Pharmacy practice:

  • New compounding rules: While USP 800 does not go into effect until July 2018, the California State Board of Pharmacy imposed its own requirements for the handling and compounding of hazardous drugs. It did not adopt USP 800 in its entirety and enacted some unique provisions, for example requiring that:

  • all CPEC be vented outside;

  • all hazardous agents be properly labeled;

  • a pharmacy must maintain specific policies and procedures on appropriate cleaning of facilities and equipment to prevent cross-contamination.

Difference between Cal. Hazardous Drug regulations and USP 800. 

            Practice point: many pharmacies stopped compounding using hazardous ingredients – including hormones and anti-neoplastic –  while some substantially remodeled pharmacy facilities to comply with proper ventilation and separate room requirements imposed by the Board.  List of Hazardous Drugs. Some pharmacies were able to obtain a waiver from the Board of Pharmacy.

  • Controlled substance prescriptions: In 2017, the California Board of Pharmacy started issuing citations to the pharmacies who dispense controls based on prescriptions missing refill checkboxes or have “_” instead of checkboxes. It is a common practice for prescribers to circle the number of refills, therefore the Board may potentially go after every single pharmacy in the state.

Practice point: California law (Health & Safety Code § 11162.1) states: “Check boxes shall be printed on the form so that the prescriber may indicate the number of refills ordered.” It is unclear why the Board decided to pick on this clerical issue this year but an argument could be made that the purpose of the statute is accomplished no matter whether there is a checkbox, a circle, or a check-line on the refill section of the prescription. Nevertheless, pharmacies should request that prescribers modify their prescription blanks.

Medi-Cal program:

  • L.A. county moratorium: This year the Department of Health Care Services (DHCS) renewed the moratorium on pharmacies located in L.A. county and made it even more difficult for independent pharmacies to serve Medi-Cal beneficiaries located in L.A. county. Exceptions are made for pharmacies with 20 or more service locations, where access to care issue exists, or if there is a change in location.

      Practice point: The moratorium will cause additional problems in 2018, as under the Cures Act (going into effect in January 2018) all PBMs must assure that pharmacies serving Medi-Cal managed care plans must also be enrolled into Medi-Cal fee-for-service. The renewed moratorium effectively precludes hundreds of independent pharmacies from serving Medi-Cal beneficiaries – both fee-for-service and managed care – who comprise a large bulk of business for many pharmacies in L.A. county.

PBM Issues:

  • Shrinking formularies: As plans put more and more pressure on PBMs to reduce cost of prescriptions drugs, many PBMs eliminated expensive and compounded drugs from their formularies in 2017. See a blog post on this issue. 

  • Oversight: several states enacted or proposed legislature in 2017 to provide more oversight over PBM conduct in their state, addressing pricing, contracting and auditing pharmacies. For example, California introduced AB 315 that would require PBMs to be licensed by the State Board of Pharmacy and to demonstrate transparency by revealing information about cost of drugs and fees earned. The bill is currently under revision and the latest version has amended the requirement of licensing by the Board of Pharmacy to registration by the Department of Managed Care to register PBMs. Current version of the Bill. See a related blog: “States continue enacting laws to increase oversight over PBMs:

DEA Enforcement – Practical Considerations:

In 2017, we have seen the increased enforcement in the DEA audits and enforcement actions. See a related blog post: “DEA’s Investigations of pharmacies and wholesalers have increased.” 

Recent DEA audits showed that many pharmacies do not properly comply with federal regulations on record-keeping causing fines or/and administrative actions. Here are some of the areas which you need to review:

  • Improperly performed inventories. It’s common for pharmacy inventory to omit the following regulatory requirements:

  • Time of the date the inventory was taken (beginning or end of the business day);

  • Finished form of the substance (e.g., 10-milligram tablet or 10-milligram concentration per fluid ounce or milliliter);

  • Number of units or volume of each finished form in each commercial container (e.g., 100-tablet bottle or 3-milliliter vial)

  • Records of receipt and dispensing.

    • Dispensing records must state number of units dispensed, name and address of the person to whom it was dispensed, the date of dispensing, the name or initials of the individual who dispensed or administered the substance. Very often, pharmacy records omit patients’ addresses or/and the DEA number of the prescriber (or state incorrect number).

    • Invoices and ordering records (such as 222s) must be properly prepared and have the information on the supplier, date of receipt, number of containers.

  • Power of attorney. All ordering personnel must properly execute a power of attorney with the registrant. Often, the power of attorney is not dated, not coming from the registrant or missing altogether. And if a power of attorney is not properly executed, the controls were illegally ordered.

  • Physical controls. Schedule II must be locked and Schedules III-V do not have to be locked but assure that they are separated from the rest of the inventory in some high-visibility place (not at the back of the storage or by the bathroom or a locker room). The keys to the controls should be in the possession of the pharmacist at all times.

  • Employee screening. Per federal regulations, pharmacy shall not employ anyone who has access to controls, if such person has been convicted of a felony relating to controls or whose application with the DEA had been denied, revoked, or surrendered for cause. Pharmacy should run state, county, and federal background checks on all the employees with access to controls.

  • Reporting theft/loss. Pharmacy must report any theft or substantial loss of controls within one day of the discovery by filing Form-106. If not filed timely, the DEA may visit the pharmacy to investigate the delay. It is common to delay filing 106 while the investigation is pending. However, the DEA requires that the registrant files the form first and then performs the investigation. If it is determined that there was no loss, the report may be withdrawn or amended.

See a related blog post: “Overprescribing and Overdispensing of Controlled Substances Continue to be a Priority in Investigations of Healthcare Providers.”

Other Federal Enforcement Actions:

Federal fraud investigations increased in 2017 with smaller pharmacies located in so-called “heat zones” being the primary target. California has only one heat zone – L.A. county – where many independent pharmacies were investigated, audited, and inspected in 2017 by various federal agencies, such as the FBI and the Department of Health and Human Services. This trend will continue into 2018. It is advisable that all pharmacies located in L.A. county perform internal audits to identify possible violations or red flags before the government does so.

See Medicare and Medicaid Fraud Prevention.