Independent pharmacies in Pennsylvania, much like their counterparts in other states, are facing a notable increase in unannounced inspections and investigations conducted by the Pennsylvania State Board of Pharmacy (“Pennsylvania Board”). This trend reflects a broader shift toward more rigorous regulatory enforcement. Such heightened scrutiny exposes independent pharmacies to substantial legal, operational, and business risks. Disciplinary actions by the Board can have far-reaching consequences, including the potential loss of contracts with Pharmacy Benefit Managers (PBMs) and the undermining of a pharmacy’s ability to continue serving its patients over the long term. As a result, maintaining compliance with state regulations has become more critical than ever for the ongoing success and stability of independent pharmacies.
Increased Board Activity and Scrutiny
The Pennsylvania Board has significantly increased its oversight of independent pharmacies, a move that appears to be a direct response to the growing prevalence of compounding medications such as Semaglutide and Tirzepatide within the Commonwealth. In addition to this heightened scrutiny, state boards—including the Pennsylvania Board—often act on information received from external sources. For example, PBMs frequently share audit findings with the Board, sometimes accompanied by allegations of suspected fraud, waste, or abuse. Given this environment, it is crucial for pharmacies to approach all PBM audits with diligence and thoroughness, ensuring that all documentation and practices are in full compliance with regulatory standards. When responding to PBM audits, it is often in a pharmacy’s best interest to employ experienced counsel to ensure that a simple PBM audit does not spiral into something far more serious.
From Inspection to Disciplinary Action
Routine inspections may swiftly escalate if instances of non-compliance are identified. Such findings can lead to a range of consequences, including warnings, formal notices, or more severe disciplinary actions such as fines, probation, or suspension of licensure. Importantly, all disciplinary actions are reportable and become part of the public record, which PBMs monitor closely. In addition, most PBM contracts mandate the prompt disclosure of any regulatory action and the failure to report these actions in a timely manner can constitute a breach of a PBM contract and may trigger additional investigations or penalties. In fact, some PBMs may require disclosure even prior to any disciplinary action formally occurring, so long as the pharmacy is aware of the risk of potential adverse action.
Business Impact of Regulatory Issues
PBMs are placing greater emphasis on state Board actions when determining a pharmacy’s eligibility for network participation. If a pharmacy’s license, or even an employee’s license, is suspended or placed on probation, it can result in immediate removal or denial from major PBM networks. Furthermore, many PBMs have cross-termination policies, meaning that termination by one PBM of a pharmacy can automatically lead to termination by the same PBM of other commonly-owned pharmacies. This cascading effect can cause a significant and sudden decline in prescription volume, making it extremely challenging for the pharmacy to regain access to these networks. In addition, some PBMs require the disclosure of termination from any other payor. Ultimately, these consequences can jeopardize the continued operation and financial viability of the pharmacy.
Compliance is Essential
Compliance with the law is essential for business survival. Key steps include:
- Keeping all licenses, inventories, and documentation current and accurate.
- Adhering to compounding and tele-pharmacy standards.
- Conducting regular internal reviews and staff training.
- Ensuring staff understand their legal roles and limitations.
- Monitoring for training gaps or administrative errors.
- Prioritize ongoing education and vigilance within your organization.
How Frier Levitt Can Help Pharmacies with Board of Pharmacy Issues
Frier Levitt provides comprehensive legal representation to pharmacies across the country in matters involving Board of Pharmacy actions, as well as the management of such actions in relation to its PBM relationships. We are dedicated to protecting the rights of pharmacies and guiding them through regulatory challenges, disciplinary proceedings, and audit responses. If your pharmacy is dealing with an investigation, disciplinary action, or inspection by a Board of Pharmacy or PBM, Frier Levitt’s experienced attorneys are available to provide informed guidance and effective advocacy. Contact us today.
