Earlier this year, Frier Levitt partners, Lucas Morgan and Harini Bupathi hosted a webinar called, “The ABCs of BOPs and PBMs: A Comprehensive Guide for Pharmacies.” In the webinar, they covered key issues and areas of focus that pharmacies should be aware of as they work to establish and maintain relationships with their respective Boards of Pharmacy (BOPs) and Pharmacy Benefit Managers (PBMs). The webinar highlighted the importance of understanding the dynamic relationship between BOPs and PBMs and the impact these relationships can have on pharmacy operations, particularly where pharmacies may not otherwise be aware of the potential overlap between these two entities. In addition, Frier Levitt delved into the nuances of BOP laws, rules, and regulations and PBMs’ private contractual terms and conditions, for example, with respect to their independent reporting obligations, and how pharmacies should be aware of any such obligations as a pharmacy provider. This article will further elaborate on the key topics discussed in the webinar.
Mutual Reporting Obligations and Considerations
When pharmacies seek licensure with BOPs or admission into PBM networks, it is not uncommon for both entities to require pharmacies to complete some form of an application or credentialing process. In such cases, pharmacies should be aware of their obligations to provide complete, accurate responses to both entities, particularly where the failure to provide truthful responses could result in an application being denied or become a basis for some form of disciplinary action. For example, it is not uncommon for a PBM to inquire about whether the pharmacy’s license, including its employees’ licenses, is in good standing with the pharmacy’s resident BOP and any other BOP the pharmacy might maintain a license with. If the pharmacy provides inaccurate information, or alternatively, fails to satisfy the obligation to proactively report any disciplinary action, then the PBM may seek to deny the pharmacy admission into the network, or if already admitted, the PBM may seek to terminate the pharmacy. To that end, it is becoming increasingly common for PBMs to terminate pharmacies over the failure to report (actual or perceived) any disciplinary action, or even potential disciplinary action. For such reasons, pharmacies should be aware of their obligations to timely notify PBMs of any disciplinary actions related to their BOP license or even their employees’ licenses and should err on the side of caution when doing so.
Examples of Interplay Between BOPs and PBMs
In addition to reporting obligations related to disciplinary actions, there are many other common interplay issues that occur between BOPs and PBMs. For example, for pharmacies to successfully obtain PBM network admission, pharmacies must first be licensed with their respective BOPs and operate in compliance with all applicable BOP rules and regulations. In addition, some BOPs may require that pharmacies commence substantive operations within a specific, and often times limited, timeframe once the BOP grants the pharmacy a license. For example, the Texas State Board of Pharmacy requires a pharmacy to open and begin operations within six months of receiving its pharmacy license. However, this type of requirement does not account for the time it takes for a pharmacy to perform other essential tasks associated with opening and servicing patients. This includes the time to credential and gain PBM network admission, particularly if the pharmacies are located in “HEAT Zones,” which can further delay the time to credential. That said, typically, a pharmacy’s ability to participate in the major PBM networks will directly impact the pharmacy’s ability to gain BOP licensure or otherwise comply with the BOP’s rules and regulations and vice versa. Understanding this dynamic relationship is critical to successfully operating a pharmacy, especially in the early stages of opening a pharmacy.
One of the most important tools that pharmacies have available to them is having strategic, yet transparent communication, with either the BOP and/or the PBMs they are working with. Pharmacies should learn of their obligations with their BOP(s) and all PBMs to ensure they are in complete compliance with all applicable BOP rules and regulations and all PBM contractual terms and conditions. This will help the pharmacy to develop sustainable, long-lasting relationships with each of these crucial entities. Knowledgeable legal counsel can be an important ally in navigating these complex areas of pharmacy.
For more information on the interplay between BOPs and PBMs, view the on-demand webinar here: “The ABCs of BOPs and PBMs: A Comprehensive Guide for Pharmacies”.
How Frier Levitt Can Help
If your pharmacy is looking to get licensed with a state Board of Pharmacy or admitted into a PBM’s network, contact Frier Levitt to speak to an attorney today. Frier Levitt attorneys have significant experience with assisting pharmacies in maintaining their relationships with BOPs, including representation of pharmacies in all aspects of the licensing process as well as subsequent proceedings including administrative hearings. Frier Levitt attorneys can also guide your pharmacy through the PBM credentialing process and help address any issues that may arise, including adverse denials, that may prevent a pharmacy from operating successfully.
