Pharmacy leaders should be transparent and collegial when representatives of state boards of pharmacy (BOPs) and pharmacy benefit managers (PBMs) ask about their operations, erring toward oversharing information rather than appearing to have something to hide.
During a recent webinar, attorneys from Frier Levitt, a law firm focused on healthcare and the life sciences, advised regular communication, noting that questions asked by BOP and PBM representatives go hand in hand to some extent.
“Compliance with BOP regulations often demonstrates meeting the terms and conditions of a PBM network,” said Harini Bupathi, JD, a Frier Levitt partner. Moreover, BOP licensure is necessary for a pharmacy to operate in any state, and serves as a prerequisite for joining a PBM network, she noted.
After a pharmacy seeks admission to a PBM network, a PBM representative is likely to ask whether any pharmacy employees have faced disciplinary action from a BOP or other regulator within, for example, the past six years. If the honest answer is “yes,” it might be tempting to skirt this question, but Ms. Bupathi strongly advised against that. After all, she noted, a PBM representative can easily search for disciplinary actions on a BOP website, so withholding of such public information will look deceptive.
“It’s very important for pharmacies to be transparent,” Ms. Bupathi said.
“Control the narrative,” added Lucas Morgan, JD, also a Frier Levitt partner.
Perhaps disciplinary actions occurred when an employee worked at a different pharmacy, Ms. Bupathi explained, and there have been no problems with the employer that is seeking PBM admission. Just saying yes to the PBM’s disciplinary question, without providing such details, would do a pharmacy a disservice by making the situation look worse than it is.
“Frame the issue in the most positive way possible. Of course we’re not being misleading here. We just want to provide full context,” Mr. Morgan said. He added that these same principles apply whether a PBM or BOP is making the inquiry.
Synergy Not Always There
However, BOP and PBM requirements sometimes operate at cross-purposes. For example, Mr. Morgan noted, a state BOP will usually expect a new pharmacy to be operational within as little as six months after getting an operating license; Mr. Morgan noted that this is the expectation in the state of Texas, as one example. But if the pharmacy’s PBM membership application hasn’t been approved within that time, it can’t operate fully and may appear to be delinquent in the BOP’s eyes.
“It all comes down to communication with both entities,” Mr. Morgan said. When it comes to noncompliant areas of operation, “the worst thing you can do is cross your fingers and hope [BOPs and PBMs] don’t find out.”
He also stressed the importance of clear communication with PBMs, citing the example of requesting that the PBM prioritize your membership application to align with a BOP’s time line. Document all such communications, Mr. Morgan said, to build a paper trail in the event a BOP asserts that a pharmacy is not fulfilling its obligations to deliver medications.
He also advised that pharmacy leaders attend BOP meetings whenever possible—not only when their pharmacy is on the agenda—to get to know members of the board. Pharmacy leaders also should update a BOP when the pharmacist in charge changes, or when practice hours change significantly. And don’t rely too heavily on electronic forms of communication. “So few people use phones anymore,” he said. “Everyone wants to email.” Someone who calls will generally find a helpful person on the other end of the line, and may get their question answered more quickly, he noted.
Handling PBM Audits
Both Ms. Bupathi and Mr. Morgan advised retaining prior legal counsel before facing trouble with BOP or PBM actions, rather than hiring an attorney once trouble starts.
Navigating PBM audits may require legal assistance, as PBMs seek to recoup costs due to discrepancies between the PBM’s accounts of disbursed prescriptions and the pharmacy’s own records. The PBM will want to recover costs of medications sold to the pharmacy but not dispensed, and in some cases will report these discrepancies to a BOP.
“Appeal, appeal, appeal” any PBM audit judgments, Ms. Bupathi advised. Taking the path of least resistance may suggest, at first, to just pay the PBM the money it seeks, Ms. Bupathi noted. This is especially true if it’s a small judgment—Ms. Bupathi suggested $1,000—that costs more to contest than to pay.
However, paying one small fine could lead to more payment requests in the future, eventually costing significant money and making it look like the pharmacy has shoddy records and inventory practices because it chose not to appeal a PBM determination.
“These things compound,” Ms. Bupathi said, which is why mounting a robust defense against PBM audit judgments—even relatively small ones— is necessary, even if it feels onerous.
The sources reported no relevant financial disclosures beyond their stated employment.
This article is from the April 2024 print issue.