Pharmacy Alert: PBM Cautions When Entering into Hub Arrangements

Last month, several pharmacies participating in a major PBM’s networks received notices about their Hub relationships. Pharmacies were reminded of their inability to enter into Hub arrangements without prior consent from the PBM and were directed to reverse any claim submitted to the PBM related to a particular drug product for which prescriptions were likely obtained as a result of the pharmacies’ Hub arrangement.

It is important that pharmacies have any existing relationships with Hubs reviewed closely and seek guidance from experienced legal counsel before entering any arrangements. In addition, pharmacies should be aware of PBM limitations on such arrangements with Hubs to ensure that they maintain compliance with the PBM’s terms and conditions to avoid any potential recoveries or further action from the PBM.

For example, several PBMs will expressly limit a contract pharmacy’s delegation of responsibilities, including prescription intake, processing any claims on behalf of the pharmacy, and even collecting copayments from patients, unless the pharmacy obtains prior consent from the PBM. In actuality, while PBMs suggest that delegation of particular responsibilities would be permissible if the pharmacy obtains consent, PBMs rarely provide pharmacies with such permission.

Pharmacy providers are encouraged to proceed with caution based on the potential contractual risks mentioned above, and companies that have existing Hub platforms available for pharmacies to participate in should also take all efforts to ensure similar compliance. In addition to these contractual issues, all pharmacy providers who participate in Hub models must conduct adequate diligence of those arrangements to ensure their participation does not result in exposure for the pharmacy. Many Hub models incorporate problematic mechanisms that implicate federal anti-kickback and health care fraud statutes, the False Claims Act, HIPAA, and other regulatory statutes.

How Frier Levitt Can Help

If your pharmacy has an existing relationship or is seeking to enter a new arrangement with a Hub, contact Frier Levitt to speak to an attorney to understand any potential regulatory and contractual risks before proceeding. Similarly, if you have an existing Hub platform or are seeking to establish one, a Frier Levitt attorney can help you to understand the precautions necessary for mitigating potential exposure. Frier Levitt attorneys have substantial experience and knowledge in the specific concerns of regulators and PBMs with respect to Hub arrangements and can guide your company accordingly.