In the wake of the national opioid crisis, a number of industry stakeholders – ranging from drug manufacturers, to wholesale distributors, to pharmacies – have entered into a multitude of settlement agreements with state and local governments, patients, and others that has dramatically altered the distribution process for controlled substances. Now, stakeholders are obligated to adopt detailed new compliance programs to limit the sale of such products. As a result of the terms of these settlement agreements, many manufacturers and distributors have implemented secret “limits” to stop suspicious controlled substance ordering, which has forced some legitimate patients to scramble to have their controlled substance prescriptions filled at pharmacies. Without prior warning or notice, pharmacies throughout the country are increasingly being notified by their wholesaler or buying group that they can no longer purchase controlled substances. This occurs when leading controlled substance manufacturers notify wholesalers that they are no longer processing chargebacks from sales to that particular pharmacy. Pharmacies are then instructed to reach out directly to the controlled substance manufacturer to inquire as to both the reason for the restriction and to find out what needs to be done to reinstate chargebacks.
Pharmacies have a duty to evaluate controlled substance prescriptions and conduct a “corresponding responsibility” or “red flag” analysis before dispensing. Pharmacy transaction data for controlled substances are logged into the Drug Enforcement Administration’s (DEA’s) Automation of Reports and Consolidated Orders System (ARCOS), which tracks the controlled substance[1]supply chain resulting in a “closed” distribution system. Registrants must develop and monitor suspicious order monitoring systems. One point of monitoring is the chargeback reports.
What Is a “Chargeback Report”?
Manufacturers give rebates to wholesalers on list prices based on a wholesaler’s transaction level information on their downstream sales (e.g., sales to pharmacies) – the so-called “chargeback data.” With this data, manufacturers track and flag suspicious sales (based on unusual size, frequency or patterns) to the pharmacy level. Not only are these suspicious sales reported to the DEA, but increasingly pharmacies are being cut off from further ordering by the wholesaler. Once a pharmacy becomes subject to a Controlled Substance Chargeback Purchase Restriction, it can result in months of disruptions in patient care where controlled substance prescriptions need to be transferred to another pharmacy rapidly and patients with legitimate needs go without their medication. While pharmacy-to-pharmacy transfers of e-prescribed Schedule II-V prescriptions are permitted by the DEA and most states, in some cases, the patient must initiate the transfer request and may need to go back to the prescriber to initiate the request. The patient must be informed that the prescription cannot be filled and patients can have the prescription transferred to the pharmacy of their choice.
Process for Pharmacies to Remove Chargeback Purchase Restrictions
The process for possible removal of the restriction to order controlled substances involves a drill down of the pharmacy’s ordering by a third party and a satisfactory explanation for the ordering of unusual size, frequency or pattern. As an example, in some cases, the drug was on the FDA shortage list and unavailable from the wholesaler, and when available the pharmacy ordered a large quantity to stock up so as not to run out. A Controlled Substance Compliance Report based on the pharmacy’s purchasing and dispensing data over at least a ninety (90) day period must also be prepared and presented to the manufacturer’s Compliance Committee for review. Additionally, follow-up questions from the manufacturer must be addressed. Then, only if the manufacturer decides to remove the restriction, can the pharmacy apply for reinstatement of controlled substance purchasing with their wholesaler or buying group. This may further involve a due diligence inspection by the wholesaler. Of note, this is a multiple step process which pharmacies should not undertake without legal counsel. To avoid lengthy disruptions in patient care, seek legal help when you receive notice of restriction to purchase from your wholesaler.
How Frier Levitt Can Help:
Frier Levitt has successfully conducted third party compliance/regulatory reviews of a pharmacy’s controlled substance ordering, dispensing, and monitoring processes, resulting in Pharmacy reinstatement. We also work together with consultants to prepare concise chargeback restriction reversal requests and follow through the process through pharmacy wholesaler reinstatement. In light of the recent upsurge in controlled substance chargeback purchase restrictions, increased due diligence is required when ordering and dispensing controlled substance prescriptions. Contact us to discuss your specific needs.
[1] Federal Controlled Substance Act (CSA) 21USC δ 801 et seq and implementing regulations 21 CFR δ 1300 et seq.
