PHARMACY ALERT: Express Scripts Subjects Pharmacies to Massive Recoupment and Termination for Purchases from Unauthorized Wholesale Drug Distributors

In a recent but aggressive trend, Express Scripts, Inc. (ESI) – the nation’s largest Pharmacy Benefits Manager (PBM) – has begun auditing and recouping large sums of money from pharmacy providers stemming from drug purchases made from allegedly “unauthorized” wholesalers or distributors. Starting in or around June 2016, ESI began conducting extensive purchase verifications and imposing discrepancies on all claims for products not purchased from a wholesaler listed as an “authorized distributor” on certain pharmaceutical manufacturers’ websites. Essentially, ESI has refused to accept otherwise valid and lawful purchases from licensed wholesalers, and has instead, determined pharmacies to have insufficient inventory to support claims dispensed. ESI has taken this draconian position even when a pharmacy maintains proper documentation to support the purchases, including invoices and proof of payment. These actions have resulted in millions of dollars of recoupment from pharmacies and even termination from the ESI networks for supposed “shortfalls.”

Despite ESI’s heavy-handed tactics, these purchases are completely permissible under applicable Federal law as well as many States’ laws. Simply put, there is no legal prohibition – other than ESI’s own contracts of adhesion – on sourcing products from otherwise duly-licensed suppliers.

If your pharmacy has been subjected to audits and recoupments from ESI on these issues, it is critical to understand your rights. You may have claims and other valid defenses against this abusive action. If your pharmacy has been audited or subject to termination based on purchases from an “unauthorized” or “unapproved” wholesaler, contact Frier Levitt today.