Pharmacy ALERT: CVS Caremark Releases Dispensing Limitations to be Effective January 2020

Over the past year, CVS Caremark began taking a series of actions against pharmacies who were dispensing “aberrant quantities” of medications within a particular therapeutic category. Despite never defining “aberrant quantities,” CVS Caremark continued to place pharmacies whose dispensing practices were flagged for this reason under adjudication and payment suspension and/or subjected them to a Mail Order Addendum for being a “non-standard retail pharmacy.” According to CVS Caremark, pharmacies that dispense a relatively larger number of claims in a therapeutic category or for one drug product only are not servicing the needs or habits of “local Prescribers or Plan Sponsor formularies,” which are determined at the CVS Caremark’s sole discretion. According to the CVS Caremark, the ability to service the habits of “local Prescribers or Plan Sponsor formularies” is a required term and condition of participation in its networks.

Recently, CVS Caremark has issued a notice to pharmacies that provides some clarification on how it is seeking to enforce compliance with the requirement that a pharmacy not dispense “aberrant quantities” of any particular drug product or therapeutic category. Attached to the notice sent to pharmacies, CVS Caremark provided a list of drug products which, if dispensed, would affect a pharmacy’s compliance with the aforementioned requirement. Specifically, CVS Caremark has stated that if in a one-month period, any one drug product or combination of products on the provided list accounts for 25% or more of the pharmacy’s claims or dollars (as measured by the CVS Caremark), then the pharmacy might be found in breach of the Provider Manual/Agreement. Should such breach occur, the pharmacy will be provided notice, after which the pharmacy will be given 30 days to cure the breach or be subject to termination.

Billing thresholds such as these run the risk of violating several rules and regulations, such as Patient Freedom of Choice laws and Any Willing Provider Laws, particularly where the PBM’s wholly-owned pharmacies are likely not subjected to the same billing thresholds. If your pharmacy has received this notice, contact Frier Levitt to speak to an attorney today.