With changes in reimbursement structures for compound medications, and with increasing scrutiny from pharmacy benefit managers, pharmacies’ relationships with marketing representatives has undergone some recent transitions. One of the principal results of these changes is a sharp rise in disputes and litigations between pharmacies and marketing representatives. Whether they are W-2 employees or 1099 independent contractors, there are several important and critical legal issues that pharmacies must be aware of and prepared for in dealing with these types of lawsuits.
Often times, these types of disputes arise when there is a perceived discrepancy between what the marketing has been paid, and the monies or commissions that the representative believes they are owed. This can often be the result of payor audits or payment suspensions, affecting the pharmacy’s cash flow or resulting in a potential clawback of previously paid out commissions. Either way, pharmacies need to be prepared to deal with the dispute as it progresses, and aware of the nuanced and delicate issues that must be navigated been dealing with these representatives.
When litigating with marketing representatives, there are or several unique issues that can present themselves. For example, pharmacies need to be concerned with the nature of the relationship with the marketer (1099 vs. W-2), and the impact on compliance with State or Federal law. This would also include analysis of the types of claims on which the marketer was compensated (e.g., Tricare, Medicare, etc.). If not handled correctly from the outset, these disputes have the potential of creating more legal and regulatory exposure to the pharmacy, particularly of some of these issues are not carefully contained. Additionally, pharmacies must be mindful of potential HIPAA or HITECH implications with these types of disputes, particularly if the marketer handled PHI. Importantly, it is critical that pharmacies in these situations are aware of the many unique issues involved in this context and react appropriately.
To that end, it is important for pharmacies to have the right attorney, not just the “convenient” attorney. While any attorney can do general commercial litigation, these types of suits are not general commercial litigation – they involve complex healthcare litigation, and require counsel with detailed knowledge and experience in healthcare law.
Frier Levitt is actively involved in representing dozens of pharmacies across the country in lawsuits and arbitrations involving marketing representatives. We have represented pharmacies across the country in many different litigation matters, including national class actions. While our attorneys are licensed in seven States, we routinely become admitted “pro hac vice” in courts across the country, and can work with local counsel to assist pharmacies through these complex litigations. If you are experiencing disputes with your marketing representatives, we would urge you to contact us today, because the way in which these matters are handled from the outset can impact not only the outcome of the case, but may also lead to broader legal and regulatory ramifications. Simply put, the choice of litigation strategy in these cases requires nuanced understanding of the complex regulatory backdrop, and any legal strategy must be delicately reconciled with experienced regulatory counsel to avoid positions that could hurt the pharmacy.
