Growing Trend in Board of Pharmacy Disciplinary Actions Related to Insurers Being Overbilled Due to Inventory Shortfalls

In recent years we have seen an increase in Board of Pharmacy investigations and complaints tied to inventory maintenance, and more specifically, inventory shortfalls between what the pharmacy has purchased from their wholesalers, and what has been billed to PBMs and insurance companies. In these proceedings, Boards of Pharmacy have sought to impose discipline – including suspension, revocation and monetary fines – where it is determined that the pharmacy billed a PBM more for a particular drug than what it had purchased from its wholesalers.  Boards of Pharmacy have alleged that these actions (while primarily tied to insurance billing) amount to failure to maintain complete accountability of drug inventories, incompetence or gross negligence in pharmacy practice, and dishonest, fraudulent, or deceitful acts in pharmacy practice.  Fines have included not only the costs of the investigation and enforcement proceedings, but also penalties that approach the value of the overbilled medications.  The California Board of Pharmacy has been particularly aggress in instituting these types of disciplinary proceeding when an inventory shortfall is discovered.

More concerning, however, is the fact that PBMs are increasingly reporting pharmacies to Boards of Pharmacy when discrepancies are uncovered in the course of an audit.  This has the effect of compounding a pharmacy’s problems, not only risking audit recoupment and termination in the event of audit findings, but also discipline from the Board of Pharmacy. 

It is important for pharmacies faced with purchase history audits or Board of Pharmacy complaints to take them seriously, and to ensure they are leveraging all available defenses.  Many times, pharmacies may source product from other sources beyond their typical wholesale supplier (such as purchases from another licensed pharmacy).  It is important that pharmacies take regular inventories of products that are acquired from all sources, and maintain adequate documentation substantiating all purchases, including invoices and proof of payment.  Finally, it is important that pharmacies have a robust policy and practice around reversing claims that are not picked up by patients.

How Frier Levitt Can Help

If your pharmacy has received a purchase history audit or is facing a Board of Pharmacy complaint related to inventory shortfalls, contact Frier Levitt today.  We have handled countless PBM audits and Board of Pharmacy proceedings, and can ensure you are raising your available defenses.

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