A Conversation with Amanda Bogle, Healthcare Attorney at Sheppard Mullin

The world of healthcare regulation compliance is ever-changing but not impossible to keep up with, according to Amanda Bogle, a healthcare attorney at Sheppard Mullin who specializes in transactional, regulatory and operational issues.

In this interview, Bogle provides insight into the current 340B healthcare deal environment, the challenges pharmacists face as their scope of practice expands and the compliance risks associated with PBM reporting requirements.

This interview has been edited for length and clarity.

Amanda Bogle

MHE: What are the new transparency and reporting requirements for PBMs, and what compliance challenges do pharmacies face under them?

Bogle: PBMs are basically the middleman between drug manufacturers, health care providers, payers and pharmacies, and so they're doing a lot of claim management tasks like developing formularies, negotiating drug prices and rebates and processing claims.

Until recently, there really wasn't a ton of information publicly known about how PBMs are doing this. In recent years, people have become more curious, and this has led to a lot of congressional reviews of PBMs on both the state and the federal level.

On the federal level, PBMs are starting to be required to report on drug spend, rebates and fees—anything regarding reimbursement—because of this push to decrease drug prices for patients. Because PBMs are kind of in the middle, it's an entity we can look at.

About half the states now have laws that require reporting disclosures about pricing, rebates and reimbursement. Because you're getting a lot of that data directly from the pharmacies, a lot of that reporting requires the cooperation of pharmacies. Now you're having all these pharmacies trying to harmonize all these different multiple requirements, especially if you have pharmacies working in multiple states.

Most contracts have some sort of non-disclosure clause on pharmacies where they're not allowed to disclose certain reimbursement or pricing information, so it's kind of left up to them to make sure that they have the proper legal advice on what exactly they can disclose while also complying with the PBM audit request.

A lot of pharmacies, especially smaller, independent ones, aren't equipped to manage all that information and get it out in a format that's accessible.

MHE: How are states responding to the push to expand pharmacist scope of practice from a regulatory perspective?

Bogle: One of the few good things that came out of the COVID-19 pandemic is that it required the country to rapidly expand access to healthcare, whether that be through expanded telehealth flexibilities or, in this case, expanding the role of pharmacists to be able to play a larger part in providing patient care. Some states have started to make some of these rules permanent, where they're expanding the role of a pharmacist and providing clinical services to patients with it.

There's sometimes a disconnect between what the state rules are allowing and what the payers are allowing to be billed, even if they're recognizing that a pharmacist is a qualified provider.

Sometimes the fee schedules are not that beneficial to a pharmacist, so they're not getting paid enough, and then they're not willing to take on that additional liability of providing clinical services without being paid in a manner that encourages them to participate in these additional roles.

MHE: Are specific compliance risks associated with mail-order pharmacy or third-party platform partnerships?

Bogle: Being a mail-order pharmacy expands your market significantly. I believe every state requires a license if you're an out-of-state pharmacy, so the more patients who are sending their prescriptions to you, the more licenses you're going to have to get, which means more exposure to risk from those State Boards of Pharmacy and more auditing requirements.

From an operational perspective, once you ship out a medication, you kind of lose control of the environment that the drug is sitting in, so you have to be more careful about how you’re packaging medication to ensure that you're maintaining medication integrity rules and environmental standards, accounting for humidity changes, and making sure you're documenting when drugs potentially degrade. It exposes you to more recall risk if drugs degrade in the process.

With respect to third-party partners, the biggest thing you have to be concerned about is patient confidentiality.

MHE: What are the implications of pharmacists being recognized as providers under federal or state Medicaid programs? Are there regulatory barriers to implementation?

Bogle: The first step is for a state to update its Medicaid state plan amendment to make sure pharmacists are recognized as qualified providers. Then, specifically outlining which services pharmacists can provide and bill for.

It can be a lengthy process to get federal approval to update your amendment, so you've only seen a few states do this so far.

Sometimes there are competing priorities about what to update in your state Medicaid plan. Even so, the services that they're including in these state plan amendments are usually limited, like providing vaccines, medication and therapy management.

MHE: What is the 340B Drug Pricing Program, and what are the most pressing regulatory developments impacting it right now?

Bogle: The 340B program is a federal program that was established in the early 90s that allows certain safety net providers to stretch their resources by purchasing certain outpatient drugs at a significant discount. The intent is that the safety net providers, who are already cash-strapped, will be able to use these financial savings to put their resources into increasing services.

So I'm going to use the terminology called covered entities. That is the name they give providers to participate in the 340B Program.

Whenever there's money involved, and some players are accessing discounts and are getting more money than others, there is a perceived disparity.

The most contentious issue right now is efforts by drug manufacturers, who are required by law to provide their drugs at a discount to covered entities, trying to be more creative in ways that they can limit the volume of discounts that they're providing to covered entities.

One way that they try to do that is by trying to limit the number of contract pharmacies that covered entities can use. Historically, covered entities would enter into agreements with retail pharmacies to essentially act as an agent of the covered entity so that prescriptions that are written for that covered entity, and then that patient gets the prescription filled at that retail pharmacy. Those prescription drugs are considered 340B eligible, and they can access those drugs at a discount when they purchase them.

They're doing this because in the 340B program, there isn't necessarily language that says drug manufacturers must honor discounts at every pharmacy. So, they're kind of trying to close a loophole. That's been highly litigated ever since they've tried to do that; a bunch of lawsuits have been filed with conflicting results on the legality of it, and now states are trying to jump in and try and protect covered entities by requiring drug manufacturers to honor 340B discounts at any contract pharmacy in their state, which has, of course, resulted in even more lawsuits.

You're seeing Congressional investigations and a growing movement of increased transparency requirements and reporting obligations for covered entities, including reporting on how they use their 340B savings, which is kind of nebulous, because it's hard to report on how you use unspent money.

My personal hope is that future regulations will strike that balance between accountability and preserving what I think is a very important cost-saving measure for providers who do serve our most vulnerable patient populations.

MHE: How should pharmacies structure their compliance programs to manage the intersection of 340B, PBM and Medicaid regulations?

Bogle: Leadership is important, so if you have the ability to hire a compliance officer dedicated to tracking and monitoring regulatory compliance developments, it’s recommended. Also making sure you have an audit team and a response team, supported by outside counsel with healthcare expertise.

A great documentation management system also goes a long way to keep up with those audit demands and respond to them in a timely manner.

Auditors, PBMs and payers are all going to request different information, so having that in a central location is important. Make sure you are also doing your own internal auditing, whether it's your claims, your inventory, your prescription files or your disclosure obligations.

You must make sure your policies and procedures are up to date and that everyone is trained on them, at least on a quarterly basis.