PHARMACY AUDIT ALERT: CVS Caremark Takes Aggressive Position Against Pharmacies for Purchases from “Unauthorized” Drug Distributors

In a recent but aggressive trend, CVS Caremark (Caremark) has begun to audit and subject pharmacies across the nation to recoupment for purchases from allegedly “unauthorized distributors.” 

Specifically, Caremark has taken the position against pharmacies that “only wholesalers for diabetic supplies that are Authorized Distributors by that manufacturer can be considered for credit.” Caremark appears to rely upon a circulation that they issued in June 2016 titled “Audit Tips: Foreign Sourced Diabetic Test Strips” that allegedly would have required pharmacies to purchase only from wholesalers listed as an “authorized distributor” on pharmaceutical manufacturers’ websites. In taking this position, Caremark has disregarded pharmacies’ otherwise valid purchases from properly licensed wholesalers and has instead, maintained that pharmacies have insufficient inventories to support the quantities of drugs billed despite providing Caremark proper invoices and proof of payment. Caremark’s actions have caused pharmacies to be exposed to large recoupment amounts and potentially, a risk of termination. 

Many pharmacies have received audit results with appeal deadlines of July 31, 2017. Other pharmacies have yet to receive audit results and have only received the initial “yellow paper” briefly identifying the discrepancies. 

If your pharmacy has been subjected to an audit and/or subsequent recoupment from Caremark for alleged purchases from an “unauthorized” wholesaler, it is imperative to address audit results before the appeal deadline. Failure to respond could result in recoupments and/or risk network termination. Contact Frier Levitt today to speak to an attorney and understand the pharmacy’s rights, claims, and defenses in this issue.