Specialty Pharmacy DEA Compliance and PBM Audit Defense - Federal Lawyer

Specialty Pharmacy DEA Compliance and PBM Audit Defense

While Specialty Pharmacies Face the Same Compliance Burdens as Other Types of Pharmacies, the Unique Nature and High Cost of Specialty Medications Means that These Pharmacies Often Fact Enhanced Scrutiny from the DEA and Their PBMs. Does Your Specialty Pharmacy adhere to Pharmacy Compliance guidelines? Contact Us to Find Out.

Specialty pharmacies play an important role in our nation’s healthcare system, and their role is expected to expand significantly in the coming years. Spending on specialty drugs for organ transplant patients, patients with HIV and autoimmune disorders, and patients with

other uncommon conditions is expected to increase exponentially by the end of the decade; and, while this means that specialty pharmacies have significant profit potential, it also means that they are being closely monitored by pharmacy benefit managers (PBMs), the U.S. Drug Enforcement Administration (DEA), the Centers for Medicare and Medicaid Services (CMS), and various other federal agencies.

For specialty pharmacy owners, avoiding significant penalties due to alleged compliance deficiencies requires a two-part approach: (i) development of a comprehensive compliance program, and (ii) execution of a proactive and strategic defense in the event of an audit or investigation. At Oberheiden, P.C., our pharmacy compliance lawyers and non-lawyer pharmacy consultants bring centuries of combined experience to protecting the interests of specialty pharmacies nationwide.

PBM Compliance and Audit Defense for Specialty Pharmacies

While many of the larger PBMs now own their own specialty pharmacies, several still work with independent providers. Although specialty pharmacies have faced challenges with joining PBM networks in the past (based on “network exclusion” provisions in the PBMs’ pharmacy contracts) – and some certainly still face challenges today – these types of exclusions have frequently been held to violate state and federal “Any Willing Provider” laws and other statutes.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Pharmacy benefit managers as intermediaries between pharmacies and the insurance companies and drug manufacturers. They negotiate prices, administrative burdens (and costs) for all parties involved. However, as PBM’s primary allegiance is to the insurance companies and drug manufacturers, pharmacies – and specialty pharmacies in particular – are subject to strict billing rules, and PBMs routinely conduct invasive audits focused on securing recoupments (or “retractions”) and otherwise enforcing rules that heavily disfavor network participants.

1. PBM Compliance

As a result, for specialty pharmacies with PBMs, billing compliance needs to be a top priority. Although the basic billing requirements are largely uniform across PBM networks, each PBM has its own unique requirements as well. This means that specialty pharmacies’ compliance efforts must be tailored not only to the unique aspects of their practice, but also to the specific requirements of their PBM contracts.

Our attorneys and consultants provide comprehensive PBM compliance representation to specialty pharmacies nationwide. We are intimately familiar with the unique and challenging aspects of PBM compliance, and we work closely with our clients to ensure that their billing practices are not putting them at risk for recoupments and other penalties. While we custom-tailor our PBM compliance programs to each individual specialty pharmacy’s needs, the core components of our compliance programs generally include:

  • Full assessment of the requirements under the PBM contract and billing rules
  • Drafting of policies and procedures based on the PBM contract and billing rules
  • Practical implantation of policies and procedures
  • Internal dissemination and training on policies and procedures
  • Review and negotiation of third-party contracts (i.e. billing administrators and IT service providers)
  • Ongoing PBM compliance counseling and compliance program updates on an as-needed basis
  • Establishment of internal monitoring, auditing, and enforcement protocols
  • Establishment of preliminary PBM audit response protocols

2. PBM Audit Defense

Even with an effective compliance program in place, it is still possible (and even likely) that specialty pharmacies will face audits conducted by their PBms. PBMs routinely conduct both “desktop” (remote) and “field” (on-site) audits to determine whether network providers are in compliance and have properly billed for all ordered and dispensed medications. As a result, while compliance efforts are about being able to effectively defend against audits when they occur.

In addition to representing specialty pharmacies with regard to PBM compliance, we also represent specialty pharmacies in PBM audits. Our PBM audit defense services include:

  • Pre-audit consultation to assess potential risks and defense strategies
  • Intervention in the audit process and direct communication with PBM auditors on our client’s behalf
  • Ensuring that PBM auditors do not exceed the scope of their contractual authority
  • Challenging PBM auditors’ flawed methodologies and assumptions
  • Preventing PBM auditors from making determinations based on limited data samples
  • Negotiating with PBM auditors as necessary
  • Post-audit consultation and audit appeals (if necessary)

Federal Compliance for Specialty Pharmacies: DEA, CMS, DOD, OIG and Other Agencies

Specialty pharmacies are subject to numerous laws and regulations at the federal level. This includes not only the Controlled Substances Act (CSA) and its regulations (which are under the jurisdiction of the DEA), but also laws such as the False Claims Act and Anti-Kickback Statute that apply to all federal program-participating healthcare providers. If your specialty pharmacy bills Medicare, Medicaid, Tricare, or the VA in addition to billing private insurers through a PBM, it is subject to these laws; and, in addition to the DEA, agencies including CMS, the U.S. Department of Defense (DOD), U.S. Department of Health and Human Services Office of Inspector General (OIG) have oversight of your pharmacy as well.

Our lawyers and non-lawyer consultants have extensive experience advising pharmacies with respect to all aspects of federal compliance. Similar to our PBM compliance programs, our federal compliance programs are custom-tailored to each individual pharmacy based on a comprehensive assessment of its unique needs. With regard to DEA compliance, areas the typically need to addressed include:

  • DEA registration applications and renewals
  • Electronic prescription applications
  • Paper and fax prescription management
  • Prescription drug inventories
  • Packaging and transfer of specialty drugs
  • Security to prevent loss or theft of specialty drugs
  • Recordkeeping, internal auditing, and document storage practices
  • Prescription management and fraud monitoring
  • Specialty drug ordering
  • Specialty drug dispensing and diversion prevention

While specialty pharmacy owners and pharmacists often focus their compliance efforts on avoiding scrutiny from the DEA, it is imperative that DEA compliance not be the sole focus of specialty pharmacies’ federal compliance efforts. In addition to DEA compliance, specialty pharmacies’ compliance needs also include:

  • General business compliance (i.e. entity formation, structuring, and licensing)
  • Employment law and OSHA compliance
  • Third-party contract compliance (i.e. contracts with marketers and electronic prescription application providers)
  • HIPAA compliance
  • Medicare, Medicaid, Tricare, and VA compliance
  • Anti-Kickback Statute compliance
  • Tax law compliance

Federal Audit and Investigation Defense for Specialty Pharmacies

While PBM audits can have substantial consequences (including financial liability and the potential for network exclusion), the consequences of federal pharmacy audits and investigations can be far more severe. Loss of DEA registration or federal program eligibility is one potential consequence; however, specialty pharmacies accused of violating the Controlled Substances Act, the Anti-Kickback Statute, the False Claims Act, and other federal laws can also face civil and criminal penalties in federal district court.

With this in mind, specialty pharmacy owners and pharmacists must seek experienced legal representation a the first sign of a federal audit or investigation. Letters from federal agencies, civil investigative demands (CIDs), subpoenas, and in-person visits from federal agents are all signs that it is time to speak with a federal defense lawyer immediately. At Oberheiden, P.C., our federal defense lawyers and former federal agents and prosecutors have extensive experience defending pharmacies and other healthcare providers in audits and investigations involving:

  • DEA, DOD, CMS, and OIG
  • Federal Bureau of Investigation (FBI)
  • Internal Revenue Service (IRS)
  • U.S. Attorney’s Office
  • U.S. Department of Justice (DOJ)
  • U.S. Department of Labor (DOL)
  • Medicare Fraud Strike Force
  • Opioid Fraud and Abuse Detection Unit

Similar to our approach to PBM audits, when representing specialty pharmacies in federal audits and investigations, we take a comprehensive approach that starts with intervening in the inquiry as soon as possible. Once engaged to represent a specialty pharmacy in DEA or other federal agency matter, we promptly make contact with the federal agents and prosecutors handling the audit or investigation in order to determine: (i) what triggered inquiry, (ii) the scope and nature of the inquiry, (iii) the current status of the inquiry, and (iv) what defenses we will be able to assert on our client’s behalf.

A Proven Record of Successful Compliance and Defense Representation

At Oberheiden, P.C., we have a proven record of providing effective compliance and defense representation for pharmacies and other healthcare providers. We have protected clients in 48 states, and we have successfully resolved matters involving the DEA and all of the other federal agencies mentioned above. If you have questions about PBM or federal compliance, or if your specialty pharmacy is facing an audit or investigation, we encourage you to contact us for a free initial consultation with one of our highly-experienced federal attorneys right away.

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If you would like to speak with one of our attorneys about PBM compliance or any other legal matter, please call 888-680-1745 or contact us online. We are available 24/7, and we can provide emergency legal representation if necessary.

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