaceutical companies to design and operate certain funds that funneled money from the companies to patients taking the specific drugs the companies sold. These schemes enabled the pharmaceutical companies to ensure that Medicare patients did not consider the high costs that the companies charged for their drugs. The schemes also minimized the possibility that the companies’ money would go to patients taking competing drugs made by other companies.”

The Department of Justice further explains that CDF and PANF functioned not as independent charities, but as “pass-throughs” for specific pharmaceutical companies to pay kickbacks to Medicare patients taking their drugs. As a result, in additional to paying monetary penalties, the two companies entered into a three-year Integrity Agreement with the federal government.

Based on this enforcement action and previous advisory opinions, pharmaceutical patient assistance programs should not (1) provide manufacturers with the internal information, such as drug utilization; (2) funnel manufacturers’ contributions exclusively to assist with the purchase of their own product (contributions should be evenly spread out). Further guidance on pharmaceutical assistance programs. 

A recent report released by California health officials revealed that drug prices are still on the rise – even despite California’s drug-price transparency laws aimed at curbing drug cost.

In 2017, California passed a drug-price transparency law that requires manufacturers to notify its customers at least 60 days in advance if they plan to increase a drug price by more than 16% in a two-year period. The law also requires manufacturers to provide a report describing reasons for drug price increases. Because of the law, several manufacturers announced plans to postpone or rescind previously planned price hikes.

However, the report showed that since the passage of the law, pharmaceutical companies raised the wholesale acquisition cost (WAC) of their drugs by a median of 25.8%.

Generic drugs saw the largest price increase of about 40%. By comparison, the annual inflation rate during the period was 2%.

Some drugs saw the sharpest increase. For example, Prozac’s price was increased from $9 to $69 (just in the first quarter of 2019, an increase of 667%). Guanfacine rose more than 200% in the first quarter of 2019 (its manufacturer cited costs and “market conditions” as reasons for the price hike).

Other states with similar drug-price transparency laws experience the same increases despite the efforts and oversight of the manufacturers. As a result, many states consider alternative measures to contain drug price hikes. For example, California has passed a law allowing it to manage and negotiate drug prices for Medi-Cal managed-care plans. Drug benefit will be carved out of the Medi-Cal managed care plans and be directly administered under the fee-for-service model.

Another example, Nevada fined several manufacturers for failing to comply with the state’s transparency law requiring detailed disclosure of financial and pricing information.

On the federal level, the Senate is currently considering several proposals to contain drug cost.  One approach is to negotiate Medicare drug prices for approximately 250 brand drugs directly with the manufacturers. Another approach in to set a maximum out-of-pocket cost for Medicare patients and penalize drug companies if prices rise faster than inflation.