IMPORTANT CLIENT ALERT

The latest edition of OptumRx (ORX) Provider Manual (2019 4^th Edition) contains significant new provisions pertaining to maintenance of records by pharmacies.We expect that, in connection with desktop audits, ORX may start demanding documentation additional to that routinely reviewed in the past and may potentially decline to credit claims where the pharmacy cannot document compliance with the new extensive Provider Manual terms.

We note that the new invoice recordkeeping requirements significantly exceed the minimum standards that apply to pharmacies pursuant to Federal and state laws.We expect these issues to come up in future audits that deal with time periods after the introduction of the new provider manual.

We highlight several points, which we believe are of critical concern to our pharmacy clients:

• 1.Wholesaler Invoices and Acquisitions
• 1.1.The latest edition of the ORX Provider Manual mandates that pharmacies acquire their prescription and billed non-prescription inventory (OTC) only from wholesalers, manufacturers, or distributors licensed in the state where the pharmacy is located, and only if such wholesalers/distributors are VAWD-accredited.
• 1.2.If the pharmacy is unable to provide invoices from wholesalers/distributors that are licensed and VAWD-accredited, ORX will charge back the entire amount of the submitted claim.
• 1.3.It appears that ORX now expects the pharmacy to request, and provide to ORX, pedigree information concerning drugs purchased from wholesalers."Pedigree Information" refers to the requirements of the Federal Drug Supply Chain Security Act ("DSCSA") that all sales of drugs be accompanied by three pieces of information: transaction information, transaction history, and transaction statement.It should be noted that the state of implementation of the requirements of the DSCSA is fluid, uncertain, and misunderstood by most players in the pharmacy supply chain, and even large national wholesalers frequently cannot provide these documents on demand.
• 1.4.ORX requires that purchase invoices list lot numbers of purchased drugs. We note that at the present time the majority of wholesalers, even large national vendors, do not regularly supply the lot numbers of purchased drugs to their pharmacy clients on the purchase history reports.
• 1.5.It appears that ORX will not accept evidence of transfers of drugs from other pharmacies, even if accompanied by cancelled checks, either in connection with sporadic transfers or as part of an inventory purchase agreement.We are working with ORX to investigate whether ORX will accept evidence of acquisition of inventory in the context of asset purchases of pharmacies.In any event, we are certain that ORX will require that the acquired inventory be accompanied by all wholesaler invoices documenting that the purchases made by the transferor are in compliance with all of the above-mentioned requirements.
• 2.Signature Logs and Delivery
• 2.1.ORX requires that, if a pharmacy wishes to use an electronic signature log, it must obtain preapproval from ORX to do so.The means of securing the necessary pre-approval must be understood.
• 2.2.If the drug is delivered to a "third party program," the pharmacy is expected to demonstrate that the release of information to that program is authorized.This is likely to be interpreted to require clear documentation of the authorization to deliver to a third-party and industry wide practice of securing verbal authorizations will no longer suffice.
• 2.3.The pharmacy cannot prove delivery by demonstrating electronic delivery notices or POS receipts without prior authorization from ORX. Once again, the process of obtaining such an authorization will need to be carefully analyzed and properly understood to ensure compliance and avoid chargebacks and other adverse actions by ORX.
• 2.4.Delivery personnel must be W-2 employees only; in-person delivery is authorized within a 100-mile radius.

We expect these issues to come up in future audits and investigations conducted by ORX. It is imperative that pharmacists and pharmacy operators understand the new requirements imposed by ORX and other PMBs and ensure their pharmacy's compliance and defensibility of all its submitted claims.

Attorneys at MDRXLaw provide comprehensive regulatory guidance and legal counsel on the latest requirements applicable to pharmacy practices.If you have any questions pertaining to compliance with the latest regulatory requirement or PBM contractual obligations or need guidance in connection with an audit or investigation of your pharmacy, please feel free to contact one of our expert pharmacy attorneys at 212.669.0200 or by email at info@mdrxlaw.com. You can also visit our website at www.mdrxlaw.com to learn more about our team and our practice and contact one of our partners directly.