Pharmacy News

Eleven items this cycle, most of them about the widening fight between drug manufacturers, PBMs, and the pharmacies and covered entities caught in between. 340B claims-data mandates keep expanding, a federal appeals court weighed in on manufacturer rebate models, and CVS is facing scrutiny on two fronts at once. Nothing new from the California Board of Pharmacy this cycle, and none of this week’s federal enforcement bulletins named a pharmacy.

CVS Rewrites Its 340B Contract Pharmacy Agreements and Sends Termination Notices

CVS is revising its Pharmacy Services Agreements for 340B contract pharmacy arrangements and sending termination notices to some covered entities, all while facing federal lawsuits alleging it withheld 340B revenue that belonged to hospitals and other covered entities. Any covered entity or specialty pharmacy with a CVS contract-pharmacy relationship should read the new terms carefully before signing anything. Read more at Frier Levitt →

Johnson & Johnson Joins the Manufacturer 340B Claims-Data Push

Johnson & Johnson has joined Eli Lilly, Exelixis, and Novo Nordisk in requiring covered entities to submit claims-level data before honoring 340B pricing, and in limiting most covered entities to a single contract pharmacy within 40 miles of the parent site. Eli Lilly is separately defending its own version of this policy in court, moving to dismiss a lawsuit from Tampa General Hospital over the same issue. Any covered entity or affiliated pharmacy relying on 340B pricing should check its data readiness now, before a manufacturer’s deadline arrives. Read more at Frier Levitt →

D.C. Circuit Rules Manufacturers Need HRSA’s Approval Before Adopting a 340B Rebate Model

The D.C. Circuit Court of Appeals has ruled that drug manufacturers cannot unilaterally replace upfront 340B discounts with a rebate model without first getting approval from the Health Resources and Services Administration. The decision closes off one path manufacturers had been testing to reshape how 340B pricing works, and it narrows how much latitude HRSA’s own revised rebate pilot program can offer going forward. Read more at Frier Levitt →

FTC’s Settlement with Caremark Could Open the Door to Cost-Plus Reimbursement

The Federal Trade Commission’s settlement with Caremark could create an opening for community pharmacies, pharmacy services administrative organizations, and wholesalers to move toward a cost-plus reimbursement model. What “cost-plus” will actually mean in practice, and how much it will pay, remains an open question worth watching closely before anyone relies on it as a bargaining position. Read more at Frier Levitt →

Health Plans Can Be Real Parties in CVS’s Usual and Customary Pricing Litigation

A ruling in the ongoing litigation over CVS’s Usual and Customary pricing practices found that self-funded health plans can be considered real and substantial parties to the case when they bear the financial risk for the alleged overcharges. That distinction matters for any plan sponsor weighing whether it has standing to pursue a PBM over similar billing practices. Read more at Frier Levitt →

Federal Court Blocks Illinois PBM Reporting Law on ERISA Grounds

A federal court has enjoined Illinois from enforcing key reporting requirements of its Prescription Drug Affordability Act against pharmacy benefit managers, ruling that the requirements are preempted by ERISA as applied to employer health plans. States with their own PBM transparency laws, California included, should watch how this argument plays out, since a PBM facing similar reporting obligations elsewhere could raise the same challenge. Read more at Frier Levitt →

FDA Warning Letter Signals a New Enforcement Theory for Compounded GLP-1 Combinations

The FDA issued a warning letter to Empower Pharmacy over its compounding of tirzepatide and semaglutide combined with additional ingredients such as vitamin B12 or niacinamide, applying a new theory for pursuing compounded GLP-1 combination products. Any pharmacy compounding GLP-1s with added ingredients should take note of the agency’s reasoning here. Read more at Frier Levitt →

Lilly Sues Sellers of Unapproved Retatrutide

Eli Lilly has filed suit against sellers of research-use-only retatrutide, extending the same enforcement pattern now showing up against compounded GLP-1 products more broadly, one built on private litigation rather than a formal FDA action. Pharmacies compounding peptide products should watch both fronts, regulatory and private, as this area continues to draw scrutiny. Read more at Frier Levitt →

Mallinckrodt Restricts Pharmacy Controlled Substance Purchases Without Warning

Some pharmacies are finding that Mallinckrodt and certain wholesalers have restricted their controlled substance purchasing privileges with little or no advance notice. Strong, well-organized compliance documentation is often what gets purchasing privileges reinstated, so any pharmacy that orders controlled substances from these suppliers should have its records in order before a problem arises. Read more at Frier Levitt →

PBM Audits Are Targeting Pharmacy-to-Pharmacy Inventory Transfers

Pharmacy benefit managers are increasingly requesting Drug Supply Chain Security Act transaction documentation for inventory transferred between pharmacies under common ownership, and flagging gaps in that paperwork during audits. Any pharmacy that moves stock between locations should have its transaction history ready before an auditor asks for it. Read more at Frier Levitt →

A Primer on State Board of Pharmacy Inspections

A two-part explainer walks through what gives a state board of pharmacy the authority to inspect a pharmacy in the first place, along with the different types of inspections a pharmacy might face and how to prepare for each. It isn’t California-specific, but the underlying framework travels well and is a useful read before any pharmacy’s first Board visit. Read more at Frier Levitt →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

One item today, and it continues a story from earlier this week. A federal judge in New Mexico declined to block that state’s 340B contract pharmacy law while a manufacturer lawsuit against it proceeds. Nothing from the California Board of Pharmacy, and no pharmacy enforcement actions in this week’s federal bulletins.

A federal judge declines to block New Mexico’s 340B contract pharmacy law

A group of drug manufacturers, AbbVie among them, asked a federal court in New Mexico to stop the state from enforcing its 340B contract pharmacy access law while their lawsuit against it is decided. The court denied that request last week. It also allowed the American Hospital Association, 340B Health, and the American Society of Health-System Pharmacists to file briefs supporting the state. A denial at this stage is not a ruling that the law is valid. It means the law stays in force while the case is litigated, and it follows similar outcomes in several other states where manufacturers have asked for the same relief. One detail matters before anyone treats New Mexico as a model: its law reaches federally qualified health centers only, which is narrower than what Arkansas and other states have passed. California has no statute requiring a manufacturer to ship 340B drugs to a contract pharmacy. What California pharmacies do have is Business and Professions Code section 4126, which allows a covered entity to contract with a pharmacy for 340B dispensing and then places two standing duties on that pharmacy: 340B stock must be separated from other drug stock by physical or electronic means, and records of acquisition and disposition must be retrievable separately from the pharmacy’s other records. The contract itself is available for inspection by Board staff during normal business hours. Read more at National Law Review →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

Two items today, both 340B. Thirteen drug manufacturers moved Arkansas’ contract pharmacy lawsuit out of state court and into federal court, and a Senate committee took up an HHS nominee who has published work critical of the 340B program. Nothing from the California Board of Pharmacy, and no pharmacy enforcement actions in this week’s federal bulletins.

Drug manufacturers move Arkansas’ 340B contract pharmacy case into federal court

Arkansas was the first state to pass a law requiring drug manufacturers to honor 340B pricing at contract pharmacies, and roughly a dozen states have since passed their own versions. Thirteen manufacturers have now moved the state’s lawsuit against them from state court into federal court. A removal is a decision about which courthouse hears the case, not a ruling on whether the Arkansas law stands, and the grounds the manufacturers actually assert cannot be characterized before the filings are read. The reason to follow it is that these state access laws are the main pressure point on contract pharmacy arrangements right now, and where they are decided will shape how quickly other states act. California has no statute compelling manufacturers to ship. What California pharmacies do have is Business and Professions Code section 4126, which allows a covered entity to contract with a pharmacy for 340B dispensing and then places two standing duties on the pharmacy: 340B stock must be separated from other drug stock by physical or electronic means, and records of acquisition and disposition must be retrievable separately from the pharmacy’s other records. The contract itself is available for inspection by Board staff during normal business hours. Read more at 340B Report →

A Senate committee reviews an HHS nominee who has criticized 340B

The Senate Finance Committee took up the nomination of a Johns Hopkins professor for an assistant secretary post at HHS. The nominee has authored studies critical of the 340B program. A confirmation hearing changes nothing on its own, and it is early to read policy into it. For covered entities and the pharmacies that contract with them, it is worth knowing who may end up in the role. Read more at 340B Report →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

Four items today, led by a California sentencing that every pharmacy owner should read. Also on the list: a new federal 340B reporting system that opens October 1, another manufacturer narrowing contract pharmacy access, and a hospital taking HRSA to court over how 340B registration works. The Federal Register also carried four DEA decisions against individual prescribers, none involving a pharmacy.

Thirty years in a $270 million Medi-Cal scheme that ran through a pharmacy

The Justice Department announced on September 9 that Paul Richard Randall was sentenced to 30 years in federal prison and ordered to pay $178,746,556 in restitution. Prosecutors said he caused roughly $269 million in claims to be submitted to Medi-Cal over eleven months through a pharmacy called Monte Vista, and that Medi-Cal paid about $178.7 million of it. Charged with him were the pharmacist who owned the pharmacy and a nurse practitioner who, according to the government, signed pre-filled prescriptions for patients she never met. The opening the scheme used is the part worth understanding. Medi-Cal had temporarily suspended its prior authorization requirement while it moved to a new prescription payment system, and the claims went in for high-reimbursing non-contracted generics during that window, including about $13,424 for a single meloxicam prescription. The case was built on kickbacks and medical necessity, not on billing arithmetic alone. If your pharmacy is being handed prescriptions by a marketing company, this is what that can become. Read more at the U.S. Department of Justice →

CMS opens its first Medicare 340B data repository on October 1

CMS is set to begin accepting Medicare Part D claims data from 340B covered entities next month through a new repository, the first of its kind. Participation is voluntary at launch. That word deserves attention, because voluntary reporting systems have a way of becoming the benchmark everyone is later measured against, and the entities that submit early tend to shape what the data looks like. If you participate in 340B, this is a decision worth making deliberately in the next few weeks instead of by default. Read the program details closely before deciding what to submit. Read more at 340B Report →

Takeda adds a blood cancer drug to its contract pharmacy restrictions

Takeda has added a blood cancer treatment to the list of drugs it restricts through contract pharmacy arrangements. Each addition of this kind narrows where a covered entity can have a 340B prescription filled, and the margin on that drug is what is at stake for the entity and for the specialty pharmacy dispensing under contract. Manufacturer policies differ from one another in their terms and in their exceptions, so the policy itself has to be read before anyone concludes what is still permitted. If this drug moves through your pharmacy under a 340B contract, check the policy now instead of finding out at the claim. Read more at 340B Report →

A Michigan hospital sues HRSA over the 340B registration process

A Michigan teaching hospital has filed suit against HRSA in federal court in Washington, D.C., arguing that the agency’s 340B registration process is unlawful. Eligibility and registration disputes usually stay inside the agency, so a court challenge aimed at the mechanism itself is worth following. What the complaint actually claims, and how far it reaches, cannot be characterized before the filing is read. For covered entities, the case is one to watch instead of act on for now. Read more at 340B Report →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

Two items today. A nationwide recall of three lots of injectable epinephrine that every pharmacy and infusion site should check against its own stock, and a look at what happens when a drug clears FDA before insurers are ready to pay for it.

American Regent recalls three lots of epinephrine injection over cracked vials and particulate matter

American Regent announced a voluntary nationwide recall on September 3 covering three lots of Epinephrine Injection, USP, 30 mg/30 mL (1 mg/mL) multi-dose vials, NDC 0517-3030-01. The affected lots are 25128L1C0, 25280L1C0 and 26108L1C0. Customer complaints described leaking and cracked vials, and the company investigation found particulate matter identified as nylon, cellulosic, acrylic, polyethylene and glass. The stated risk is serious. Particulate injected intravenously can block and clot blood vessels, and a cracked vial means sterility can no longer be assured. No adverse events had been reported at the time of the announcement. Distributors, retailers and healthcare facilities are told to stop using the product and return it to the place of purchase or discard it. This is worth a same-day check of physical stock, and of emergency kits in particular, because epinephrine usually sits in a crash box instead of on an active dispensing shelf, and stock nobody has touched in months is exactly the stock that gets missed. Read more at FDA →

A newly approved cancer drug shows the gap between FDA approval and insurance coverage

STAT reports on patients with pancreatic cancer caught between the approval of a new drug and the point at which insurers were ready to cover it. The drug nearly doubled median survival in its key trial. The expanded access programs that had been supplying it closed as soon as FDA approved, and coverage was not yet in place, so some patients waited weeks with nothing to bridge them. The reported cost is close to $40,000 a month, and one family paid more than $9,000 for a seven day supply while an approval worked its way through. The pattern is not unique to this drug. It repeats on most specialty launches, and the pharmacy or infusion provider is usually the one standing in front of the patient when it happens. Anyone building a specialty or infusion service should settle in advance how a launch-window gap gets handled, including who talks to the patient about cost and what the site is willing to supply at risk. Working that out for the first time with a patient waiting is the worst version of it. Read more at STAT →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

Four items today. A new FDA compounding guidance that took effect on publication and reaches state-licensed pharmacies, two developments in 340B, and a federal audit of how California handles Medicaid overpayment recovery.

FDA issues temporary compounding policies for neonatal starter parenteral nutrition

FDA has published guidance describing its regulatory and enforcement priorities for compounding certain starter parenteral nutrition drug products for neonates. Two things stand out. The guidance was published for immediate implementation rather than going out for comment first, which usually points to a supply problem sitting behind it. And it is not limited to registered outsourcing facilities. It also covers state-licensed pharmacies and federal facilities that are not registered with FDA as outsourcing facilities. If your pharmacy compounds neonatal starter parenteral nutrition, the conditions set out in the guidance are what you will be measured against now. Those conditions are the substance of the document, so read them before assuming you are covered by the policy. Read more at the Federal Register →

Johnson & Johnson expands 340B data requirements and extends contract pharmacy restrictions to grantees

Johnson & Johnson has announced it will expand its 340B claims data requirements to cover drugs a covered entity dispenses in house, not only those going through contract pharmacies. It is also extending its contract pharmacy restrictions to grantees. Both halves matter. Manufacturers and covered entities have been fighting over contract pharmacy arrangements for years, and pulling grantees into the restrictions widens that fight to organizations that had largely stayed out of it. The in-house data requirement is a different kind of change, because it reaches dispensing a covered entity handles itself. Grantees in particular should expect to hear about this directly rather than read about it later. Read more at 340B Report →

A congressional report tracks what states are doing on 340B

A new congressional report on state efforts to lower prescription drug prices gives attention to the growing number of states that have acted on 340B. Most of that state activity has taken the form of contract pharmacy protection laws, passed while the federal litigation continues. The report is useful as a map of where the states stand and which way they are moving. It is a survey rather than a legal analysis, and it is worth reading as one. Read more at 340B Report →

OIG says California did not return the full federal share of Medicaid overpayments

The HHS Office of Inspector General has released an audit examining whether California reported and returned the correct federal share of Medicaid overpayments identified by its Medicaid Fraud Control Unit during federal fiscal year 2023. OIG concluded the state fell short across the 26 cases it reviewed, and put the federal share that should have been reported and returned at just over $99 million. This is a finding about the state’s reporting, not about any individual provider. It is worth noting anyway, because of what tends to follow. When a state is told it left that much federal money unrecovered, pressure to pursue recovery on the provider side generally increases, and pharmacies sit in the Fraud Control Unit’s case mix alongside everyone else. Read more at the HHS Office of Inspector General →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

A quiet stretch over the holiday weekend. Two items today. A federal appeals court has weighed in on the Anti-Kickback Statute and the way HHS handles advisory opinion requests, and the DEA published a registration order worth a look if you hold a registration of your own.

A federal appeals court weighs in on the Anti-Kickback Statute and HHS advisory opinions

The D.C. Circuit has decided Vertex Pharmaceuticals v. HHS. The reading from Frier Levitt is that the court left the Anti-Kickback Statute’s reach broad while placing real limits on how HHS evaluates and processes advisory opinion requests. If that holds, a company weighing a patient support or copay assistance program has a somewhat more predictable path to a favorable opinion, and no less exposure under the statute itself. This is an appellate opinion, so anyone planning to rely on it should read the decision rather than a summary of it, including this one. Read more at Frier Levitt →

DEA publishes a decision and order against a physician registrant

The Drug Enforcement Administration published its decision and order in the matter of Stephen Bossenberry, M.D., in today’s Federal Register. An individual practitioner case rarely changes how a pharmacy operates day to day. These orders are still where the agency sets out its current thinking on registration sanctions, which makes them worth following for anyone who holds a DEA registration. Read more at the Federal Register →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

One to watch today. Oversight of the 340B program is reportedly moving from HRSA to CMS this month, though nothing is official yet. Below that, what covered entities can do about manufacturer data demands, and a Medicare audit finding worth knowing about.

340B oversight may be moving from HRSA to CMS

340B Report says the administration is expected to shift oversight of the 340B program out of HRSA and into CMS this month. It is attributed to an unnamed source and nothing has been announced, so treat it as a heads-up rather than a done deal. If it holds, it changes who writes the rules and who enforces them for covered entities and contract pharmacy arrangements alike. Read more at 340B Report →

What covered entities can do about manufacturer 340B data demands

Eli Lilly has already suspended 340B pricing for hospitals that did not meet its claims-data policy, and Tampa General Hospital sued over the price increases that followed. This piece is about what a covered entity can do now rather than waiting to see how the litigation lands. Worth reading if you are sitting on a manufacturer data demand and hoping it goes quiet. Read more at Frier Levitt →

Medicare Part D paid $588 million for drugs that had gone over the counter

A federal audit found Medicare Part D sponsors paid roughly $588 million from 2021 through 2023 for medications that had already transitioned from prescription to over-the-counter status. The HHS Office of Inspector General pointed to outdated FDA information and the lack of a clear process on the CMS side. Numbers like that tend to become audit priorities later. Read more at Pharmacy Podcast Network →

Why the letter of intent matters more than people think

An attorney’s view from both sides of a pharmacy deal, focused on the letter of intent and what actually protects a buyer or a seller once things get complicated. Useful background if you are thinking about buying or selling a pharmacy. Read more at Boesen and Snow Law →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

A busier day than usual. California confirmed its new licensing rule for nonresident pharmacies, and a federal appeals court revived a whistleblower tool used against health care fraud. Below that, a PBM lawsuit and the latest on 340B.

Nonresident pharmacies now need a California-licensed pharmacist-in-charge

The Board of Pharmacy’s September update confirms it: since July 1, a nonresident pharmacy can’t ship prescriptions to California patients unless its pharmacist-in-charge holds a California license. The Board says it won’t move to shut down good-faith compliance efforts during the transition, but that’s a grace period, not a pass. Read more at California State Board of Pharmacy →

Appeals court revives a whistleblower tool used against health care fraud

The Eleventh Circuit reversed a district court ruling that had declared False Claims Act whistleblower suits unconstitutional. That ruling was the argument PBM and pharmacy defendants were watching closely as a way to head off fraud claims before they started. This closes that door, at least in that circuit. Read more at Frier Levitt →

Florida’s attorney general accuses two PBMs of price fixing

Florida sued Express Scripts and Prime Therapeutics, alleging their 2019 partnership was used to push down pharmacy reimbursement rates. Prime disputes the claim. Another sign of how closely PBM steering and reimbursement practices are drawing regulator attention. Read more at Fierce Healthcare →

Massachusetts advances a broad PBM reform bill

A legislative committee moved Massachusetts House Bill 4493 forward, a package aimed at PBM practices that squeeze independent and community pharmacies. It isn’t California law, but it’s the kind of bill language other states tend to borrow. Read more at Frier Levitt →

States keep winning 340B lawsuits against drug manufacturers

A Colorado federal judge dismissed a drug industry trade group’s challenge to that state’s 340B law, and similar fights are playing out in South Dakota, North Dakota, Maryland and West Virginia. So far, the pattern favors the states. Read more at 340B Report →

AbbVie and Organon expand their 340B exemption lists

Both manufacturers added new states to the list exempt from their 340B contract-pharmacy restrictions, and Amgen published a new FAQ on encounter data requirements. Worth checking if your 340B billing runs through a contract pharmacy relationship. Read more at 340B Report →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299

Quiet day for California Board of Pharmacy activity. One item worth a look, on how a PBM audit changes once the plan sends back a full discrepancy list instead of one number to dispute.

When a PBM audit turns into a discrepancy list, the fight changes

A discrepancy list breaks an audit finding into individual line items instead of a single number, and that changes how a pharmacy should respond. If your pharmacy is in the middle of a PBM audit, this is worth reading before your next response goes out. Read more at Boesen & Snow Law →

This update is general information about developments in pharmacy law and regulation. It is not legal advice, it does not create an attorney-client relationship, and it should not be relied on as a substitute for advice about your own situation. Prior results do not guarantee a similar outcome. If you have a specific question about your pharmacy, call or write and we will talk about it properly.

Law Office of Bhavesh Desai | Bhavesh Desai, Pharm.D., Esq.
Yorba Linda, CA 92886 | (909) 618-7299