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Pharmaceutical Compliance

Pharmaceutical Compliance at a Glance

Federal law imposes several compliance obligations on pharmacies operating in the United States. All aspects of pharmaceutical practice are affected by these compliance obligations, from drug ordering and inventory management to billing public and private payers. Pharmacy compliance obligations are extensive, but federal authorities do not excuse oversights. Pharmacy owners and pharmacists-in-charge can expect significant repercussions if an audit, investigation, or whistleblower complaint reveals evidence of shortcomings.

Compliance must be critical for pharmacies in the United States. If a pharmacy's compliance is anything short of comprehensive, they cannot expect to escape scrutiny if they are overburdened with high demand. By taking a proactive stance toward compliance, pharmacies can meet their compliance obligations, and pharmacy owners and pharmacists can protect themselves (and their staff) from federal liability.

The Compliant Path

To order prescription medications, pharmacies must use DEA Form 222 (In order to transfer a C-II controlled substance between laboratories, like sodium pentobarbital, a DEA Form 222 order form is necessary), and they must ensure that they are ordering genuine drugs from reputable sources. In addition to documenting and tracking all orders placed for prescription medications, pharmacies must also maintain documentation of all shipments received.

Federal law, known as the Drug Supply Chain Security Act (DSCSA), aims to prevent counterfeit medications from being distributed. DSCSA compliance obligations for pharmacies include:

  • avoiding transactions with entities that are not registered with the U.S. Food and Drug Administration (FDA) or licensed under state law
  • conducting drug tracing analyses to identify counterfeit medications
  • investigating suspected medications and notifying the FDA

A well-managed inventory is crucial to avoiding unwanted scrutiny from the DEA and other federal agencies. Using comprehensive inventory control protocols and maintaining detailed documentation of all incoming and outgoing drugs can help pharmacies avoid discrepancies and losses.

There are additional compliance obligations associated with accepting electronic prescriptions in addition to those imposed by filling paper prescriptions. For managing electronic prescriptions, pharmacies must use appropriate software; they must also thoroughly document all transactions involving digitally received prescriptions.

Prescription drug fraud must be identified and prevented by pharmacies through effective policies and protocols. This includes assessing the validity of prescriptions issued by physicians, as well as evaluating prescriptions and refill requests made by patients. Pharmacy owners are also obligated to implement physical and logical security measures to prevent prescription drugs from being stolen. Both medications in inventory as well as those in transit are subject to this requirement.

Before transferring or disposing of prescription medications, pharmacies should ensure that they have proper documentation, and they must follow their internal policies and procedures regarding transfer and disposal. Third-party service providers should have adequate controls in place as well for pharmacies that utilize them.

To demonstrate that a prescription has been dispensed, pharmacists need to mark prescriptions. The pharmacy's name and address must be included, along with the prescription reference number, the amount of medication disbursed and the date of dispensing.

The prescription must be marked as canceled once all supplies and repeats have been dispensed. In addition, expired prescriptions should also be marked as cancelled. The expiration date for Schedule 4 items is 12 months after issuing, and for Schedule 8 items it is 6 months. Schedule 8 prescriptions should be annotated by the pharmacist to indicate how they have been authenticated by the prescriber.

The patient's clinical record must keep track of what was dispensed on each occasion. Clinical records are the dispensing software in a pharmacy. The pharmacist must record the following information for each medicine dispensed:

  • Identifying information about the patient (name and address)
  • patients date of birth for Schedule 8 medicines
  • name of medicine supplied, and quantity supplied
  • prescription date and dispensing date
  • prescription reference number generated by the dispensing software; and
  • name and address of the prescriber.

While the prescription is still in use, the original must be kept. Prescriptions with remaining repeats of Schedule 8 and within the 6-month expiration date are included.

Documents must be retained after they have been no longer used for the required period. Documentation for obtaining or authorizing supplies may include prescriptions, repeat forms, duplicates, doctors' bag requests, faxes for emergency supplies, or supply requisitions. Additionally, any dispensing information required by legislation, such as supply endorsements, script cancellations, etc., must be recorded.

If a pharmacy is not dispensing from the original document, such as an order to supply a medicine on a Residential Medication Chart, copies/images of supply documents are also necessary. It is not possible to dispense medicines from copies or images as they are not legal prescriptions. Original prescriptions must be accepted by pharmacists instead of scanned images. Images cannot be accepted as an electronic prescription system. Documents are stored as copies or scanned copies if they meet the requirements of the legislation and can be reproduced later.

It is essential that an electronic copy of a legal authorization to supply a medicine is an exact and accurate image of the original. Any part that is obscured or illegible must be removed. It is important that the quality of the image, including resolution, contrast, color, and size, is sufficient for this purpose. Commercial document archiving systems are recommended as fit-for-purpose options.

Modifications, alterations, and deletions of an image should not be permitted through electronic storage methods. It is essential that the system is adequately backed up, disaster resistant, and resistant to loss of data. As with the original documents, the system should maintain the confidentiality and security of the information. It is the responsibility of the authorized person to control or maintain electronic records.

Images must be retrieved or reproduced by the system for viewing, printing, or electronic transfer to the Department of Health as required.

It is imperative that pharmacists and pharmacy technicians follow stringent protocols when filling prescriptions and dispensing medications to ensure the correct drugs are dispensed at the correct dosage. Additionally, pharmacies should take appropriate measures to reduce the risk of prescription drug diversion.

The Key Elements to Billing and Coding Compliance

Whenever pharmacies bill Medicare, Medicaid, Tricare, private insurance companies, or other payors, they must ensure that they are coding all reimbursement requests correctly. In the event of a pharmacy fraud audit or investigation, coding errors, even unintentional ones, may result in substantial liability. Using incorrect billing codes, upcoding prescriptions to charge higher rates, billing for the incorrect quantity or drug, and billing for medications that were not actually given to patients are examples of errors that can raise suspicion.

Pharmacy billing compliance also involves taking reasonable steps to confirm that all prescriptions they fill are medically necessary. Payers may deny reimbursement for non-medically necessary prescriptions, and they may also pursue remedies or penalties for fraud. Even though pharmacists are not expected to second-guess healthcare providers' decisions in every case, they should understand when and how to identify questionable prescriptions. 

Maintaining compliance with the terms of pharmacy benefit managers (PBMs) contracts is important for pharmacies that work with PBMs not only to avoid retractions and liability, but also to avoid the possibility of federal scrutiny. Pharmacists and pharmacy owners can be charged with insurance fraud under federal law, which can carry substantial fines and prison terms. 

Pharmacies must conduct thorough due diligence and negotiate adequate protections into service agreements when engaging third parties to provide transfer, disposal, billing, and other services. As pharmacies cannot assign their obligations under federal law, they can still be held directly responsible if a third-party service provider violates the law. 

Due to the growing number of states that have legalized marijuana for medicinal purposes, pharmacies' cannabidiol (CBD) prescription practices are under enhanced scrutiny at the federal level. It is necessary to adopt specific policies and procedures that are specific to CBD compliance in pharmacies that fill CBD prescriptions based on legalization under state law.

Similarly, compound pharmacies and specialty pharmacies have additional compliance burdens. The DEA has focused a lot of attention on compound pharmacies in recent years, and specialty pharmacies must demonstrate comprehensive compliance to the DEA and to their PBMs.

Pharmacy organizations need to adopt comprehensive written policies and procedures to effectively implement their compliance protocols and demonstrate compliance to the DEA, PBMs, and other federal authorities. Besides addressing all aspects of compliance (including, but not limited to, those discussed above), these policies and procedures should also be tailored to each pharmacy's unique legal obligations and operational risks.

The compliance efforts of pharmacies must also include affirmative steps to assess the effectiveness of their compliance programs and to determine if additional corrective action is needed. Internal audits are conducted routinely, new compliance risks are evaluated periodically, and there are documented protocols that can be used in the event of a compliance violation.

To establish and maintain compliance, pharmacies' personnel should be trained on the requisite policies and procedures. Each role will have different training requirements, and everyone should be required to affirmatively certify completion of the required training programs.

Establishing a compliance officer is a crucial step toward demonstrating to federal authorities that your pharmacy takes compliance obligations seriously. The compliance officer should have a thorough understanding of all aspects of the pharmacy's operations, and they should be able to devote sufficient time to assessing the pharmacy's compliance risks and needs on a regular basis.

Recordkeeping is a key component of pharmacy compliance, as discussed above. When it comes to federal law enforcement and PBM compliance, if a pharmacy cannot provide documentation explaining compliance, then it can face serious liability risks even if it has complied with the law and its contractual duties. Compliant pharmacy policies and procedures must include provisions for the generation and storage of documentation, and pharmacies must emphasize the importance of documentation throughout their entire operation.

In addition to compliance, pharmacies must also demonstrate compliance during an audit or investigation. Pharmacies are routinely audited by the DEA and the PBMs, and apparent compliance deficiencies may trigger invasive federal investigations that can result in civil or criminal penalties. 

Pharmacy owners, pharmacists-in-charge, and pharmacies are subject to legal liability if they are unable to comply with civil investigative demands (CIDs), subpoenas, and other requests based on the Controlled Substances Act and its enabling regulations. Therefore, documentation of compliance is just as important as compliance itself, and pharmacies should work with experienced legal counsel to ensure they are taking the proper steps to protect their owners, their employees, and themselves. (Insert link to get connected to a compliance officer)

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