2020 Star Ratings – Pharmacies Likely to Feel Pressure for Greater Efficiency and Improved Patient Outcomes

The Centers for Medicare & Medicaid Services (CMS) has announced that during 2020, an increased number of senior citizens will have access to higher quality Medicare Advantage (MA) and Part D prescription drug plans.  That announcement came as the agency released 2020 Star Ratings for plans operating under these programs, which indicated improved performance averages on the determinative star rating index.

“Most people with Medicare will have access to Medicare Advantage and Part D plans with four or more stars in 2020,” CMS explained in a press release, “and approximately 81 percent of Medicare Advantage enrollees with prescription drug coverage will be in plans with four and five stars in 2020, an increase from 69 percent in 2017.”

Specifically, CMS expects 52 percent of Medicare Advantage plans that offer prescription drug coverage to have an overall rating of four stars or higher, compared to approximately 45 percent during 2019.  Further, the agency notes the average star rating for all Medicare Advantage plans with prescription drug coverage has improved to 4.16 out of 5 stars, increasing from 4.02 in 2017.

With regard to Part D plans, analysis by AARP found that while scores are “much lower than those of the MA plans,” they too had shown improvement over the past year, “mainly because beneficiaries have moved from plans with lower scores to those with higher ratings.”

Overall, CMS estimates that during 2020, 28 percent of individuals enrolled in stand-alone Part D plans will be covered by plans with four or five stars, compared to three percent covered by such plans in 2018.  The average star rating for a stand-alone prescription drug plan has improved from 3.34 in 2019 to 3.50 in 2020.

In announcing these improvements, CMS Administrator Seema Verma noted improvements that have been made to Medicare Advantage and Part D programs.  “Due to recent actions CMS has made to protect and strengthen Medicare Advantage, plans are better able to compete on the basis of cost and quality,” Administrator Verma noted.  “As a result, beneficiaries are benefiting from more plan choices, lower costs, and increased quality.”

While this improvement among Medicare Advantage and Part D plans is certainly positive news, it does hold important implications for pharmacies – even though pharmacies are not specifically part of the CMS Star Rating system.

Let’s explain that.

In 2008, the Centers for Medicare and Medicaid Services (CMS) created the Five-Star Quality Rating System as a way to assess Medicare health and drug plan performance on a number of key criteria.  The purpose is to provide patients and their families with an easy way to compare plans, and ensure access to high-quality choices for their Medicare coverage.

In addition, by rewarding strong performers with financial benefits, the star ratings system seeks to incentivize low-scoring plans to improve performance.

Medicare plans are rated on a scale of 1 to 5 with, according to  CMS, a 1-star rating representing poor performance, and 5-stars representing excellent performance.  The official scoring matrix breaks down as follows:

5-star rating:  Excellent

4-star rating:  Above Average

3-star rating:  Average

2-star rating:  Below Average

1-star rating:  Poor.

High performers receive significant rewards for their good ratings that include major incentive bonuses (for Medicare Advantage Drug Plans)  and the ability to enroll patients year-round.  A poor performing plan will naturally not be eligible for financial bonuses, but runs the greater risk of losing eligibility to serve as a Medicare plan.

In addition, highly rated plans will attract larger numbers of patients, while poor performers will tend to lose members.  Dr. Zac Renfro, PharmD. explained in an Elements Magazine article why the ability to attract new members is critical to today’s health plans.  “Due to the Affordable Care Act (ACA), health plans and pharmacy benefit managers (PBMs) can now only keep a certain percentage of their profits,” he explained.  “The remaining amount must be used to cover the cost of the services they provide, as well as reinvesting back into the health plan or PMS’s program.”

Which is where plan enrollment becomes a factor.  “The only way that they can increase their profits,” Renfro noted, “is by increasing their patient numbers in their health plan.  Health plans that have a lower star rating tend to have a lower number of patients choosing them over higher rated plans that have similar costs.

“With pharmacies impacting a plan’s star rating so much,” Renfro added,  “they’re starting to put an emphasis on pharmacy quality scores to determine preferred networks and other performance contracting programs.”

Star Ratings – Key Criteria

While many factors contribute to a health plan’s star rating, offers a “summary” of key considerations that include:

  • Staying healthy – screening tests and vaccines: Whether members receive various screening tests, vaccines, and other check-ups to help them stay healthy.  For example, plans are assessed based on percent of plan members who receive flu vaccinations each year, the percent of female members who have regular mammograms, and the percent of plan members screened for colon cancer.
  • Managing chronic conditions: How often members with certain conditions undergo recommended tests and treatments to manage their conditions.  This includes ensuring patients with diabetes receive recommended care; that patients with high blood pressure follow recommended treatments, and that patients with bone fractures are treated for brittle bones.
  • Member experience with the health plan: Based on member ratings of a particular plan.
  • Member complaints and changes in the health plan’s performance: How often members had problems with the plan.  Includes how much the plan’s performance improved (if at all) over time.
  • Health plan customer service. How well the plan handles member calls and questions.

Prescription drug considerations

Medicare plans that cover prescription drugs are assessed on factors that include:

  • Drug plan customer service: How well the plan handles member calls and questions.
  • Member complaints and changes in the drug plan’s performance: How often members had problems with the plan.  This includes how much the plan’s performance improved (if at all) over time.
  • Member experiences with the drug plan: Member ratings of the plan.
  • Drug safety and accuracy of drug pricing. Assesses accuracy of the plan’s pricing information, and the frequency with which members are prescribed drugs in a way that is safe and clinically recommended for their condition.

Within these broad categories are several considerations that directly relate to pharmacy performance.  These factors include:

  • Ease of getting prescriptions filled when using the plan.
  • Accuracy of the plan in providing drug pricing information: This is a score based on prices members actually pay for drugs, compared with prices listed on the plan’s website.  Higher scores in this category generally mean the plan accurately listed drug prices.
  • Diabetes, blood pressure, and cholesterol medication adherence: Percent of plan members with prescriptions for these conditions “who fill their prescription often enough to cover 80 percent or more of the time they are supposed to be taking the medication.”
  • Members who had a pharmacist (or other health professional) help them understand and manage their medications. This is especially relevant for patients with medication therapy management programs.  Programs are assessed to determine frequency and quality of interactions and discussions between the pharmacist and patient.
  • Extent to which patients with diabetes are taking drugs to treat high cholesterol. As a way to lower the risk of developing heart disease, most people with diabetes should take cholesterol medication.  This rating is based on the percent of diabetic plan members who take the most effective cholesterol-lowering drugs.
  • Plan members’ complaints about prescription drug coverage: Every year, Medicare surveys people who leave their plan to determine reasons behind that decision.  Patients are specifically asked if problems with prescription drug coverage played a role with regard to:
    • Any change in medications covered by the plan
    • Any problems getting the plan to pay for their medications
    • Any problems obtaining medications, including brand name drugs; or
    • Frustration with the plan’s approval process.
  • Comprehensive medication reviews (CMRs) were added to the list of star rating categories in 2017, as a way for Centers for Medicare & Medicaid Services to assess the quality of medication therapy management services provided to Medicare beneficiaries.
  • The list was further expanded in 2019, when CMS announced that statin use for treating diabetes had been added to the list of performance indicators. According to McKesson, plans will be assessed based on the number of diabetes patients ages 40-75 who receive a statin.  For pharmacies, this means identifying diabetes patients who are not currently on a statin, and contacting their physician to recommend that one be prescribed.

According to analysis by McKesson, pharmacy-related measures are weighted heavily, and can impact up to 50 percent of a Medicare plan’s overall star rating.  It’s easy to see then, why plan administrators scrutinize pharmacy performance, and only want to engage with high-performers.

This high level of scrutiny is likely to become even more intense in 2020, as the average star rating among Medicare Advantage and Part D plans continues to increase.  Plans wishing to improve their attractiveness among beneficiaries will look to continue to improve their star ratings, with pharmacy performance an important part of that success.

Improving Pharmacy Performance with an Integrated Technology Solution

As pharmacies look to improve performance, technology will play an integral role.  Most pharmacies already rely on technology to perform at least a perfunctory level of pharmacy-related services.  But in recent years, tremendous advances in pharmacy system capabilities allow extensive data analysis, tracking and reporting functions that simply did not exist as recently as a few years ago.

With regard to improving pharmacy performance on 5-Star related categories, technology can be especially helpful in ways that include:

  • Medication Adherence. Pharmacists have a clearly-defined role in helping meet CMS directives for overseeing medication adherence for patients with chronic conditions including diabetes, high blood pressure and high cholesterol.  This is because of pharmacists’ unique position to engage patients about the importance of taking medications as prescribed, and to facilitate the adherence process.

With regard to technology, a pharmacy-specific solution can maintain patients’ prescription histories, which means a pharmacist can have immediate access to patient records when filling a prescription, or speaking with a patient about a particular medication.  Ready access to this information can help a pharmacist explain how a particular drug works, and discuss any potential side effects, which can allay patient concerns.

In addition, a pharmacy can automatically generate outbound text messages, emails and phone calls, as a way to remind patients about renewals and pickups.  These simple messages can have a tremendous impact in reminding patients that a prescription is about to run out, thereby helping to avoid a missed dosage, or even worse, a patient simply deciding to forego renewing a prescription.

  • Comprehensive Medication Review. According to the American Journal of Health-System Pharmacy, CMS directs that medication therapy management programs target patients who have two or more chronic diseases, take Medicare Part D-covered drugs, and have estimated drug spending that exceeds a CMS-established threshold.

Pharmacists may perform the CMR, which must include an action plan for improving the patient’s medication use.

Similar to technology’s role in addressing adherence, an integrated system can manage the CMR process in key ways that include:

  • Identification of eligible patients
  • Determination of ideal medication dosage and usage schedule
  • Synching of all medications so that all pick-ups occur on a single day
  • Availability of information describing purpose of each medication, along with information about potential side effects
  • Tracking of all pharmacist-patient interactions
  • Outbound texts and phone calls to remind patients about scheduled refills.


  • Ease of Obtaining Medications. According to Surescripts 2018 National Progress Report, 85 percent of all prescriptions were delivered to pharmacies electronically during 2018, a greater than 500 percent increase since 2015.  For patients, e-prescriptions eliminate an extra step in the process, since it is no longer necessary to travel to the pharmacy to drop off a prescription.  Instead, a patient can wait until notified that the prescription is ready, and then set out for a quick pick up.  One study found patient adherence improves by 10 percent when the medication is e-prescribed, compared with written prescriptions.

A comprehensive technology system ensures seamless processing of the prescription from the point it is received and recorded, entered into the queue, filled and marked for pickup.

Use of Statins.  With CMS now assessing information about diabetes patients who are prescribed statins, a pharmacy’s technology system can easily identify eligible patients, notify them about the role of statins in diabetes management, and initiate the process for obtaining a prescription.


At the same time CMS released its overall 2020 star ratings, it also released the average rating for each area of measurement.  Among areas that directly affect pharmacy performance, “medication adherence for diabetes medications” carries an average star rating of 3.9; “medication adherence for cholesterol (statins)” increased to 3.6, and “getting prescription drugs” showed an average rating of 3.5.

As beneficiaries become savvier about the importance of star ratings as a way to compare plan effectiveness, plan administrators will want to ensure their preferred pharmacy partners will help improve their ratings.  Smart pharmacy managers in turn, understand the critical role a fully-integrated technology system can have in helping to improve patient outcomes, and to document all star-related services provided to patients.





How Do Pharmacy Benefit Managers Cost Medicaid?

Drug costs are rising at an alarming rate and there is no end in sight—or at least that’s what a recent study finds. The past six years has seen a substantial increase in the cost of many prescription drugs, especially those used to treat major health conditions like diabetes and cancer.

According to a study published in the journal JAMA Network Open, one of the biggest culprits for this seemingly unending problem is the lack of regulation in the price increases happening in the pharmaceuticals market.

The study conducted by researchers from the Scripps Research Transitional Institute assessed claims from Blue Cross Blue Shield Pharmacy from 2012 to 2017 and they discovered that almost all of the drugs included in the study had an annual or biannual cost increase. 36 of the drugs included in the study increased in cost by as much as 50% over a six-year period.

The median cost of these drugs increased by up to 76%, which is a lot for patients who are suffering from chronic health conditions that demand long-term medication compliance.

Pharmacy benefit managers and their role in rising drug costs

 According to the researchers, “given the median annual cost increase of 9.5%, our results suggest the costs for popular brand-name drugs would double every 7 to 8 years.”

With these findings affecting the quality of healthcare that’s provided to patients in the United States, 33 states across the country have passed laws that will somehow help control the rising costs of prescription drugs and they are setting their eyes on pharmacy benefit managers or PBMs who have a big role to play in addressing the issue.

What are pharmacy benefit managers?

A pharmacy benefit manager is essentially a professional who serves as an intermediary between employers, insurers and other members of the healthcare system. PBMs offer services that aid patients including educational programs, counseling and administering drug coverage.

Medicare Part D drug plans, health insurance companies, large employers and other businesses usually hire pharmacy benefit managers to help them control and manage different prescription benefits. PBMs play an important role in the distribution of drugs because they close deals with pharmaceutical companies that affect the prices and availability of prescription medication for more than 266 million Americans, according to the Pew Charitable Trusts.

Major payers like Medicaid and Medicare also work closely with pharmacy benefit managers and rely on them for drug procurement rather than do the task themselves.

In fact, the deals made by PBMs will help consumers and health plans save at least $654 billion between 2016 and 2025, according to the Pharmaceutical Care Management Association, which is a national advocacy group for PBMs.

What are the responsibilities of pharmacy benefit managers?

Being the middleman between consumers and healthcare providers, PBMs have the responsibility to ensure patient’s compliance to prescription medications, operate mail order so drugs are delivered to the right patients and negotiate rebates with pharmaceutical companies so consumers can have the most affordable options.

PBMs also have the responsibility to manage formularies to help consumers know what drugs are covered by their health plans and they help ensure the accessibility of prescription drugs through proper distribution across a network of pharmacies.

Some pharmacy benefit managers also offer specialty services where they connect consumers or pharmacists with biologic manufacturers and orphan drug suppliers.

Who are the three biggest PBM companies in the US?

These three largest PBM companies in the United States cover a good chunk of patients with pharmacy benefits:

    • ExpressScripts

ExpressScripts is not linked to or owned by any pharmaceuticals company, which is why it’s the most reliable when it comes to consumer benefits. The company offers novel solutions for improving patient care and managing pharmacy costs.

    • CVS Caremark

A growing PBM, CVS Caremark offers a comprehensive drug benefit service to more than 2,000 healthcare plan beneficiaries and sponsors all over the country.

    • Argus

Being one of the last independent providers of healthcare information and services that support Medicare Part D and Medicaid, Argus has a wide range of clients and the company serves some of America’s most vulnerable populations.

What are the roles of PBMs in effecting drug prices?

Pharmacy benefit managers effect the availability and price of prescription drugs in three ways:

    • Formularies

PBMs have a list of prescription drugs that are covered by health plans known as formularies. These formularies will determine which medications can consumers under Medicaid and other health plans use and how much they need to may for them.

    • Purchasing power

Because pharmacy benefit managers procure drugs in bulk, they have the purchasing power to negotiate discounts and rebates from drug manufacturers, especially those who want their drugs to be added to the PBMs’ formularies.

    • Reimbursement

As part of their job pharmacy benefit managers work with pharmacies in reimbursing drugs that were sold and dispensed to consumers.

What are the issues thrown at PBMs?

Over the last few years, PBMs have faced scrutiny over consumer complaints and issues on rising drug prices.

    • Lack of transparency

Pharmacy benefit managers have been called out for not having enough transparency in their operations where both consumers and regulators are not aware of how deals are closed and if rebates and savings are really passed down to consumers.

A recent study conducted by the Pew Charitable Trusts found out that “PBMs passed through 78% of manufacturer rebates to health plans in 2012 and 91% in 2016.”

The United States Government Accountability Office also said that pharmacy benefit managers passed nearly all of their Medicaid and Medicare Part D rebates on to consumers in 2016, but there are still questions on whether this is applied to the entire health care market.

    • Rising drug costs

Politicians have also started pointing their fingers at PBMs regarding issues of rising prescription drug costs. In fact, 33 states across the country have passed laws targeting pharmacy benefit managers.

Rep. Mary Felzkowski, R-Irma talked about a personal experience that led her to support a bipartisan bill aiming at lowering drug costs in Wisconsin: “I just got a prescription for a generic (drug) and my pharmacy benefit manager will not let me have the generic because they get a kickback on the formulary.

So instead of paying my $5 copay for the generic I paid $35. Now I’m very fortunate. I can afford that. Not everyone can. So this is a real issue.”

    • Spread pricing

Spread pricing has been a longstanding practice for PBMs. This model means that the PBM will charge a payer like an employer or health plan more than what it reimburses the pharmacy for a medication. The PBM then keeps the difference. This has become an issue for some because the exact difference has always been kept confidential from both regulators and health plans.

What changes will Medicaid be implementing for PBMs?

Although pharmacy benefit managers were once thought to help lower down the cost of prescription drugs that benefit patients, many state Medicaid programs are implementing changes to pharmacy benefits due to the different issues faced by PBMs lately.

For instance, the Medicaid program in Michigan is proposing to eliminate all PBMs that negotiate drug prices and handle its prescription drug claims. Beginning December 1, Medicaid will be handling all its drug coverage internally to try to manage the cost of prescription drugs in the state. This was after a study revealed that state Medicaid agencies didn’t really get the dramatic savings that they were promised by outsourcing negotiations and procurement of drugs through pharmacy benefit managers.

According to Michigan officials, the state would save at least $40 million by extracting bigger rebates from pharmaceutical companies and cutting operational costs in handling Medicaid drug benefits. This move could mean that companies like CVS Health, MedImpact and OptumRx could stand to lose business.

Other states are also following suit with bills regulating pharmacy benefit managers in the effort to reduce drug prices. According to the National Academy for State Health Policy, 47 states have already proposed 275 bills to address the issue of increasing drug prices. 123 of these bills were aimed at PBMs. In the state of Wisconsin, small pharmacies continue to push for the oversight of pharmacy benefit managers.

What reforms are being considered to regulate PBMs?

The issues with pharmacy benefit managers and their role in skyrocketing drug prices have resulted in a lot of bills trying to eliminate them as a part of the drug distribution process. But as Rep. Joe Sanfelippo, R-New Berlin pointed out, he is concerned about PBMs but he isn’t dismissing the fact that a lot of employers are relying on these professionals to control the cost of prescription drugs.

To address the issues with the operations of PBMs, there major reform ideas have been formulated by several states that will hopefully ensure that consumers get the best benefits from the deals they make with pharmaceutical companies:

    • Improving transparency

Several federal lawmakers are pushing to add new rules and regulations that would require PBMs to submit more information on how they negotiate prices and rebates. This will help the government determine if consumers get the largest portion of savings from rebates and negotiations.

    • End spread pricing

Several states are looking into creating legislations that would end the longstanding practice of spread pricing in pharmacy benefit managers. Instead of using the spread pricing model, legislators want PBMs to use a pass-through model where they would have to charge payers the same amount they reimburse to pharmacies with the addition of a fixed administrative fee.

The federal government is also now requiring all Medicaid fee-for-service programs to use the pass-through model and ditch the spread pricing model.

    • Rebates

Several policymakers are considering new rules that would require pharmacy benefit managers to pass through a bigger chunk of rebates to consumers. PBMs will still be allowed to keep part of these rebates in order to maintain the benefit of them negotiating for the price reduction of some of the most important prescription drugs in the market.

The Commonwealth Fund has suggested that 90% of all rebate savings should be passed on to payers.

The move to transform the healthcare system in the United States has got different legislators scrambling for rules that will help benefit consumers more. There have been numerous debates on whether there is still a need to hire pharmacy benefit managers or just take control of drug distribution internally. In Ohio, for instance, the legislative committee that manages the state’s $28 billion Medicaid program has conducted a meeting in September to review the progress of addressing the issues regarding pharmacy benefit managers profiting off the distribution of prescription drugs for the poor and disabled.

According to a Pew study this year, the rebates given by manufacturers to PBMs have increased dramatically from $39.7 billion in 2012 to a staggering $89.5 billion in 2016. The U.S. Department of Health and Human Services also stated that the average price difference between the list price of a drug and its cost after a rebate is between 26 to 30%.

Some pharmaceutical companies also admitted that they had to raise the list prices of some of their products due to the increasing rebates imposed by pharmacy benefit managers. If this amount is passed on to consumers, the prices of prescription drugs would definitely be lower than it is today.  There is also the issue of PBMs favoring more costly drugs because they get bigger rebates for them.

The bottomline

Whether there is still a need for pharmacy benefit managers or not is still up for debate. But at the end of the day, it will all boil down to what decision will benefit the consumers best.

After all, prescription drugs should be accessible to everyone because they are an important part of the treatment plan of patients, which will ultimately decide if they get to enjoy excellent prognosis or not.


This is Medicine Redefined

This winter (December 13-15, 2019) will mark the American Academy of Anti-Aging Medicine (A4M) 27th Annual World Congress in Las Vegas, their Annual World Congress hopes to deliver world-class education focused on integrative health: through the most recent emerging clinical research, newly discovered therapies, and future scientific advances.

With an agenda specifically engineered to allow attendees to learn the newest, most innovative protocols and practices. This event is considered to be the largest event in Anti-Aging Medicine, every year the conference features a combination of unique programming, a diverse audience, and a collaborative learning environment.

The countdown begins: only 3 more weeks! This year, as the world prepares for the start of a new decade, The American Academy of Anti-Aging Medicine invites all to take part in leading the charge towards a new era of health care that puts patient health, first.

Join us and hear from the field’s foremost leaders and return home with real knowledge that can change the trajectory of patients’ lives. (Purchase ticket here

Take part in an educational experience unlike any other:

  • Learn directly from the foremost thought leaders in Anti-Aging medicine
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  • Browse the latest products, services, and devices in the field
  • Take part in a patient-centered medical movement

Join thousands of healthcare practitioners and professionals from across the globe as A4M continues to redefine their mission and transform the field of modern medicine through top-tier education: with the ultimate goal of enhancing and enriching the entire landscape of health.

Learn more:



The Ten Pharmacy Trends to Watch Out For in 2020

Just like that, 2019 is coming to a close and what a year it has been for healthcare and especially for pharmaceuticals. This year, the industry has taken center stage, as governments, businesses and individuals are now recognizing the important role of good quality medications in maintaining an excellent healthcare system.

The use and cost of different drugs have also been a hot topic in debates and headlines for 2019.

From specialty medications to the use of technology to speed up the development of drugs, this year was all about innovation and breakthroughs for the pharmaceuticals industry.

The top pharmacy trends for 2020 and the year that was

 The end of 2019 is just right around the corner and people are already looking forward to what the top pharmacy trends for 2020 are. But before we look into what the coming year has to offer, let’s do a recap of some of the biggest pharmacy trends and advancements for 2019:

    • Artificial intelligence

The introduction of artificial intelligence into the development of new drugs has been one of the hottest pharmacy trends for 2019. Taking the lead in this area is IBM Watson, a computer that could interpret millions of pages of scientific literature and data that will help researchers and pharmaceutical companies speed up the development of new medications.

Artificial intelligence is set to be used in more areas of drug development and will be part of the top pharmacy trends for 2020.

    • Mobile health apps

Data gathering has always been one of the most challenging areas of clinical research. But this year, more pharmaceutical companies are taking advantage of mobile health technology to gather relevant data for clinical studies that will help in the development of new drugs.

These apps are considered to provide accurate information on a patient’s health status, which is why they’ve been used to study diseases like Parkinson’s disease, diabetes, breast cancer, asthma and cardiovascular disease.

    • Gene-specific drugs

 Precision medication is one of the most significant pharmacy trends for 2019 because it targets specific genes based on the patient’s health condition.

Genetic information is gathered through genome sequencing where researchers are able to identify specific abnormalities and come up with drugs and therapies targeted towards them.

This trend, which will also be part of the top pharmacy trends for 2020 helps increase the efficiency of drugs to help patients get better outcomes for their treatment.

    • Printable medication

This year, the drug Spritam made history as the first 3D-printed drug to be approved by the FDA. Manufactured by Aprecia Pharmaceuticals, the drug is created through a 3D printing process that allows the pill to be porous enough to be dissolved quickly while delivering the dosage required for the patient.

One of the most talked about pharmacy trends this year, printable medication is expected to pave the way for the future of drug development and lower the cost for manufacturing drugs.

These breakthroughs have created a better landscape for the pharmaceuticals industry. And the best part is, more advancements are coming as we welcome another year. Here are some of the top pharmacy trends for 2020?

    • Specialty medication

Specialty products and services were considered the most profitable among all the pharmacy trends for this year, and 2020 will see a bigger market for these medications as they become part of the top pharmacy trends for 2020.

Specialty drugs are developed mostly for chronic and degenerative diseases like rheumatoid arthritis, cancer and multiple sclerosis.

They are so rare and highly in-demand because of the complexity and cost of creating them. But they are also very important in helping treat the symptoms of chronic diseases so patients can enjoy better quality of life.

One of the top pharmacy trends for 2020 is the growing spending for these specialty medications where system pharmacies will procure them so they can be made available to patients and health plans will reimburse these pharmacies after.

    • 340B drug discount program

The 340B drug discount program has been part of the pharmacy trends for many years, and the ongoing discussion for its improvement is not expected to die down in 2020. In fact, the coming year will see more focus on the program’s path for pharmacies: compliance and performance.

As a pharmacy, it’s very important to monitor the efficiency of your existing 340B program to know how to make the most of helping patients and your health system. You also need to stay on top of new rules, enforcements and audits so you can easily adjust your program for compliance.

    • Over the counter medications

According to research, the average American household spends about $338 on over the counter products every year. With the growing cost of hospital treatments and health insurance plans, more Americans are turning to self-medication as a way to treat minor health issues.

Over the counter medications are easily accessible and don’t require a prescription, which helps in cutting down time and cost for treatment.

Their popularity will continue to grow as part of the top pharmacy trends for 2020, so it’s very important for pharmacies to ensure that staff members are well trained to guide consumers in buying the best over the counter medications. They should be able to offer the best options for their customers so they don’t need to see a physician.

    • Next-door healthcare

The world has never been more fast-paced than it is today, especially with the advent of mobile apps and other technological advancements. This also means that consumers are now expecting on-demand care, especially with the procurement of medications.

Next-door healthcare will be one of the top pharmacy trends for 2020 where pharmaceutical services will be made more easily accessible to consumers.

Pharmacies need to find ways to not only extend their hours of service but also offer ways for patients to easily fill their prescriptions and comply with their medications after they leave the pharmacy. Some pharmacies will even start to offer deliveries for patients who have difficulty going to the establishment to buy their medications.

    • Virtual healthcare

With more people relying heavily on technology, virtual healthcare is expected to be one of the most significant pharmacy trends for next year. The pharmaceuticals industry will see an increased use of e-commerce and mobile channels for marketing, and the competition will definitely be stiff.

But virtual healthcare also transcends to other services like apps, online prescription forms, patient portals and even delivery services that will be the future of procuring medications.

With its significance in shaping the landscape of pharmaceuticals, virtual will healthcare will not only be part of the top pharmacy trends for 2020 but also in the coming years.

    • Data tracking and management

All health system pharmacies will surely agree that data tracking and management can be one of the hardest tasks in the business—but it is also one of the most important. As an integral part of the healthcare system, pharmacies should be able to use their data wisely to make smarter decisions for patients.

The first step to a more efficient data management system is to make data more accessible. One of the top pharmacy trends for 2020 will be the use of a single platform to integrate all health IT systems.

This will help pharmacies cut down on costs for managing different information systems and increase efficiency in pulling out data to use for research and in creating better treatment plans for patients.

Integrated IT systems will also help pharmacies save time in performing day-to-day activities, as they help in optimizing inventories, generating more accurate reports and managing customer loyalty programs.

    • Drug approvals

The development of new drugs has always been a long and sometimes tedious process for pharmaceutical companies, especially with the FDA being at odds with them. But this time, the FDA under Commissioner Scott Gottlieb, MD promises that the agency’s Center for Drug Evaluation and Research will be supportive of the industry throughout the process of developing new drugs.

Considered to be one of the top pharmacy trends for 2020, the onslaught of drug approvals started as one of the pharmacy trends for 2018 where drugs like Patisiran for treating polyneuropathy in hereditary transthyretin-mediated amyloidosis and Migalastat for treating Fabry disease have been approved.

This year, drugs like Selinexor and Quizartinib have also been approved. At the beginning of 2020, Mirvetuximab soravtansine for ovarian cancer and Pegilodecakin for pancreatic cancer are set to be approved by the FDA.

    • Health care megamergers

2019 has been the year of the healthcare megamergers. From Aetna and CVS Health to Prime Therapeutics and Walgreens with AllianceRx, these megamergers have been one of the top pharmacy trends for this year and their impact will surely be felt throughout 2020.

According to the CEO of CVS Larry Merlo, the primary goal of their merger was to lower down the coast of medication to increase adherence, offer better services in stores and build the pharmacy’s member base. Other big names in the industry are expected to follow suit, which will surely make healthcare megamergers one of the top pharmacy trends for 2020.

    • Public policy

There has been a longstanding discussion on the transparency of healthcare costs for patients and payers. In fact, things heated up this year as more pressure is placed into making the cost of healthcare services more transparent to the public, especially the real prices of drugs.

More health plans are expected to become more critical in reimbursing medications, especially for specialty drugs that are limited in supply and are more expensive than regular drugs.

Manufacturers should also notify healthcare providers about shortages or plans of discontinuing drugs because many of these specialty drugs are life saving. This means that any disruption to the supply chain could put many lives at risk.

    • Biosimilar

The biosimilar market has not only been a part of top pharmacy trends for many years, but it has also been controversial topic in the industry. In its essence, biosimilar is a medical product that’s almost an identical copy of the original but manufactured by a different company.

The biosimilar market in America has been behind from other markets due to approval restrictions. But 2020 will see more of these biosimilars making their way into the market, thanks to the FDA’s commitment to increasing the competition, especially for specialty pharmacies.

While the use of biosimilar medication has been subject to some scrutiny due to misconceptions about the efficacy of generics, it will be one of the top pharmacy trends for 2020 because of how the FDA is working on raising the bar for makers of biosimilar products. The coming years will also see more money being invested in the biosimilar market, especially with the increasing rate of approvals for drugs from the FDA.

2019 felt like a “déjà vu” moment for the pharmaceuticals industry with both new and longstanding discussions brought to the table. The cost and use of different medications has taken center stage as well as the introduction of methods that will help speed up drug development.

As a pharmacy, it’s very important to remember a few things as you look into the top pharmacy trends for 2020 and create your game plan for the year ahead. For one, consumers are now smarter than ever. They will be more critical of everything including the price of medications because it will affect their compliance to treatment and the outcome of their health condition.

Pharmacists will also play a bigger role as part of the healthcare team and better distribution models will be implemented to increase the efficiency of delivering medications, especially for patients with chronic and debilitating diseases.

At the end of the day, the evolution of the pharmaceuticals industry will be a huge factor in the overall landscape of the world’s healthcare system. These top pharmacy trends for 2020 are a good way to kickstart another big year for the industry, and we can only look forward to bigger things ahead as we say goodbye to the year that was and welcome the year that is 2020.


How Do You Start a Long-Term Care Pharmacy?

It is a cold, hard fact: the American population is growing older. Today, there are more than 46 million Americans over the age of 65 and a 2018 U.S. Census Bureau Report said that in 2035, “there will be 78.0 million people 65 years and older compared to 76.4 million under the age of 18.”

This is mainly because the last of the baby boomer generation will reach the age of 65 between 2020 and 2030, which means that 1 in 5 Americans will be an elderly by 2030. This number is even set to balloon by up to 90 million by 2050 and for the first time in history, there will be older people than younger ones.

While ageing is a natural process in the human life cycle, it also comes with a series of medical conditions that are mostly progressive and can affect an individual’s capability to perform activities of daily living and even care for himself.

That is why long-term care facilities are needed now more than ever and with that also comes the need for a fully functional long-term care pharmacy that will help guarantee the quality of medications given to patients suffering from these chronic health conditions and ensure their compliance to the treatment plan.

Understanding long-term care and long-term care pharmacies

 If you are one of those who would like to answer the growing demand for a long-term care pharmacy, it’s very important to understand the premise of long-term care and long-term care facilities as well as the roles and responsibilities of a long-term care pharmacist.

What is long-term care?

In its essence, long-term care encompasses a wide variety of services that cater to the healthcare and personal care needs of individuals who may not be able to care for themselves because of their disability or the complications of their health condition.

The main goal of long-term care is to offer individualized and patient-centered services that help a patient stay as independent as possible, maximize quality of life and meet the patient’s needs over a period of time.

While a good percentage of patients needing long-term care are part of the elderly population, long-term care also caters to patients from all ages who are affected with disabling health conditions over an extended period of time.

What are long-term care facilities?

A long-term care facility generally provides skilled nursing care and restorative and rehabilitative services aimed at helping patients in need of assistance with activities of daily living and compliance with their treatment plan. Long-term care facilities are usually composed of nursing homes, assisted living facilities and skilled nursing facilities.

As of 2016, 63% of long-term care facilities in the United States are hospice care providers and a good 99.5% of nursing homes offer therapeutic services for patients.

More than one million people reside in assisted living facilities in the United States and each year, over 4 million Americans are admitted or recommended to reside in skilled nursing facilities or nursing homes.

What is a long-term care pharmacy?

 The idea of a long-term care pharmacy goes back to the time when apothecaries played an important role in addressing health issues within communities. Before there were clinics, urgent care centers and hospitals, most people relied heavily on pharmacists to help diagnose and provide the right medications for common ailments.

Today, other healthcare facilities have fulfilled this role, but in terms of long-term care, the idea of having a long-term care pharmacy still follows the same premise as the traditional apothecary and the role of a long-term pharmacist is still as significant as before.

This is due to the increasing demand for quality healthcare in long-term care facilities as the elderly population grows and the number of chronic progressive diseases is becoming a bigger concern for the entire healthcare system.

In general, a long-term care pharmacy could take over some of the roles of a physician, especially when it comes to monitoring the conditions of individuals in long-term care facilities and regulating the dispensing of medications to maintain proper compliance. In fact, the two major roles of long-term care pharmacists are to help in the actual dispensing of long-term medications and serve as consultants in the proper use of these medications.

What are the benefits of a long-term care pharmacy?

Compared to a regular pharmacy, a long-term care pharmacy is especially beneficial to patients requiring long-term care with a consistent drug protocol. This includes the elderly and individuals who have chronic blood conditions, cancers and autoimmune diseases.

A long-term care pharmacy does more than just dispense medication. Since a long-term care pharmacist is able to establish a strong relationship with a patient, he can take on some of the responsibilities of a primary care physician, especially in terms of monitoring the compliance of a patient to his treatment plan.

Patients requiring long-term care can benefit from having a long-term care pharmacy as a service provider and a dispensary for medications.

Where can you find a long-term care pharmacy?

A long-term care pharmacy is generally found in long-term care facilities and nursing homes. But any pharmacy can also be a long-term care pharmacy depending on its managing business plan and the type of specialized services that it offers.

Long-term care pharmacies can also be found in mental institutions, rehabilitation centers, correctional institutions, hospice care, adult day care and even ambulatory and urgent care facilities. As of 2016, 97.2% of nursing homes have pharmacies or pharmacist services.

What are the duties of a long-term care pharmacy?

A regular pharmacy simply files incoming prescriptions, dispenses medications and acts as a mediator between the patient and doctor. But a long-term care pharmacy goes beyond the responsibility of appropriately dispensing prescription drugs in long-term care facilities under PDPs and MA-PD plans. It could also offering services that are not usually available in a regular pharmacy.

A long-term care pharmacy usually has a bigger inventory since it caters to the long-term needs of patients and it could also have several laboratory equipment and supplies. It also does drug research and reviews the drug regimen of patients, offers clinical visits and reviews medical records, and provides counseling to patients undergoing long-term care to ensure their compliance to the treatment plan.

A long-term care pharmacy could also help monitor a patient’s condition and response to medications, provide nutritional support services and offers IV therapy, fitting for surgical appliances and provisions for medical equipment.

As a care-centered practice, a long-term care pharmacy can also perform these additional services:

    • Quality assurance programs for medications and delivery of care
    • Assessment and evaluation of drug information
    • Medication delivery systems
    • Patient education programs, forms and reports
    • Proper packaging of medication to ensure patient compliance
    • Diagnostic services and laboratory testing

What is a long-term care pharmacist?

A long-term care pharmacist plays a vital role in the function of a long-term care pharmacy since he provides care and ongoing support to patients who are admitted or treated over long periods of time. These patients may be in rehabilitation facilities, skilled nursing centers and nursing homes.

Since a long-term care pharmacy usually caters to an ageing demographic, a long-term pharmacist usually deals with elderly patients who need treatment for specific diseases. He will be responsible for ensuring proper dosage requirements, compliance with drug therapy regimens, advising with drug interactions and helping patients make formulary decisions.

What does it take to become a long-term care pharmacist?

The minimum requirement for becoming a pharmacist in a long-term care pharmacy is a degree in Pharm.D with training in a long-term care setting. The successful completion of an undergraduate course will help a student prepare for pharmacy school and increase the chance of success during his advanced pharmacy course and in obtaining a doctorate degree.

Pharmacy school usually takes for years to complete and will cover the different aspects of medication and medical therapies including its uses, interactions and sciences.

After completion of pharmacy school, a state licensure is required and if a professional wishes to work as a long-term care pharmacist or start a long-term care pharmacy, some on-the-job experience may be required.

The average annual salary of a long-term care pharmacist in the United States is $116,000. This pay rate is based on experience, length of service, the responsibilities involved and the location of the long-term care pharmacy. A long term-care pharmacist may also enjoy benefits like a 401(k) and other compensation programs, health insurance, vision, dental and prescription coverage, bonuses and continuing education reimbursement.

What are the new rules of Medicare for long-term care pharmacies?

Medicare doesn’t cover any type of long-term care, but it may offer coverage for medical services rendered in long-term care settings such as nursing homes and assisted living facilities. Medicare also provides coverage for short-term stays in skilled nursing facilities given that the patient has been admitted for at least three days in a regular hospital.

But since Medicare and Medicaid programs still cover medications, recent additions to Medicare long-term care pharmacy rules put more responsibility on pharmacists in a long-term care pharmacy setting.

This rule from the Centers for Medicare and Medicaid Services (CMS) still follows the same requirement for a monthly drug-regimen review (DRR) but it requires an additional simultaneous review of a patient’s medical chart.

Both these requirements are stated in the new pharmacy services section of the nursing home rules, which also includes the restrictions of the use of psychotropic medications that are often overused in nursing homes. According to Khristy McClelland, the President of Guardian Pharmacy in Jacksonville, Florida, “the new regulation expands pharmacist services, and in many cases will increase the costs to provide these services.”

McClelland acknowledges that there are barriers that inhibit pharmacists from accessing medical charts and medical administration records that are routinely reviewed during DRRs. “In order to maintain compliance with the new regulations, facilities will have to ensure that pharmacists have access to these records,” she added.

It’s also very important for facilities to have proper reporting procedures for pharmacists that will be helpful when an issue needs immediate action based on a DRR. This new rule also cites provisions that are aimed at improving the speed and quality of the services provided in long-term care facilities and reduces avoidable hospital re-admissions.

These additional provisions will add more weight to the tasks of pharmacists working in a long-term care pharmacy setting. For instance, all long-term care facilities will be required to develop, implement and maintain an effective assurance and performance improvement program to help patients get the best outcomes of care and improve their quality of life.

They also need to develop and implement a baseline care plan for each resident within 48 hours of his admission. This care plan should include instructions that will help ensure patient-centered effective care that meets professional healthcare standards.

Long-term care facilities will also be required to develop an infection prevention and control program, especially since infections are prevalent in a lot of these facilities and would require proper dispensing of medications from a long-term care pharmacy.

What is the future of long-term care pharmacies?

The demand for an efficient long-term care pharmacy in different long-term care facilities will continue to grow as the population ages. As the government pushes to improve the quality of care offered to patients admitted in long-term care facilities, the role of long-term care pharmacists as one of the primary members of the healthcare team will also continue to expand.

There is a lot to learn about running a long-term care pharmacy—from the growing list of responsibilities to the new provisions implemented by Medicare—but it’s all for the benefit of elderly patients who deserve the best care as they battle through chronic and often progressive medical conditions.


Here’s Everything You Need to Learn About Orphan Drugs

The field of medicine is one of the most studied areas of science for a good reason. With thousands of diseases affecting millions of people around the world, it’s been a mission for many countries to find the right treatments and medications to improve quality of life and prevent mortality rates from skyrocketing to unprecedented numbers.

But while most of us know about popular diseases like diabetes mellitus, cardiovascular disease, cancer and hypertension, there are also those orphan diseases that are so rare they only affect a small percentage of the world’s population. They are usually treated using medications called orphan drugs.

Orphan diseases and orphan drugs: A closer look

 To gain a better understanding of orphan drugs, we need to learn about what orphan diseases are and how they affect the world’s population.

Orphan disease defined

A disease is categorized as a rare or orphan disease when it only affects a small number of people in comparison with the general population. In European standards, for instance, a disease is considered rare when it affects only one in every 2,000 individuals. In general, 1 in 17 people will suffer from a rare disease in their lifetime.

Today, there are at least 7,000 types of rare diseases, many of which are considered chronic and life threatening. Most orphan diseases also appear early in life where 30% of children affected by them die before their fifth birthday.

More than 250 new medical conditions are also being described in medical literature every year. However, there is still no proper definition of orphan diseases because they differ in each territory.

The most notable orphan diseases

Medical breakthroughs and the development of orphan drugs may have saved millions of lives, but more than 350 million people around the world are still suffering from a group of orphan diseases. The most common types of rare diseases include:

    • Multiple sclerosis

Multiple sclerosis is a potentially disabling disease of the brain and central nervous system where the immune system attacks the myelin sheath that covers the nerve fibers causing miscommunication problems between the brain and the rest of the body.

It affects 90 in every 100,000 individuals and if not treated with orphan drugs, it can cause permanent damage to the nerves.

    • Narcolepsy

Narcolepsy is a neurological disorder where the individual has difficulty controlling sleep and wakefulness. It is characterized by hallucinations, excessive sleepiness, sleep paralysis and even episodes of cataplexy where the patient experiences partial or total loss of muscle control. Narcolepsy affects 50 in every 100,000 individuals.

    • Primary biliary cholangitis

Formerly known as primary biliary cirrhosis, primary biliary cholangitis is an autoimmune disease of the liver resulting from a slow and progressive destruction of the liver’s small bile ducts. This results in a buildup of toxins in the liver called cholestasis. This orphan disease affects 40 in every 100,000 individuals.

    • Fabry disease

Also known as Anderson-Fabry disease, this rare genetic disease is part of a group of conditions known as lysosomal storage disease. It affects the skin, kidneys and heart due the genetic mutation that interferes with the function of sphingolipids. Fabry disease is usually diagnosed in childhood and affects 30 in every 100,000 individuals.

    • Cystic fibrosis

Cystic fibrosis is a rare inherited disease that affects the lungs, digestive system and other organs of the body. A defective gene that affects the cell’s ability to produce sweat, mucus and digestive juices usually causes the disease and it affects 25 in every 100,000 individuals.

Orphan drugs defined

With at least 90% of the known orphan diseases still lacking treatment, the need for high quality orphan drugs has never been more important. An orphan drug is generally defined as a pharmaceutical agent that is developed specifically to treat medical conditions called rare or orphan diseases.

Because orphan drugs are used for conditions that are so rare, developing them would not be profitable enough for private pharmaceutical companies without the help of the government.

In many countries, research and development for orphan drugs is often a subject of public policy and those with the right support from the government have resulted to breakthroughs that otherwise might not have been possible if only private companies funded them.  But patients with orphan diseases are still spending more for treatments because orphan drugs are priced higher because of their limited availability.

As of 2014, 281 orphan drugs are available on the market while more than 400 are still undergoing clinical trials. The United States is leading the development of these drugs with more than 300 clinical trials underway followed by Europe. There is a total of 600 clinical trials today, 231 of which are on phase 2.

The cost of orphan drugs

Since orphan diseases are not widely known around the world, the cost of developing orphan drugs are considered higher than traditional drugs. However, many countries are starting to find ways to back the research and development of these drugs to help give patients better quality of life.

The United States is leading the charge with government-backed incentives like tax credits for the cost of research and development and clinical trials. This will help lower the cost of orphan drugs and speed up their delivery to the market. Countries like Australia, Europe and Japan are also following the same strategy.

The estimated worth of pharmaceutical companies focusing on developing medications for rare diseases are about half a trillion, roughly about 17.5% of the total value of the big pharmaceutical industry. The total enterprise value of the market is at $508 billion.

In the United States, the average cost of an orphan drug for every American patient can reach up to $151,000 per year as compared to only $34,000 for non-orphan drugs. This cost is set to grow further in the future, as orphan drugs will make up one-fifth of the total prescription sales around the world by 2024.

It’s easier for pharmaceutical companies to get marketing approval for an orphan drug in the United States and Europe because of initiatives that are geared towards encouraging the development of these types of drugs. This can include financial incentives and extended exclusivity periods for producers to enjoy sole rights to market their drug.

The Orphan Drug Act (ODA) of 1983

On January 4, 1983, President Ronald Reagan signed the Orphan Drug Act (ODA) into law to help incentivize the research and development of orphan drugs.

    • What is the purpose of the act?

The main goal of the ODA is to encourage pharmaceutical companies to develop more drugs to treat rare or orphan diseases.

The act was amended in 1984 to classify rare diseases as those affecting less than 200,00 people in the United States, but it also covers drugs for medical conditions that affect more than 200,000 but the cost of making them would exceed their revenue if marketed in the United States.

    • What are the incentives of the ODA?

One of the biggest incentives provided by the ODA is the 7-year marketing exclusivity of orphan drugs for pharmaceutical manufacturers. This gives them the chance to get their investment back without pricing their drugs too high. The ODA also awards several grants to academic-based researchers and pharmaceutical companies annually for the development of orphan drugs and offers a 50% tax credit for expenses incurred during the evaluation of an orphan drug.

There are also some exemptions given only to companies developing orphan drugs. Although they follow the same development path as regular drugs, the government acknowledges that since rare diseases affect only a small percentage of the population, it may not be possible to test the drug on 1,000 patients during a phase III clinical trial.

    • What is the impact of the ODA?

Since it was enacted in 1983, the ODA already had a huge impact on the development of orphan drugs. A 2011 paper by Aaron S. Kesselheim of the Harvard Medical School showed that from a single orphan designation in 1983, the number increased to 40 in 1984 and as high as 121 in 2007.

From January 1983 to May 2010, the FDA already approved 353 orphan drugs and granted designations to 2,116 compounds. And as of 2010, 200 of the 7,000 officially designated rare diseases are now treatable.

Roche is one of the biggest manufacturers of orphan drugs in the world producing Rituxan, a drug primarily used to treat rheumatoid arthritis. When combined together with another Switzerland-based company Novartis, both companies were able to generate more than $20 billion in worldwide revenues for orphan drugs in 2018.

Although not designated as an orphan disease, the FDA has approved the use of the ODA for the research and development and creation of orphan drugs to treat AIDS. In 1995, 13 of the 19 FDA-approved drugs were designated orphan status, 10 of which have received marketing rights. There are also more than 70 designated orphan drugs for the treatment of other HIV-related conditions.

    • What are some of the popular orphan drugs?

With the help of the ODA and EU legislation, several orphan drugs have been developed to treat rare diseases such as cystic fibrosis, glioma, snake venom poisoning, multiple myeloma and phenylketonuria.

One of the first orphan drugs to be developed was for cystic fibrosis. In the 80s, patients diagnosed with this rare disease didn’t survive beyond their early teenage years. But with the development of Tobramycin and Pulmozyme, the life expectancy and prognosis of patients with cystic fibrosis have improved immensely.

Wilson’s disease is another rare disease that’s now treating using an orphan drug. The hereditary medical condition results in the body accumulating fatal levels of copper. Penicillamine was developed specifically for the treatment of Wilson’s disease, but it has been tested to be effective in treating arthritis as well. Another drug, Bis-choline tetrathiomolybdate is now under investigation as another treatment for the disease.

Another huge breakthrough in orphan drugs is the development of statin drugs to treat familial hypercholesterolemia. Two researchers who worked on the drug, which is now used to treat high cholesterol received a Nobel Prize in 1985.

    • What is the future of the ODA?

While the goal of the ODA is clearly benefiting those suffering from orphan diseases, the act hasn’t been free from controversies. Some skeptics believe that pharmaceutical companies are manipulating the benefits of the ODA to take advantage of bigger revenues.

According to America’s Health Insurance Plans, the pharmaceutical industry has reportedly “gamed the system” by turning orphan drugs into multibillion-dollar products. An investigation published by Kaiser Health News in 2017 showed some drugs being designated as orphan drugs after first being designated as non-orphan.

These issues are not falling on deaf ears. Last year, FDA Commissioner Scott Gottlieb, MD said that he was open about the possibility of re-evaluating some aspects of the Orphan Drug Act. In a statement to Kaiser, Gottlieb said that it’s time to ask, “Do we have the right incentives in place?” He also mentioned in a separate blog post that the agency would study the proper application of orphan incentives.

The Rare Diseases Act was also enacted in 2002 to amend the Public Health Service Act, which aims to properly designate and control orphan diseases and orphan drugs. The act also increased funding for the research and development of orphan drugs to help people suffering from orphan diseases.

The European Union (EU) has followed suit in enacting a similar legislation from the ODA. In 2000, Regulation (EC) No 141/2000 was enacted and it referred to orphan drugs as “orphan medicinal products.”

Aside from diseases affecting only a small number of the world’s population, the EU’s definition of orphan diseases also include some tropical diseases that are mainly found in developing countries. The European Commission offers a 10-year marketing exclusivity benefit for an orphan drug after its approval. The European Medicines Agency (EMA) and the Committee on Orphan Medicinal Products administer this legislation.

Over the years, other countries have also implemented legislations that support the development of orphan drugs. Nations like Singapore, Japan and Australia have offered subsidies and other incentives for researchers and pharmaceutical companies that want to develop drugs to treat different orphan diseases.


Latest Counterfeit Scare Underscores Technology’s Role in Pharmacy Drug Safety

U.S. pharmacists received a startling reminder of the urgent need for drug safety, when in November 2019, a statement was issued by the Drug Enforcement Agency (DEA) warning the public about an alarming number of counterfeit pills that had been seized throughout the nation.  “Mexican drug cartels are manufacturing mass quantities of counterfeit prescription pills containing fentanyl, a dangerous synthetic opioid that is lethal in minute doses, for distribution throughout North America,” the statement read.

The DEA said that 27 percent of the drugs seized contained potentially lethal doses of fentanyl.  Special Agent in Charge Ray Donovan, of the agency’s New York Division warned:  “Counterfeit pills have hidden dangers causing one in four users to die, according to DEA field testing.  This is a warning and a plea for parents to talk to their children about using counterfeit or diverted prescription pills – either one of them ends with death and/or devastation.”

News of the surge in potentially-lethal drugs comes as U.S. drug manufacturers, wholesale distributors, pharmacies and other parties involved in prescription drug distribution continue to implement key provisions of the 2013 Drug Quality and Security Act, which is intended to prevent counterfeit, stolen, contaminated or otherwise harmful drugs from entering the nation’s drug supply chain.


Drug Supply Chain Security Act – Working Toward a Track-and-Trace System

Specifically, Title II of that legislation, the Drug Supply Chain Security Act (DSCSA) mandates creation of “an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States.”  The system, referred to as “track and trace,” is being spearheaded by the U.S. Food and Drug Administration (FDA), and is mandated to be operational by 2023.  When fully implemented, the system will be capable of tracking a drug at the unit level throughout its supply chain.

The FDA is working to build that system, namely by working with supply chain stakeholders, and through a pilot program that was launched earlier this year to identify, build, and test required capabilities.

DSCSA Implemented in Phases

As that work continues, progress is being made to implement other provisions of the law.


A. Product Tracing

In 2015, manufacturers, wholesale drug distributors, repackagers and dispensers (primarily pharmacies) were required to provide information about the handling history of each drug sold in the U.S. market.  Specifically, each drug transaction must now be accompanied by three separate documents that include FDA-required information including:

          Transaction information (TI)

        • Proprietary or established name of the product
        • Strength and dosage form of the product
        • NDC number of the product
        • Container size
        • Number of containers
        • Lot number of the product
        • Date of the transaction
        • Date of the shipment, if more than 24 hours after the date of the transaction
        • Business name and address of the person from whom and to whom ownership is being transferred.

          Transaction history (TH)

A statement in paper or electronic form, including the transaction information for each prior transaction going back to the manufacturer of the product.

Transaction statement (TS)

A statement, in paper or electronic form that affirms the following points:

        • The entity transferring ownership in a transaction is authorized as required by DSCSA;
        • The product was received from a person who is authorized as required by DSCSA;
        • Transaction information and a transaction statement were received from the prior owner of the product, as required under the law;
        • The entity did not knowingly ship a suspect or illegitimate product;
        • The entity has system and processes in place to comply with verification requirements under the law; and
        • The entity did not knowingly provide false information, and did not knowingly alter the transaction history.

B. Product Verification

Also beginning in 2015, stakeholders are required to have in place systems and processes to comply with product verification requirements.  Specifically, this includes the ability to handle “suspect” and “Illegitimate products” that may be counterfeit, diverted, stolen, intentionally adulterated or appear otherwise unfit for distribution.

Stakeholders must have in place a process to:

    • Respond to verification requests from the FDA about suspected products;
    • Quarantine and investigate any suspect product to determine if it is illegitimate;
    • Notify trading partners and the FDA of any illegitimate product;
    • Respond to notifications of illegitimate product; and
    • Satisfy recordkeeping requirements.

C. Product Identification (Serialization)

The law established requirements for manufacturers and repackagers to print or affix a unique product identifier on the smallest individual sellable unit.  The product identifier is composed of four specific data elements:

    • National Drug Code
    • Serial number
    • Lot number
    • Expiration date.

The product identifier must be “human and machine readable,” with a two-dimensional (2-D) bar code adopted as the standard for machine processing.

The law sets out specific deadlines for compliance within each stakeholder group:

    • November 2017: Manufacturers
    • November 2018: Repackagers
    • November 2019: Wholesalers will only trade products with product identifiers
    • November 2020: Dispensers (Pharmacies) will only trade products with product identifiers.

2019:  Pharmacy Specific Requirements

Pew Charitable Trusts refers to pharmacies as “the last stop in the distribution supply chain before medicines reach patients,” and calls their participation “an essential component of the new DSCSA system.  It’s not surprising then, that several of the important components already implemented, directly affect pharmacies.  Current pharmacy responsibilities include:

1. Confirm all trading partners are properly licensed or registered.

a. Check the registration of manufacturers and repackagers by accessing the FDA’s Drug Establishments Current Registration Site — DECRS.

b. Check the licensing of wholesale distributors and third-party logistics providers. This can be done by searching the FDA’s Wholesale Distributor and Third-Party Logistics Providers Reporting database.

c. Check the licensing of pharmacies through the respective state authority.

2. Receive, store and provide product tracing documentation.

a. Only accept prescription drugs that are accompanied by three pieces of product tracing documentation:

i. Transaction Information

ii. Transaction History

iii. Transaction Statement.

b. Store the product tracing documentation in paper or electronic format for six years.

c. Generate and provide all product tracing documentation whenever a prescription drug is sold to a trading partner. (This documentation does not need to be provided when a prescription is dispensed to a patient, or sold to another pharmacy for dispensing to a patient.)

3. Investigate and properly handle suspect and illegitimate drugs.

a. Quarantine and investigate suspect prescription drugs to determine if they are illegitimate.

b. If a drug is found to be illegitimate, a pharmacy must work with the manufacturer and take specific steps to avoid inadvertent dispensing to patients. The pharmacy must also notify the FDA and the trading partner from whom the drug was purchased, and to which it may have been sold.

Looking ahead, pharmacies will face additional responsibilities that include:

    • 2020: Pharmacies will only be permitted to purchase products that include a unique product identifier.
    • 2023: The entire drug supply chain – including pharmacies – will be required to utilize the electronic track-and-trace system.


Protecting Drug Safety – the Role of Technology

As the “final link” in the drug supply chain, pharmacists have a tremendous role in the successful implementation of the DSCSA.  By the time a drug is received by a pharmacy, it has already passed through several other trade partners, and is just one step away from being dispensed to a patient.

Therefore, pharmacies must have a fail-safe process in place to ensure — not only full compliance with DSCSA – but accuracy and safety of its overall operations.  In today’s busy pharmacies, that process increasingly comes in the form of a fully-integrated technology system.  Certain technology solutions, including the PrimeRx™ system offered by Micro Merchant Systems, can allow a pharmacy to seamlessly manage compliance requirements, monitor patient wellbeing, protect against expired drugs, and seamlessly maintain records and documentation.

Important to note though, not every technology system offers the same capabilities.  This means a pharmacy manager must spend time carefully reviewing different systems, to ensure a system has the required functionality.  With regard to compliance with the Drug Supply Chain Security Act, for example, it’s important to ensure that a system’s manufacturer is aware of the evolving requirements, and understands the need to provide required capabilities.  With regard to PrimeRx™, DSCSA and safety-related competencies include:

Access to National Drug Code and other databases.  Pharmacies have long recognized the need for immediate access to the National Drug Code listing as a way to verify prescribed medications and list proper drug codes on all documentation.  Going forward, the NDC code will be an integral part of each drug’s unique identifier, which means access to the NDC registry will be essential.  In addition, pharmacies must have access to the required FDA databases to validate trading partners’ proper licensing and certification.  PrimeRx™ offers seamless access to this information, and allows pharmacy staff to quickly confirm and document all required information.

Recordkeeping.  The PrimeRx™ system offers extensive recordkeeping that allows pharmacy managers to efficiently store documentation and information about essentially all aspects of pharmacy operations.  This includes the ability to record unique notes and observations about patient interactions, along with extensive medication histories.  The system also allows for detailed inventory-related records management, including chains of custody for all drugs, expiration dates, and dispensing histories.  With regard to DSCSA compliance, the system can seamlessly process and store mandated transaction documents.  Should those documents need to be transmitted to another pharmacy, the system can automatically send the required materials.

Report generation.   In addition to storing this information, PrimeRx™ allows the pharmacy manager to generate detailed reports on a wide range of patient, inventory and operations topics.  This includes reports to satisfy FDA information requests regarding specific transactions, or drug investigations.  Should a pharmacy determine that a drug is illegitimate, PrimeRx™ can facilitate compliance with all FDA reporting requirements.

Bar Code Scanning.  Since the DSCSA requires all product identifiers to be available in 2-D format, it’s essential for a pharmacy technology system to be able to easily import that information.  PrimeRx™ offers the required scanning capability, and allows for information to be quickly and accurately loaded and filed.

Continuous Upgrades.  Micro Merchant Systems is a leader in the pharmacy technology industry, and has long been a pioneer in anticipating pharmacy needs.  As the FDA continues its work to identify core components of the national track-and-trace system, Micro Merchant Systems will again be at the forefront with required capabilities.  As such, PrimeRx™ customers can be assured that as the system is developed, the necessary software upgrades will be provided in a timely, efficient manner.

Counterfeit and contaminated drugs pose a legitimate threat to the global drug supply chain.  The World Health Organization reports one in 10 drugs sold in developing countries is fake or substandard, “leading to tens of thousands of deaths, many of them of African children given ineffective treatments for pneumonia and malaria.”

And while developing countries may bear the brunt of the counterfeit drug problem, no country is immune.  In a single week, officials from Health Canada seized $2.5 million worth of fake pharmaceuticals at the border.  Earlier this year the WHO reported on fake leukemia medicine circulating across Europe.  And in the United States, which has the safest drug supply in the world, as many as 19 million Americans buy medicines from foreign online pharmacies or other unlicensed sources.

Clearly, the DSCSA comes at a good time for the U.S. prescription drug industry – and American consumers. And armed with a fully-integrated technology system, the nation’s pharmacies will continue to be at the forefront of efforts to protect patients from harmful prescription drugs.

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Pharmacy Technology Solutions For The DIR Fee Profit Squeeze 

Pharmacy Technology Solutions For The DIR Fee Profit Squeeze


Pharmacy technology – Earlier this year, New York City pharmacy owner Bob Hopkins told local television station WPIX that his drug reimbursement rates had decreased by 40 percent over the previous six months. “Which means,” the report noted, “every time he rings up a drug, he might be losing money.” This is why having the right pharmacy technology solutions in place to manage reimbursement data is important for your pharmacy.

This experience was echoed by another New York City pharmacist, Stephen Cilento, who co-owns Bridge Pharmacy in Bay Ridge, Brooklyn. Cilento told local publication The Brooklyn Daily Eagle as many as one-third of prescriptions filled by his pharmacy are reimbursed at a rate below his whole-sale purchase price.

Each of these pharmacy owners attributed responsibility for the reduced reimbursement rates to pharmacy benefit managers (PBMs) – the third parties that act on behalf of insurance companies and other payers to negotiate prescription drug prices with manufacturers, and determine pharmacy reimbursement rates through pharmacy technology solutions.

These examples follow findings of a study commissioned by the Pharmacists Society of the State of New York (PSSNY), which examined PBM practices statewide and found:

  • Pharmacy gross profit margins on generic drugs were reduced by 83 percent between Q1 2016 and Q4 2017;
  • Pharmacies were paid less than what it cost them to dispense a generic drug 99 percent of the time during Q4 2017; and
  • Pharmacies were paid less than the national average invoice cost of generic drugs 46 percent of the time. “In other words,” the study noted, “pharmacies were underwater on nearly half of claims.”

New York wasn’t the only state to delve into current pharmacy practices.

Last year Arkansas joined 37 other states in enacting legislation – the PBM Licensure Act – which promised to hold PBMs more accountable by requiring licensing by the state insurance department. But a year after the law took effect, pharmacy technology solutions show reports of declining reimbursement rates are still prevalent.

“There have been some improvements, but it’s far from a fixed problem,” John Vinson, executive vice president and CEO of the Arkansas Pharmacists Association told Arkansas TB&D news website. Vinson noted that just the day before, he received a call from a pharmacist who was reimbursed $20 for a drug that had cost $105 to purchase. The reimbursement rate had been $150 just a month before. Having the right pharmacy technology solutions in place will help you better keep track of your reimbursement rates.

Similar stories can be found among pharmacies nationwide. PBMs reject the notion they are at fault, and in response to the New York survey, the Pharmaceutical Care Management Association (PCMA) issued a statement that noted, in part: “The role of PBMs is to reduce prescription drug costs and improve the quality of pharmacy benefits for their clients. It is not to enrich independent drug stores, who are continuously pushing an agenda that increases their bottom line at the expense of patients.” However, having the right pharmacy technology solutions will help the pharmacy owner keep track of DIR and GER fees.

Regardless of where the fault lines, the fact remains that pharmacies have seen a sustained decrease in reimbursement rates that is affecting profitability and for many, their very existence.

But falling reimbursement rates aren’t the only profit pressures felt by today’s pharmacies. Omnipresent threats of DIR fees, price “spread” practices and reduced dispensing fees are also considerations.

According to the Healthcare Information and Management Systems Society (HIMSS), spread pricing “occurs when health plans contract with a pharmacy benefit manager to manage their prescription drug benefits, and PBMs keep a portion of the amount paid to them by the health plans for prescription drugs, instead of passing the full payments on to pharmacies. Pharmacy technology solutions can help your pharmacy better manage spread pricing.

“The spread,” HIMSS notes “is the amount between what the health plan pays the PBM and the amount the PBM reimburses the pharmacy for the beneficiary’s prescription.”

A 2019 investigative report by the New York State Senate’s Committee on Investigations and Government Operations called spread pricing a source of “significant revenue” for PBMs.

Spread pricing is most often used in conjunction with generic drugs, which account for almost 90 percent of all prescriptions dispensed in the United States. Last year, investigative reporters at Bloomberg took a nationwide look at the practice, and determined that spread pricing costs state Medicaid plans and insurance providers millions of dollars annually.

The Bloomberg reporters examined pricing and reimbursement practices for 90 different generics, across multiple state programs. This included pricing practices for aripiprazole, a generic anti-psychotic drug. The investigation found that although the market price for the drug dropped to about $20 per month during 2017, “many state Medicaid plans, including in Ohio, New York, Arizona and Texas, were still paying more than $140 a month.”

Similarly, the study found that in late 2017, “private Medicaid plans in Indiana spent more than $800 for a 30-day supply of entecavir, a hepatitis B pill that costs pharmacies less than $140 to buy. State plans paid more than $100 per prescription for generic versions of the heartburn drug Nexium, which cost pharmacies less than $25 at the time.” However, when asked, Indiana pharmacists claimed they were only receiving a “tiny slice” of those markups. “We’ve seen nothing but declining margins,” one independent pharmacy owner told the Bloomberg team. Using pharmacy technology solutions will come in handy during a pharmacy audit.

Direct and indirect remuneration (DIR) fees, according to the American Pharmacists Association (APhA), refer to “price concessions not reflected at POS for pharmacies participating in Medicare Part D networks. Accessed weeks or months after Part D beneficiaries prescriptions are filled, the retroactive fees complicate decisions about staffing and whether to expand or even keep open a business. Pharmacies may not realize until long after a prescription is filled that they didn’t even recoup their costs.”

In addition to recouping rebates and other post-POS price concessions, DIR fees can be assessed based on arbitrary factors, usually with little advance notice to the pharmacy. The New York Senate report cites DIR fees which include “costs for pharmacies to participate in a Part D preferred network, price reconciliations based on contractual rates, and compliance fees for contract-based metrics.”

National Community Pharmacists Association (NCPA) Director of Congressional Affairs Adam Harbison said in a 2019 presentation that pharmacy DIR fees “have increased 45,000 percent in less than 10 years, raising drug prices and putting many pharmacies out of business.”

Reduced Dispensing Fees Through Pharmacy Technology Solutions

Dispensing fees refer to the amount paid to a pharmacy to cover the costs of providing a drug to a patient. Several factors fall under the umbrella of a dispensing fee including labor costs, transportation, storage and patient counseling. According to RxSafe™, “the national average cost of dispensing medications is $10.55 per prescription – not including pharmacy profit – but Medicaid only reimburses a dispensing fee on average of $4.50 per prescription. Under Medicare, the pharmacist is paid even less — $2.27 per prescription. This is why pharmacy technology solutions are important. In group-health plans or private insurance, a PBM negotiates the dispensing fee with the individual pharmacies, typically at 40 percent off the usual and customary dispensing fee charge.”

For many pharmacies, the cumulative effect of reduced reimbursement rates, increased DIR fees, decreased dispensing fees, and spread pricing can seem overwhelming. And it probably helps explain why a 2019 survey of New York City pharmacists found 99 percent are concerned about negative consequences for their businesses, with 70 percent saying they had already laid off workers or reduced store hours.

Pharmacists Seek Legislative, Regulatory Relief

With so much at stake, it’s not surprising that pharmacies across the nation are joining forces to fight what many perceive to be existential threats. At the federal regulatory level, a 2019 industry-led effort came close to persuading the U.S. Department of Health and Human Services to revise Medicare Part D pricing structures so that point-of-sale pricing would include all pharmacy price concessions. Although that effort ultimately failed, it marked the closest the agency has come to addressing the issue.

Legislation has also been introduced in the U.S. Congress, S.988/H.R. 803, the “Improving Transparency and Accuracy in Medicare Part D Spending Act,” which among things, would prohibit retroactive pharmacy DIR fees.

At the state level, the National Conference of State Legislators (NCSL) reports state auditors in Kentucky, New York, Ohio, Pennsylvania, Texas and West Virginia have begun looking into pharmacy spread pricing practices in their states, although no legislative solutions have yet been enacted.

Also at the state level, laws have been enacted in 38 states seeking to hold PBAs accountable by imposing limits on pharmacy audits, and/or by imposing PBA registration requirements.

Pharmacy Technology Solutions to the Rescue

It just may be though, that a pharmacy’s best weapon could be its pharmacy technology system – the same system that serves as “command central” in managing everything from daily workflow to seamless refills to inventory and records management.

Pharmacy managers may be surprised to learn they are really just scratching the surface when it comes to accessing the full scope of their pharmacy technology system’s capabilities. A pharmacy that relies on its system for “refill management,” for example, may not take the next logical step of linking to an automated inventory management system.

A pharmacy manager may be pleasantly surprised to learn that its existing technology system offers significant options to improve efficiency, thereby off-setting some of the onerous and costly effects of declining reimbursement rates and other PBA-related issues.

  • Minimize mistakes. Since a pharmacy has little control over its drug reimbursements, it can better manage the dispensing process to minimize mistakes and ensure full reimbursements are received. Pharmacy technology solutions can help in several key areas:
    • Proper drug codes. An advanced pharmacy technology system will be linked to the National Drug Code, which will ensure proper identification codes are included on claims. Erroneous classifications can lead to improper reimbursement, and even outright claims denial.
    • Proper dispensing. An automatic pharmacy dispensing system will ensure that accurate quantities of a drug are measured. This eliminates any risk of human error, which can occur when a pharmacy technician becomes distracted, or simply makes a mistake.
    • On-time refills. Refills-filled-too-soon is another top reason for reimbursement denials. A pharmacy technology based refill system will automatically monitor a patient’s record, and alert the pharmacist if a refill order has been requested before the appropriate date. Improper refills are also a major “red flag” for PBM auditors, so a refill-management process has the added benefit of helping to minimize the risk of an audit.
  • Improved pharmacy inventory management. With a pharmacy technology solution enabled, automatic order system in place, a pharmacy can minimize the risk of holding expired or obsolete drugs in its inventory. In addition, pharmacy technology solutions will continually track bin contents, and alert pharmacy staff when a prescription has not been picked up. The system will generate a reminder to the patient and, ultimately, will add any unclaimed medication back into inventory.

Not only will improved pharmacy inventory management help control spending, but a pharmacy can also free up valuable storage space, to offer additional in-demand products.

  • Pharmacy eCare Plans. A relatively new trend in healthcare management is the emergence of pharmacy eCare plans. Through an eCare plan, a pharmacy maintains – and regularly updates — comprehensive records for all services provided to a patient including medication history, consultations, lifestyle plans, and medication adherence strategies. The eCare plan can be shared across a patient’s team of healthcare providers, and used to validate pharmacy reimbursement claims for value-added services.


  • Increasing number of prescriptions. An obvious way for a pharmacy to improve profitability is to increase the number of prescriptions filled. A pharmacy can achieve this by improving patient adherence rates (described below), or by expanding its viability as a “preferred network pharmacy.” This can be accomplished through metric-based reporting, which will allow a pharmacy to easily document its efficiency to health plans and PBMs.


  • Demonstrate efficiency for plans looking to boost star ratings. A pharmacy can also use metric-based reporting to demonstrate its performance to health plans looking to maintain – or improve – their “star rating.”

A pharmacy that prioritizes responsiveness to Centers for Medicare and Medicaid Services (CMS) Five-Star Rating requirements could improve its appeal as a “preferred pharmacy,” thereby potentially increasing its customer base. Pharmacy Technology related capabilities include:

  • Medication Adherence: A Pharmacy technology system provides the pharmacist with ready access to a patient’s medication history, which can be used to explain how a particular drug works, and discuss any potential side effects.

In addition, a pharmacy can automatically generate outbound text messages, emails and phone calls, as a way to remind patients about renewals and pickups.

  • Comprehensive Medication Review. An integrated system can manage CMR process requirements in key ways that include:
    • Identification of eligible patients
    • Determination of ideal medication dosages and usage schedules
    • Syncing of all medications so that all pick-ups occur on a single day
    • Availability of information describing purpose of each medication, along with information about potential side effects
    • Tracking of all pharmacist-patient interactions
    • Outbound texts and phone calls to remind patients about scheduled refills.
  • Ease of Obtaining Medications. A comprehensive pharmacy technology system will allow electronic transmission of a prescription, and seamless processing from the point it is received and recorded, entered into the queue, filled and marked for pickup.

In addition, many systems now offer apps that allow for 24/7 refill orders, whereby a patient can quickly request a refill from any internet-connected device.

  • Use of Statins. With CMS now assessing information about diabetes patients who are prescribed statins, a pharmacy’s technology system can easily identify affected patients, notify them about the role of statins in diabetes management, and initiate the process for obtaining a prescription.


  • Key Performance Indicators. A pharmacy can rely on its pharmacy technology system for customized reporting on self-identified metrics. An advanced system will allow detailed analysis of that data, and provide a pharmacy manager quick access to reports and graphs detailing performance across a range of functions. This detailed reporting can help a pharmacy manager easily determine strengths and weaknesses within the operation.

As pharmacists continue to face an array of profit-squeezing forces, they can find relief by unleashing the full power of their pharmacy technology system. Although technology can’t eliminate these fees and processes, it can help a pharmacy fight back, and even identify new opportunities for profit and growth.

by Micro Merchant Systems

Categoriesnews,  Pharmacy Audits

Pharmacy Audits Are On The Rise – Pharmacy Audit Solution

Pharmacy Audits are on the Rise

A Comprehensive Pharmacy Audit Solution Ensures 24/7 Readiness

A few years ago, the Michigan Pharmacists Association hosted a webinar on the topic of “pharmacy audits,” during which former state attorney general John Wright advised pharmacists that “because of technology, technically, you are always being audited.”

Wright went on to explain:  “Pharmacy Auditors have automated systems to look at your processes and what is happening in pharmacies, and are always looking at data for clues they can use to trigger pharmacy audits, so really you are always being audited.”

This bleak assessment would seem to be supported by reports from different pharmacists about the frequency and scope of audits their pharmacies have experienced in recent times.

A popular blog written by an Iowa pharmacy owner, for example, detailed the author’s pharmacy audit experiences.

“Over my career as a pharmacy owner, we have faced over $1,000,000 worth of pharmacy audited claims, and the PBMs have attempted to charge back over 10% of that amount,” the author wrote.  “A single pharmacy audit may include over 100 individual prescriptions representing as many as 250 dispense dates and may represent over $100,000 in sales.”

This particular pharmacist went on to note his near-100 percent success rate in defending his pharmacies from unfair charge-backs – a process that required a considerable investment of time and energy.

Similar examples were reported by Health Mart, which cited one Pennsylvania pharmacy owner whose three stores were audited “about 30 times” in a single year.  Another owner of five pharmacies in Ohio said his staff typically handles three-to-five pharmacy audits at any given time.

It would certainly seem then, that pharmacy audits have become an inevitable part of today’s pharmacy operations.  For a pharmacy that has not yet been subject to a pharmacy audit, the question is not “if” an audit is in its future, but “when” will it occur?

Stay focused on the underlying purpose of a pharmacy audit.

As a pharmacy owner considers the potential implications of a pharmacy audit, it’s important to stay focused on the underlying purpose of a pharmacy audit:  Parties paying for services want to make sure they are not paying too much, and that organizations with which they engage are acting in good faith, and in full compliance with all regulatory requirements.

That said, it’s critical for a pharmacy owner to have a good understanding of current pharmacy audit practices, and information about how to proactively prepare for an audit. That preparation begins with meticulous documentation and record-keeping as a way to minimize the disruption and adverse consequences of a pharmacy audit.  A comprehensive pharmacy software solution can provide a high degree of confidence that all records are in order, but a pharmacy owner must have an appreciation for the “bigger picture” of today’s pharmacy audit practices.

pharmacy audit

For starters, a pharmacy manager must realize that pharmacy audits can come at any time, and in many forms.

In general, pharmacy audits are usually initiated by a party which may include:

  • Pharmacy Benefit Managers. (Caremark, Express Scripts, OptumRx, etc.)
  • Private insurance companies. In many instances, pharmacy audits are outsourced to external audit companies that operate on a “bounty” basis whereby the auditor is paid a percentage of monies recovered in the pharmacy audit. Thus, these companies have a financial incentive to uncover wrongdoing.
  • Government Agencies (Medicaid/Medicare or, if fraud is suspected, the Drug Enforcement Agency).

Regardless of which party initiates the pharmacy audit, the goal is generally the same – to uncover wrongdoing and recover funds believed to have been erroneously paid to the pharmacy.

Many Different Types of Pharmacy Audits

According to the American Pharmacy Cooperative, Inc. (ACPI),  common types of pharmacy audits include:

  • Desk/mail audits. An auditor will contact a pharmacy by automated means and request specific pharmacy claims and/or additional information. The pharmacy will accumulate the requested information and send the documents to the auditor.  According to ACPI, the desk audit is “set up to evaluate  prescribing patterns, physician referral patterns, utilization overrides, ingredient cost integrity, geographic prescription reports, payment reports, and billing issues to identify possible abusive or fraudulent activity.”
  • Telephone pharmacy audit. The pharmacy receives a phone call from an auditor and is asked to clarify information included on a single claim, or a small number of claims.
  • Prescriber audits. Claims provided by a pharmacy are “thoroughly verified” by a prescriber/physician to ensure all parties records coincide. The prescriber audit is essentially handled the same way as a desk audit.
  • Member audits. Claims provided by a pharmacy are validated by specific patients/members. This type of audit is also handled in the same manner as desk audits.
  • On-site/Field pharmacy audits. As the name implies, this type of pharmacy audit takes place within the pharmacy, with an auditor being on-site for an undetermined length of time.  ACPI notes key features of the on-site audit which include physical observations, prescription reviews, inventory, and checks for compliance with Part D regulations and procedures.

Pharmacy Owner Audit

Pharmacy Audit Notification

Most pharmacy owners are notified 2-3 weeks in advance, and informed about the scope of the pharmacy audit.  This provides the pharmacy owner with time to assemble the requested documents – something that can easily be accomplished via a good pharmacy software system. Requested information may include:

  • List of prescriptions filled during specific date range
  • Signature logs
  • Billing records
  • Policies and procedures
  • Compound formula worksheets
  • Written policies regarding compounding.

According to Pharmacy Times, the on-site pharmacy audit has “the potential to become a really big deal.”  A typical pharmacy audit will review claims going back 24 months, with an auditor reviewing as many as 100 prescriptions in one afternoon.  Any discrepancies may be subject to an adjustment, unless a pharmacy manager can produce documentation to support the claim.  “Something as simple as an undocumented refill in the computer may amount to thousands of dollars in adjustments.”

In some instances – “rare instances” according to ACPI – pharmacy owners are not notified in advance.  This type of “unannounced” pharmacy audit can result in a less efficient investigation, since the pharmacy owner has not had time to prepare necessary records and documents.  But, the unannounced visit can provide a more reliable indication of a pharmacy’s day-to-day operations.  Should a pharmacy owner face an unexpected visit from the pharmacy auditor, Cardinal Health provides a few steps to follow:

  • Verify the identity of the individual. Request identification and call the phone number listed on the individual’s business card to verify employment.
  • Inquire about the scope of the pharmacy audit and document the answer in writing.
  • Ask how long the auditor will be on-site and determine the number of records that will be subject to examination.
  • Ask for time to ensure proper staff coverage.
  • Direct pharmacy staff that all questions should be directed to the pharmacy owner or manager.
  • Ensure staff is aware of pharmacy policies for partial refills, prescriptions that are not picked up, procedure for drugs not covered by Medicare Part D, and other key pharmacy processes, in case questions are asked of them.
  • Do not allow the auditor to roam the pharmacy unattended. Instead, if the pharmacy auditor wants to check on refrigerator temperature, or manually review shelf inventory, or any other process, the pharmacy manger should either accompany the auditor, or provide the requested information.


  • Investigational Audit. According to ACPI, “providers are contacted normally by telephone or mail and asked to provide photocopies of specific documents and records related to claims paid to the provider during a specified period of time.  Documentation may include copies of original prescriptions, signature logs, computer records, and invoices showing purchase or receipt of dispensed medications.  These can be as simple as comparing National Drug Codes (NDCs) ordered versus those dispensed, or a more  complex investigation involving the prescriber, member or potential pharmacy fraud.”


  • Invoice Audits. In this type of audit, auditors review NDCs and amounts for medications submitted by pharmacies from wholesaler receipts.  According to ACPI, invoice pharmacy audits can be classified as “investigational” audits, and are in accordance with third party payor agreements.

Pharmacy Audit Documentation and Record-keeping

Hanging over all pharmacy audits, of course, is the threat of financial repercussions, including claw backs of fees determined to have been paid in error, penalties, contract cancellations, and the possibility of an audit finding triggering a larger investigation.  One Ohio pharmacist told Pharmacy Today that his five community pharmacies were under such scrutiny by pharmacy auditors that two staff members were assigned to deal with audit matters. “The problem,” he noted, “was that the large sums of money Pharmacy Benefit Managers (PBMs) wanted were for minute errors like misspelling a person’s name.

“We were getting audited for reasons that didn’t affect the patient outcomes, or the payer in a negative way,” the pharmacy owner noted. “It was mostly clerical errors.”

While no two pharmacy audits are ever exactly the same, most have a few key elements in common, namely the need to provide seamless documentation trails for all critical pharmacy transactions, including prescribing and billing practices, invoice and inventory records and controlled substance management.

Which is why the most important audit just might be the one that takes place proactively within a pharmacy, before the pharmacy audit notice arrives, or an unannounced pharmacy auditor arrives on a pharmacy’s doorstep. A pharmacy self-audit can allow a pharmacy to self-identify potential areas of vulnerability, and implement quality best practices that will ensure top-notch record-keeping.

Improper documentation is a top reason for pharmacy audit penalties.

“Think about what you do, how you handle your documentation now,” advised John Wright in the Michigan Pharmacists Association webinar.  “Don’t wait until the pharmacy auditor comes in and you’re kicking yourself because you’re going to lose $10-or-$20,000 because you didn’t have your documentation filled out correctly.”

But what exactly are the documentation snafus that can trigger a pharmacy audit?  Elements magazine, produced by PBA Health lists five common mistakes:

  • Filling unauthorized prescription refills, and failure to accurately document refills.
  • Failure to maintain hard copies of prescription records.
  • Failure to dispense correct drug quantity
  • Using incorrect Dispense-as-Written (DAW) codes.
  • Insufficient directions for use.

Your Pharmacy Audit Software Solution – An Essential Tool in Audit Preparedness

The good news for pharmacy managers though, is that whereas locating required documentation and records used to mean hours spent hunting through file boxes, today that information can be just a few clicks away.  A pharmacy’s technology solution, which already serves as the pharmacy workhorse by facilitating pharmacy workflow and prescription filling processes, can also be a one-stop solution for most-requested pharmacy audit documents.

A comprehensive pharmacy software system will allow for the capture, archiving and storage of critical capabilities including:

  • Electronic signature logs
  • Proof of prescription pick-ups and deliveries
  • Copies of all prescriptions, both front and back
  • Payment documentation
  • Coordination of benefits
  • Prescription inventory records
  • Copies of all pharmacy correspondence, including exchanges between the pharmacy and patient
  • Automatic inventory management and reordering procedures
  • Automatic inventory adjustments to reflect medications returned to stock
  • Verification of prescriber credentials
  • Assignment of NDC codes
  • Proper billing practices for generic and brand-name drugs
  • Documentation for controlled substance handling
  • Automatic warning trigger for potential over-prescribing of opioids and other controlled drug categories.
  • Automatic triggers to reduce dispensing errors; and
  • Seamless insurance claims management.

Easy access to any of these data elements can be a tremendous time-saver in preparing for a pharmacy audit, and allow pharmacy managers to address auditor documentation requests.

Although pharmacy audits have become almost inevitable, they no longer have to strike fear and dread within pharmacy managers and owners.  Instead, as Michigan’s John Wright notes, they are “survivable,” especially for a pharmacy that has done its due diligence and has good internal controls and records management processes in place.



The American Pharmacy Purchasing Alliance is a community of pharmacy owners, pharmaceutical experts and professionals dedicated towards the recognition and advancement of the specialized industry  pharmacy, patient care & pharmaceutical purchasing. 

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