Cerebral, Inc., a telehealth startup offering virtual treatment for multiple mental health conditions including anxiety, depression, insomnia, and attention-deficit/hyperactivity disorder (“ADHD”), is currently facing several legal proceedings stemming from the company’s controlled substance prescribing practices. The issues are not unique to Cerebral, however, and serve as a potential sign of things to come as both federal and state governments continue rescinding Covid-19 waivers that loosened regulations surrounding telehealth and the prescribing of controlled substances.
On May 4, 2022, the United States Department of Justice (“DOJ”) probed an investigation into Cerebral due to potential violations of the Controlled Substances Act and issued a grand jury subpoena from the U.S. attorney’s office for the Eastern District of New York. According to news outlets, in the subpoena, the DOJ demanded that Cerebral produce documents related to its providers’ prescribing of controlled substances, including ADHD medications like Adderall. The subpoena follows a March 2022 report by the Wall Street Journal in which Cerebral’s nurse practitioners complained of feeling “pressured” to prescribe Adderall and other ADHD drugs. Specifically, the nurses cited the telehealth company’s 30-minute telehealth sessions as insufficient to adequately assess a patient’s need for stimulants and diagnose ADHD.
In response to the subpoena, Cerebral executives implemented a company-wide policy immediately ceasing the prescribing of stimulants to treat ADHD in new patients. However, the company intended to continue prescribing controlled substances to treat other mental health conditions as well as continue treating existing ADHD patients with stimulant drugs. Notwithstanding these adjustments, Cerebral’s pivot in prescribing practices was insufficient to ease the concerns of major pharmacy chains like CVS and Walgreens, as both companies stated that by the end of May, the pharmacy giants would no longer accept prescriptions for controlled substances issued through Cerebral and similarly structured telehealth companies. Even Cerebral’s preferred pharmacy partner, Trupill, Inc., has ceased filling Cerebral’s controlled substance prescriptions.
Additionally, on June 15, 2022, the Federal Trade Commission (“FTC”) announced an active investigation into Cerebral. According to the FTC, the purpose of the investigation is to determine whether Cerebral engaged in deceptive advertising or marketing practices. Specifically, the FTC will examine Cerebral’s subscription billing and cancellation process following complaints from several patients who claim they had trouble closing their accounts with Cerebral and receiving refunds for services.
Cerebral launched in January 2020 and grew rapidly, in large part due to federal and state waivers of certain telehealth and prescribing regulations due to the public health emergency. Critically, the waivers, which were enacted in response to the Covid-19 pandemic, loosened regulations that required prescriptions for controlled substances to be predicated on an in-person evaluation of the patient. As a result, beginning in March 2020 and continuing throughout the public health emergency, providers rendering care through telehealth companies like Cerebral were granted authority from the United States Drug Enforcement Agency (“DEA”) to prescribe schedule II – V controlled substances based solely on a virtual health encounter conducted in compliance with state law.
Following the DEA’s issuance of the federal waiver, numerous states followed suit and implemented similar waivers. However, the expiration of federal and state waivers is looming as the public health emergency comes to an end. Accordingly, all relevant parties, such as companies like Cerebral, telehealth providers, companies engineering telehealth platforms and models, and pharmacies filling prescriptions for controlled substances from telehealth providers must be aware of the risks they face with respect to controlled substances and implement a contingency plan for when the remaining waivers are lifted.
Preparing for expiration of federal and state Covid-19 waivers is especially critical in light of the fact that state laws surrounding controlled substance prescribing and telehealth are often vague and subject to DEA interpretation. For example, New York state regulations state that “[n]o controlled substance prescription shall be issued prior to the examination of the patient by the practitioner…”[1] Of note, the regulation does not define what constitutes an “examination,” leaving room for interpretation as to whether an in-person evaluation is required. Similarly, Texas regulations state that a prescription for controlled substances to treat chronic pain, cannot be issued via telemedicine.[2] However, Texas law appears silent as to whether controlled substances may be prescribed virtually to treat other conditions. As a result of these ambiguities, Frier Levitt is aware of multiple instances in which the DEA has denied out of state registration to providers based upon its broad interpretation of state laws and DEA’s requirement that controlled substances be prescribed via telehealth only in compliance with state law.
Given the government’s interest in Cerebral and its prescribing practices and overall business model, parties involved in the prescribing and filling of telehealth-issued controlled substance prescriptions must be cognizant of the waning Covid-19 waivers and relevant state laws in order to avoid backlash. As detailed above, state laws can be ambiguous and present additional challenges for telehealth providers. Therefore, if they have not done so already, telehealth providers issuing controlled substance prescriptions must begin developing and implementing contingency plans to ensure their provision of care complies with applicable laws and regulations.
How Frier Levitt Can Help
Laws and rules related to the delivery of healthcare services via telehealth are rapidly evolving. The Covid-19 pandemic has presented unique and difficult challenges, and frequent updates and changes increase the burden on providers to stay apprised of what they can and cannot do. Frier Levitt attorneys are experienced in advising the full spectrum of telehealth stakeholders. If you or your company needs guidance navigating recent and pending changes to telehealth regulations, contact us to speak to an attorney.
[1] 10 NYCRR 80.63(d)(1).
[2] 22 TAC §174.5(a).
