SCPC Member Alert: Recent FDA Requirements on Dispensing Create Conflict with Department of Justice Fraud Concerns and Payer Practices

DATE: March 9, 2020

As you may know, many Part D Plans/PBMs and other government payers (Medicare, Medicaid and TRICARE) recently began seeking audit recoupments from pharmacies that do not dispense insulin pens in multi-dose packaging as provided by manufacturers.  SCPC understands that this payment policy change is causing confusion in the marketplace and could be disruptive to effective provision of insulin to patients in the LTC facilities and other LTC settings that SCPC members serve.

This situation seems to have arisen from yet another conflict among regulatory agencies.  We understand the key facts to include:

• January 2019: the OIG announced a settlement of fraudulent billing allegations against Walgreens for dispensing insulin pens in multi-dose packaging rather than removing individual pens from such packaging for individual dispensing. The OIG alleged that this practice constituented fraudulent billing under Medicare, Medicaid and Tricare.  Walgreens settled these claims for $209 million and entered into a Corporate Integrity Agreement with the Department of Justice.  You may review the DoJ’s press release concerning the settlement.

• January 2019: many PBMs began recouping payments to pharmacies for insulin pens dispensed in multi-dose, manufacturer packaging rather than as individual pens.

• November 2019: FDA announced revised manufacturer instructions to specify that insulin pens only should be dispensed in multi-dose packaging as provided by the manufacturer. An example of one of the FDA’s revised “packaged inserts“ with the new instructions for dispensing only in the original manufacturer carton can be found at § 16.2 here.  All manufacturers of insulin pens were required to update their “package inserts“ to include this same change.

• November 2019: many PBMs began recouping payments to pharmacies for insulin pens dispensed in individual units rather than in multi-dose, manufacturer packaging.

CMS guidance adds to the confusion.  The Medicare Part D Manual (Chapter 6, Section 30.4.4.1 and 30.4.4.2) offers limited guidance effective January 15, 2016 for both retail and long-term care settings which seems to specify that pharmacies must comply with FDA instructions with regard to “transition suppy” of non-formulary drugs, which seems of limited relevance.  This provision, moreover, specifies that “Part D sponsors and their processors must determine how to process claims in such cases, ”  but does not state explicitly that PDP payments must be consistent with FDA provisions.  In addition, the Part D Manual offers no guidance concerning Medicare Part A, Medicaid or TRICARE.

This confusion places LTC pharmacies in the untenable position of complying with the FDA instruction at the risk of claims denials or recoupments from PDPs/PBMs and other government payers and potential fraud charges from the DoJ, or compliance with DoJ interpretations at the risk of  FDA sanction and payment denials or recoupments.  In addition, it is possible that LTC facilities and pharmacies could face conflicts with the Requirements of Participation for Skilled Nursing Facilities (Medicare) and Nursing Facilities (Medicaid), as well as TRICARE, and also could face conflicts with Part D guidelines pertaining to LTC pharmacies.

We understand that, in addition to potential legal liability, conflicting requirements and enforcement actions by DoJ, FDA and CMS and payment denials or recoupment from government payers, the requirement that insulin pens must be dispensed in multi-dose packaging could present significant operational and cost concerns to pharmacies and facilities.  SCPC will rely on the Policy Council to provide information regarding these concerns.

SCPC has contacted CMS Part D staff to seek immediate assistance.  We also have initiated a thorough legal and regulatory analysis and are developing a comprehensive action plan to respond promptly to this situation.  In addition to a focus on resolving these conflicting requirements as soon as possible, we believe this development should help accelerate Congressional consideration of legislation to define LTC pharmacy in statute, which could well have helped avoid such a complicated and untenable set of circumstances for LTC pharmacies and the patients they serve.

If you have any questions or comments, particularly information about the degree to which these developments already have affected your operations, please let Alan Rosenbloom know immediately.