Pharmacy Providers Must be Vigilant Due to Recent Uptick in PBM Network Terminations

Independent pharmacies and providers must be vigilant based on a recent uptick in network terminations (many of which are not justified) by pharmacy benefit managers (“PBMs”) throughout the country. The fact that PBMs will often issue termination notices in various ways that may go undetected by pharmacies and providers further complicates the issues and intensifies the need for vigilance. More specifically, through the different PBM contracts, all of which are unilaterally drafted adhesion contracts, PBMs give themselves substantial discretion in how they go about providing notices to network providers, including those involving network termination.

Typically, PBMs will state in their contracts that they have the discretion to provide notices via the mail, fax, email, through the PBMs “provider portal” or a combination of these different methods of communication. However, further complicating the issue is that there is often no consistency in how the PBMs will deliver these notices to providers. Frier Levitt has observed a recent uptick in PBM terminations with the notice of such terminations being provided in an opaque manner, which often leads to confusion and delays in the provider learning of the PBMs’ very significant decision to terminate the provider. Unfortunately, in some cases this is not detected until the eve of a termination and in other cases after the termination has taken effect. Providers must remain vigilant and check all PBM communication channels to ensure that if they have received notice of termination from a PBM, appropriate action is taken under the circumstances. Providers should also be aware of the many channels through which a PBM may communicate such notices as stated in their PBM agreements. Additionally, there has been an increasing trend of pharmacies being terminated from pharmacy networks by PBMs due to a pharmacy’s alleged affiliation and/or common ownership with providers that have been previously terminated from the PBM’s pharmacy network—but these allegations are often frivolous or attenuated in nature.

How Frier Levitt Can Help

Frier Levitt represents thousands of pharmacies and providers across the United States with an emphasis on PBM issues. Our team has successfully defended numerous pharmacies in matters involving some of the most troubling, complex, and often murky PBM tactics including improper PBM terminations. Our attorneys have extensive knowledge of all aspects of PBMs in terms of their relationships with pharmacies and providers. Contact us to speak with an attorney about how pharmacies and providers can leverage the various laws and protections afforded to pharmacies and other providers.