November 09, 2017

Big Issues Front and Center at Annual Conference for the American Society for Pharmacy Law

In the midst of the opioid epidemic, pharmacists and attorneys from across the country gathered last week for the 28th Annual Conference for the American Society for Pharmacy Law (ASPL). The conference brought together attorneys, pharmacists and other stakeholders from the National Association of Boards of Pharmacy (NAPB), state boards of pharmacy, drug distributors, PBMs and health systems to discuss important new developments and visions for the future of pharmacy law.

The conference provided insight into a number of timely and high-impact issues in the pharmacy industry. Below are a few that struck us as particularly important.

Compounding Continues to Confuse

You would think five years after the New England Compounding Center (NECC) killed 76 and sickened 700 and four years after the passage of the Drug Quality and Security Act (DQSA), there would be more clarity about the federal and state roles in overseeing compounding pharmacies. Despite attempts at alignment, the regulations remain a patchwork. 

Congress responded fairly quickly in passing the DQSA in 2013, creating a new regulated entity known as 503B “outsourcing facilities.” The Food and Drug Administration (FDA) has closely scrutinized these new outsourcing facilities — so closely, in fact, that many entities that initially registered with the FDA as outsourcing facilities have since closed or ceased bulk compounding. There was general discussion at the conference about the difficulty of compounding drugs in accordance with cGMP and the need for final guidance from the FDA on this issue. 

While oversight of outsourcing facilities clearly rests with the FDA, there continues to be uncertainty with respect to health system pharmacies (typically operating as 503A traditional compounding pharmacies), which have historically been regulated by State Boards of Pharmacies. In April 2016, the FDA issued draft guidance that clarified that the FDA will not take action against a hospital pharmacy distributing compounded drugs if distributed only to facilities that are owned and controlled by the health system in which the pharmacy exists, pursuant to a patient-specific order, and within a one mile radius of the compounding pharmacy. The one-mile radius is meant to distinguish the dispensing of medicine within a hospital campus from a larger health system. According to this draft guidance, a health system that wants to use a compounding pharmacy to distribute non-patient-specific compounded drugs to facilities across its service area will need to register as an outsourcing facility and follow stricter standards. Yet at least 20 states have legislation specifically allowing pharmacies to compound for “office use,” and others may allow such a practice through state registration as a manufacturer.  Many health systems are still uncertain whether to follow the draft FDA guidance or await further clarification from their Board of Pharmacy. 

The FDA’s practice of issuing draft guidance rather than promulgating regulations may continue. The Trump administration has required agencies to identify two regulations to eliminate if they want to create one new regulation. In that spirit of deregulation, the FDA’s most recent regulatory agenda did move some of the regulations relating to compounding on its inactive list.

Suspicious Order Monitoring Is Required of Everybody

A recent 60 Minutes story highlighted the duty that drug wholesalers have in identifying suspicious orders for controlled substances and reporting them to the Drug Enforcement Agency (DEA). The McKesson Compliance Addendum, a CIA-like agreement, is a helpful roadmap for what the DEA expects of drug wholesalers. But it was very clear from multiple presentations at ASPL that drug wholesalers are not alone in this duty. Every entity in the supply chain (including manufacturers and perhaps even a State Board of Pharmacy) has a duty to identify and report suspicious orders.

Retail pharmacies in particular have been hit with a number of settlements in 2017 that relate directly or indirectly to a failure to report suspicious orders. Costco ($11.75 million) and Rite Aid ($834,200) entered into settlement agreements for filling prescriptions that contained incorrect DEA numbers for prescribers. Safeway ($3 million) and CVS ($3.5 million) entered into agreements for failing to timely report missing or stolen controlled substances, and for filling forged prescriptions and not resolving “red flags.”

In addition to implementing a comprehensive system to comply with the DEA’s recordkeeping requirements, pharmacies should take proactive measures to identify and report suspicious orders. Pharmacies should perform analysis on data available to them, such as ordering and dispensing data that would reveal any spikes in drugs ordered and dispensed, and deviations from the norm in scripts written by a particular physician. Data analysis may help to identify an issue, but further inquiry should be done before coming to the conclusion that a particular physician may be engaging in unethical behavior.

Pharmacies need to be very careful about what they do if they identify a physician who may be engaging in unethical behavior with respect to their prescribing practices. An entire session was devoted to pharmacists defending defamation claims, and claims for tortuous interference, arising out of statements made by a pharmacist while refusing to fill a prescription from a particular physician. For example, earlier this year — in Mimms v. CVS Pharmacy, Inc. — CVS suffered a $1 million jury verdict for telling patients that the physician who wrote the prescription “operates a pill mill,” and is a “murderer,” and that he “soon would be arrested.”  In contrast, in a Florida court’s 2015 decision in Lefrock v. Walgreens Co., the court recognized that a pharmacist could have a privileged conversation with a patient that is afforded qualified immunity in the course of counseling the patient, particularly in a situation where a pharmacist has a legal duty to counsel the patient. Pharmacies should provide clear guardrails for their pharmacists regarding how to handle these situations, and certain words and phrases that should be avoided.

Oh, Canada!

One of the last sessions at ASPL was a discussion led by our colleague Libby Baney regarding illegal online pharmacies, many of which claim to operate in Canada and sell drugs that are manufactured in Canada. Despite those beliefs, according to the Alliance for Safe Online Pharmacies (ASOP Global), there are 33,000 illegal online pharmacies delivering unsafe and adulterated medications. And 85 percent of the drugs being sold by “Canadian” online pharmacies are not in fact manufactured in Canada, but are manufactured in India, China, Mexico, and elsewhere. Unfortunately, ASOP Global’s research has found that less than 5 percent of Americans are aware of the risks of illegal online pharmacies — including those masquerading as Canadian — and people don’t know how to find a safe site. In an attempt to help identify safe online pharmacies, NABP has acquired the .pharmacy top-level domain. NABP only allows safe, legal entities to use a .pharmacy domain if they have been verified to meet the NABP. pharmacy program standards and policies. More detailed information can be obtained at

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