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Pharmacy Benefit Managers Placing Increased Scrutiny On Pharmacy and Wholesaler Pedigree Documentation
January 14, 2016

In recent months, we have learned of increasingly aggressive audit activity by Pharmacy Benefit Managers (PBMs). As part of these audits, at least one PBM has suspended payments pending the results of the audit, which may violate various legal and contractual obligations of the PBM.  Responding to the audits can be extremely burdensome and time consuming.  Many pharmacies have suffered from significant operational complications resulting from the complete suspension of payments while awaiting the results of an audit, which can take many months.

Some of these audits have requested that pharmacy wholesalers independently provide the auditors with pedigree documentation, in order to validate drug purchases from manufacture through dispensing.  Although the Federal Drug Supply Chain Security Act (DSCSA) requires such documentation to be maintained and provided by all wholesalers, the FDA announced that it recognized that wholesalers may need additional time to begin maintenance of such documentation.  Accordingly, the FDA has delayed enforcement until March 1, 2016.  Due to the delay in enforcement, it is questionable whether such pedigree information is necessary to substantiate a claim to a PBM.

Pharmacies that are facing PBM audits of this sort should be aware of the possibility of a suspension of payment pending the audit results, and may wish to consider appealing findings, such as those based on the lack of pedigree information.

For additional information, please contact the San Francisco Office at 415.875.8500; Joe LaMagna in San Diego at 619.744.7300; or Brett Moodie in Los Angeles at 310.551.8111.

For media inquiries, please contact Barrett McBride at bmcbride@health-law.com or 916.456.5855.