2024 Pharmacy Law - Week 12 PDF

Overview ======== Instructor ---------- Dan Telford, PharmD\ dtelford001\@regis.edu Required Reading and References ------------------------------- Abood RR, Burns KA. (2025). Pharmacy Practice and the Law, 10th Edition, (TEXTBOOK) - **Chapter 6 Federal Regulation of Pharmacy Practice (p. 275...

Overview ======== Instructor ---------- Dan Telford, PharmD\ dtelford001\@regis.edu Required Reading and References ------------------------------- Abood RR, Burns KA. (2025). Pharmacy Practice and the Law, 10th Edition, (TEXTBOOK) - **Chapter 6 Federal Regulation of Pharmacy Practice (p. 275-285 up to the drug reimbursement section, p. 289-294 (starting with tamper resistant pad section) and p. 300-309)** - - Medicare - Medicaid - Medicare/Medicaid Fraud and Abuse Laws - Federal Regulation of Long-Term Care (in class discussion- not on RAT) - Federal Antitrust Laws - Miscellaneous Federal Laws Related to Pharmacy Practice (340B, Patient Safety and Quality Act, FSA, HSA (in class discussion- not on RAT) Class Format ------------ - 10 Question iRAT/tRAT - Application exercises to follow the tRAT Learning Objectives =================== Book Objectives --------------- - \* Identify the basic drug and pharmacy-related provisions of Medicare. - \* Identify the basic drug and pharmacy-related provisions of Medicaid. - \* Recognize the application of the Medicare/Medicaid fraud and abuse laws. - Identify CMS requirements for pharmacies that provide medications and services to Long-Term Care Facilities (LTCFs). (in class discussion- not on RAT) - \* Describe the application of the Sherman Antitrust Act to pharmacy practice. - \* Describe the application of the Robinson-Patman Act to pharmacy practice. Additional Targeted Objectives (for the RAT) -------------------------------------------- 1. Identify the four groups covered by Medicare. 2. **[Medicare Part D-]** be familiar with the following: a. Enrollment periods b. Pharmacy Access c. Notice Required when claims are not covered d. Medication Therapy Management (MTM) requirements e. Fraud and Abuse implications for pharmacies/pharmacists 3. **[Medicaid]**- Be familiar with the following: f. eligibility requirements (what population does it serve) g. Who administers, oversees, and funds state Medicaid programs. h. Prescription drug coverage i. Prescription pad requirements (p.289) 4. Medicare/Medicaid Fraud and Abuse Laws j. Know what would constitute a violation of the **False Claims Act** k. Be familiar with the **Anti-Kickback Statute** including: i. How a pharmacy could be in violation of the statute ii. What are the 2 elements that must exist to be in violation iii. What are some exceptions or "safe harbors" from the anti-kickback statute l. Know what activities the **Stark Law** prohibits and who it is targeted towards 5. Sherman Antitrust Act m. Be familiar with the key elements of the act and describe the application to pharmacy practice n. Be able to distinguish between section 1 and section 2 of the act 6. Robinson Patman Act o. Describe the application of the act to pharmacy practice p. Understand the concept of competing buyers and injury to competition q. Be familiar with the non-profit institutions act and know which activities/sales are permissible under the "own use doctrine" (see bullets on p.306-307) Selected Book Take-Away Points ------------------------------ - Medicare is the federal government health plan, insuring primarily those individuals over 65 years of age and those with permanent disabilities; it has four components, Parts A, B, C, and D. - Medicare Part A, in part, insures for hospitalization and certain LTCF stays, home health visits, and hospice; Part B, in part, covers certain outpatient products and services; and Part C, called Medicare Advantage, allows beneficiaries to choose a managed care plan. - Medicare Part D provides prescription drug benefits through either private stand-alone plans or as a component of a Part C plan. - Once enrolled in a Part D plan, an enrollee cannot normally change plans until the next open enrollment period, except if making a one-time change to a five-star plan. The open enrollment period is from October 15 to December 7. - Plans employing a formulary must utilize a P&T committee to develop and review the formulary; and, the formulary must include all therapeutic categories and classes of drugs with at least two drugs in each class, except for certain classes where all drugs must be covered. - Plans may not change therapeutic categories and classes in the formulary other than at the beginning of the year, except to include new drugs or therapeutic uses. - Part D plans must ensure that beneficiaries have convenient access to a network of pharmacies and cannot use mail-order pharmacies exclusively in place of community pharmacies. Beneficiaries are entitled to receive the same supply of drugs at either a community or mail-order pharmacy. - Although the law contains an "any willing provider" provision, many plans presently use networks of preferred pharmacies and some PBMs have excluded pharmacies from plans saying that they are not "similarly situated." - Pharmacies are reimbursed the ingredient cost plus a dispensing fee as determined by the plan; claims must be paid within 14 days of electronic submission. - Pharmacies must provide a printed notice to the patient when a prescription is not covered by the plan. - The law requires plans to provide MTM programs and pharmacists may receive fees for providing those services. Plans may not require more than three chronic diseases for a beneficiary to qualify for MTM services and must target at least five of nine core chronic conditions. - False claims under Part D are subject to the federal fraud and abuse statutes, and both plans and pharmacies must have policies and procedures in place to address fraud, waste, and abuse, including pharmacy employee training programs. - Pharmacies that supply DMEPOS must be accredited; however, the ACA allows an exemption if certain criteria are met. - Pharmacists are not recognized as healthcare providers under Medicare, affecting their ability to be compensated for services. APhA is currently supporting federal legislation to change the provider status for pharmacists. - Medicaid provides healthcare costs for certain categories of indigent patients and is administered by the state, jointly funded by the federal government and the state, with each state program subject to federal approval and federal regulation. - The federal government established the "MAC" program for drugs in 1975 out of concern that state Medicaid agencies were reimbursing pharmacies too much. - The FUL program replaced the MAC program in 1987. FUL drugs are multiple source drugs for which CMS determines a reimbursement amount. - The calculation for Medicaid reimbursement to a pharmacy for a dispensed drug product on the FUL list is the FUL price of the drug plus a dispensing fee, as determined by each state. - Current law provides that the FUL price of a drug is determined as no less than 175% of the weighted average of the most recently reported AMPs for therapeutically equivalent drug products available for purchase by "retail community pharmacy" on a nationwide basis. CMS regulations provide an exception allowing for the use of a higher multiplier when the FUL calculation amounts to less than the average retail community pharmacies' acquisition cost. - The definition of "retail community pharmacy" excludes mail order, nursing home, LTCF, hospital, clinic, not-for-profit and government pharmacies, and PBMs (42 C.F.R. § 447.504(a). - AMP is defined as the average price paid to the manufacturer by wholesalers for drugs distributed to "retail community pharmacy" and that "retail community pharmacy" pays for drugs directly from the manufacturer. - The FUL price must be based on quantities of 100 tablets or capsules or on quantities commonly provided by pharmacists. The agency must specify the compendia source for its price basis for each drug, and an FUL drug must be therapeutically equivalent and available from three different suppliers. - If a drug is not on the FUL list or the prescriber has designated "brand necessary," the pharmacy is reimbursed the lower of (1) AAC plus a dispensing fee established by the agency or (2) providers' usual and customary charges to the general public (42 C.F.R. § 447.512(b). - Prior to the formula provided earlier, pharmacies were reimbursed based upon the EAC of the drug rather than the AAC. States determined EAC based upon AWP; however, AWP has been determined to be a flawed estimate of what a pharmacy actually pays for a drug product. - Medicaid prescriptions must be written on tamper-resistant prescription pads. - The FCA prohibits knowingly presenting or causing to be presented a false or fraudulent claim for payment or approval; it prohibits knowingly making, using, or causing to be made or use a false record or statement material to a false or fraudulent claim. - Violations of the FCA could result in civil penalties of between \$5,000 and \$10,000 per claim, plus treble damages and the government has charged chain pharmacies with FCA violations. - Private persons can sue on their own behalf or on behalf of the federal government, and are known as qui tam lawsuits. - The AKS prohibits anyone from knowingly and willfully soliciting, receiving, offering, or paying any remuneration (including any kickback, bribe, or rebate) in exchange for inducing referrals or for furnishing any goods or services paid for by Medicare or Medicaid. - Violations of the AKS constitute a felony punishable by a maximum fine of \$25,000 per violation and/or 5 years imprisonment, and the government has charged chain pharmacies with AKS violations. - There are several exceptions to the AKS known as "safe harbors," and some apply specifically to certain pharmacy activities. - Drug manufacturer programs that induce healthcare providers to generate business for the manufacturer might violate the AKS. This includes educational grants, research funding, gifts to providers, fees for drug switching or consultation activities, and similar type programs. - The Stark law prohibits certain healthcare providers from referring Medicare or Medicaid patients to certain entities in which the healthcare provider (or an immediate family member) has a financial relationship. - Proof of a Stark violation does not require intent or that the defendant acted willfully or knowingly. - There are federal rules that impact pharmacy practice regarding LTCFs, including the storage, administration, and dispensing of drugs. - If the interdisciplinary team at a facility determines the practice clinically appropriate, residents may self-administer medications. - Each resident's drug therapy must be free from unnecessary drugs. This includes drugs used in excessive doses (including duplicative therapy), excessive durations, without adequate monitoring, without adequate indications for its use, in the presence of adverse consequences, or any combination of these. - LTCFs are limited in using psychotropic medications (e.g., antipsychotics, antidepressants, anti-anxiety, and hypnotics). Residents are not to be given psychotropic medications unless they are needed for a documented diagnosis, and any psychotropic medications not appropriately prescribed should have gradual dose reductions and discontinued. PRN orders for psychotropic medications are limited to 14 days. CMS limits pharmacies servicing LTCF to dispense not more than a 14-day cycle of medications. - Medication error rates at a facility cannot be greater than 5%, and residents must be free of any significant medication errors. - LTCFs must employ or obtain the services of a pharmacist to provide consultation on all aspects of the provision of pharmacy services. - Each resident of a LTCF must have his or her DRR, in conjunction with the resident's medical chart, at least once a month by a consultant pharmacist. The consulting pharmacist must document on a separate, dated, written report any irregularities to the attending physician, the facility's medical director, and the director of nursing. The physician must document in the medical record that the irregularity was reviewed and what, if any, action was taken. If no action was taken, a reason is required to be documented. An LTCF must develop and maintain policies and procedures for DRRs. - The Sherman Antitrust Act contains two sections: Section 1 prohibits concerted action that unreasonably restrains trade; and Section 2 prohibits exploitation of monopoly power for the purpose of harming competition. - A violation of Section 1 requires a formal or informal agreement between competitors. - The amount of market power a defendant possesses is generally critical to an antitrust analysis. The percentage of market power a business must have to be deemed a monopoly depends upon the facts of each situation, but market shares of more than 40% generally raise monopoly concerns. - Courts generally apply one of two types of analyses when evaluating whether an activity violates the Sherman Act: the rule of reason or the per se rule. Under a "rule of reason analysis" courts will balance the pro- and anticompetitive effects of the defendant's conduct. Courts will apply the "per se rule" to certain activities such as price fixing, boycotting, and tying arrangements. Price fixing is an explicit or implicit agreement among competitors to affect price or the allocation of services. Boycotting is an agreement among competitors not to deal with another party. A tying arrangement is one where the purchase of one product is conditioned on the purchase of another and when the seller can force the buyer to purchase the tied product. - PBMs manage the prescription drug portion of a health plan. - Because PPOs consist of competitors, they must be careful to not engage in prohibited activities such as price fixing or boycotting. - PSAOs (PPOs) are critical to allowing independent and small chain pharmacies to compete for third-party prescription plans. - Purchasing cooperatives are generally procompetitive; however, if a cooperative has significant market share, it must be cautious about excluding or expelling members as well as how it conducts business with sellers. - The 340B law requires that drug manufacturers provide outpatient drugs at special reduced prices to designated covered entities serving underserved and uninsured populations. - Covered entities may contract with pharmacies to serve their eligible patients; the number of contract pharmacy arrangements has increased dramatically since 2010. - A 340B contract pharmacy may use either the pre-purchased inventory model or the replenishment inventory model. - A 2014 OIG report revealed that 340B requirements lack clarity and that covered entities differ in their interpretation of the requirements leading to different determinations and inconsistencies. - Federal law makes it illegal for the covered entity or pharmacy to dispense or sell a 340B drug other than to an eligible 340B beneficiary. - PSQIA creates a voluntary program through which healthcare providers can share information related to patient safety events with PSOs, and this information is privileged and confidential.