Role of Pharmacy Attorneys Amid PBM Scrutiny
Frier Levitt has been representing independent pharmacies over two decades with respect to a variety of legal and operational issues such as Pharmacy Benefit Manager (“PBM”) audits, payment/adjudication suspension, network termination, and network exclusion. Over the years, our role as a zealous advocate of the pharmacies has become immensely important mainly due to increasing PBMs’ scrutiny and widening legal implications on the pharmacies. Meanwhile, there has been a growing number of pharmacy consultants who provide services including guidance on PBM audits. While such growth can be viewed as a positive trend for the independent pharmacy industry, the pharmacies must understand that the pharmaceutical industry is one of the highly regulated industries with many rules and regulations enforced by the government, and even seemingly simple PBM audits have legal issues underneath the surface and require legal analysis.
As noted above, there exists a myriad of legal issues subsumed in routine PBM audits. Generally, PBMs require their member pharmacies to follow dispute resolution procedure set forth in the PBM Provider Manual when responding to an audit. An audit timeframe is as follows: (i) a PBM issues a notice of audit requesting certain documentation from a pharmacy; (ii) the pharmacy submits the requested documentation; (iii) the PBM issues an initial audit report (“Initial Findings”); (iv) the pharmacy submits its appeal response; and (v) the PBM issues a final audit report (“Final Findings”). The PBM Provider Manual also sets forth a deadline for the pharmacy to submit an appeal response following issuance of the Initial Findings as well as the Final Findings. Notwithstanding the said deadline, in the event that the pharmacy submits an untimely appeal response, we have successfully made factual and legal arguments to allow the PBM to accept the appeal response. More importantly, the pharmacy has the right to request, provided that such right exists under the PBM Provider Manual and/or the state law, a good-faith based meet-and-confer with the PBM as part of or apart from the appeal response following the Final Findings.
During the meet-and-confer, the pharmacy (often, its legal representatives) meets via telephone conference with the PBM’s legal team including its inhouse counsel to attempt to resolve any outstanding audit discrepancies. When we participate in a meet-and-confer for a pharmacy, we prepare a host of factual and legal arguments, some of which were already made in the appeal responses, to reverse the alleged discrepancies raised in the Final Findings and to prevent the recoupment on the reimbursement paid on the alleged discrepant prescription claims. More specifically, we utilize applicable federal and state laws such as Any Willing Provider law, Pharmacy Fair Audit law, Prompt Pay law, and Deceptive and Unfair Practices Act to support the pharmacy’s position. In addition to the foregoing, we advise legal implications that may fall upon the pharmacy, pharmacists, and/or pharmacy owners (collectively, “Pharmacy Stakeholders”) when evaluating the allegations raised in the Initial Findings, prior to submitting an appeal response. This is because not only we as the attorneys have ethical duty to advise our clients of any and all potential legal issues but also PBM audits may have legal implications beyond the audit itself. Notably, we have dealt with federal and state level investigations commenced by various government agencies (e.g., Board of Pharmacy, Office of Inspector General, Drug Enforcement Agency, Attorney General’s Office) and these investigations closely mimic a PBM’s audit findings or acknowledge that a PBM submitted a complaint to the agency. These investigations can lead to administrative, civil, and/or criminal sanctions against the Pharmacy Stakeholders. In fact, we have represented countless Pharmacy Stakeholders in front of different government agencies. This is one of many reasons why a pharmacy should consult with a pharmacy attorney.
PBMs have been and will continue to scrutinize the independent pharmacies through various means including, without limitation routine audits. The pharmacies must know their rights provided under the PBM Provider Manual as well as applicable federal and state laws when responding to PBM audits. It is wise for the Pharmacy Stakeholders to consult with experienced pharmacy attorneys to be apprised of their rights and the potential legal issues that may arise out of or relating to PBM audits.
How Frier Levitt Can Help
Frier Levitt assists pharmacies in preparing for audits, responding to initial audit discrepancies, appealing final audit results, minimizing risks of PBM contract renegotiations, and challenging PBM contract terminations. We also help pharmacies develop business plans and establish standard operating procedures to prepare for audits long before they begin. If your pharmacy received a notice of an audit or is interested in planning ahead, contact us today to speak to an attorney.