Recent enforcement actions focus attention on the importance of fundamental operational processes to ensure only valid prescriptions and refills are processed. Last month, Omnicare, Inc. (Omnicare), a subsidiary of CVS Healthcare Corporation (CVS), paid $15.3 million to settle allegations that it submitted fraudulent claims for invalid prescriptions in violation of the Controlled Substances Act (CSA). Notwithstanding the settlement, two whistleblower suits in which the federal government, 29 states, and the District of Columbia intervened, and which raise analogous claims against Omnicare and CVS are still pending. Earlier this year, the state of Illinois submitted a memorandum in opposition to Walgreens’ motion to dismiss, outlining its arguments as to why its $19 million suit for alleged inappropriate auto-refills should proceed.

These actions highlight the benefit of not only having comprehensive policies, procedures and trainings, but also an internal auditing process to ensure such policies, procedures and training protocols are followed and complaints and deviations are addressed through a formalized corrective action process.

What Makes a Prescription Refill Valid?

State pharmacy laws and federal healthcare program regulations contain several conditions requiring pharmacies to fill only valid prescriptions. State laws contain requirements governing what constitutes a valid prescription, including information that must be included on a prescription, the expiration periods of prescriptions, and how prescriptions may be refilled. State Medicaid regulations and commercial payors often prohibit refills without express consent from the patient, similar to the requirements under Medicare Part D.

The Omnicare settlement resolves allegations that Omnicare, among other things, allowed opioids and controlled substances to be dispensed to its long-term care facility clients without a valid prescription. In the still-pending lawsuits against Omnicare and CVS, the government contends the pharmacy relied on computer systems that automatically filled prescriptions for indefinite periods without a physician’s determination that the drugs were still safe and clinically appropriate. Under the system’s settings for healthcare facilities such as SNFs, the number of refills auto-populated to an artificially high number—such 99 refills for Medicare Part D patients—unless the number was manually overwritten. This allegedly allowed Omnicare to refill prescriptions up to 99 times without contacting the patient’s physician for authorization. Furthermore, Omnicare allegedly failed to provide the basic training necessary for its pharmacies to understand their obligations to identify valid prescriptions, dispense only drugs supported by a valid prescription, accurately track prescription expiration dates, and obtain new prescriptions when necessary. The complaints paint a picture of overburdened, understaffed, and undertrained pharmacists and technicians relying on computer systems rather than independently verifying the prescriptions’ validity due to constant pressures from upper management “to get prescriptions out the door.”

The government further alleges defendants were aware of these flaws but failed to address them. The complaints note Omnicare and CVS were made aware of the problem by several sources, including the following:

  • State pharmacy boards found Omnicare’s dispensing requirements failed to comply with state law.
  • Third-party and internal audits revealed a persistent failure to obtain valid prescriptions before dispensing.
  • Omnicare received complaints from facilities and even its pharmacies that Omnicare was dispensing drugs without a valid authorization to fill or refill the prescriptions, and was inflating the number of allowable refills.

In the Walgreens case, the state of Illinois alleges the defendants instructed employees of C&M Specialty Pharmacy (C&M), one of Walgreens’ specialty pharmacies, to auto-refill Medicaid patients’ prescriptions and leave a note that the patient authorized the refill, regardless of whether such authorization was obtained. This conduct allegedly caused false claims to be submitted in violation of the federal and state false claims acts.

Key Takeaways for Providers

These cases serve as a cautionary tale for providers and as a lesson in maintaining robust and effective compliance practices related to obtaining valid prescriptions and refill authorizations:

  • Omnicare was allegedly alerted by several sources, including internal complaints and audits, about the problems with its automated refill system, but according to the government, Omnicare failed to adequately respond until the government began investigating. Similarly, the basis of the state’s claim against Walgreens lies primarily in its failure to comply with Illinois Department of Healthcare and Family Services’ (HFS) notice to providers that HFS would no longer reimburse auto-refilled prescriptions. Equally as important as maintaining processes such as compliance hotlines and internal audits to spot non-compliance before it becomes a systemic issue, is taking appropriate corrective action when complaints are raised.
  • The complaints in the CVS/Omnicare case often highlight defendants’ failure to conform to their policies and procedures. In addition to having comprehensive policies and procedures in place, it is essential that providers follow them. Documented policies and procedures can be a double-edged sword: failure to comply can undermine compliance efforts and give the government fodder to use in the event of an investigation.
  • The CVS/Omnicare complaints repeatedly attack the companies’ lack of adequate training to prevent the alleged misconduct at issue. All employees should receive training on compliance basics, and employees in positions that involve particularly risky areas—here, dispensing opioid and controlled substances—should receive additional training tailored specifically to these areas. In addition to providing training, it is important to track that employees have received the requisite training, document that they have demonstrated competence in these areas, and re-train as necessary.

If you have questions about how to comply with regulations regarding obtaining valid prescriptions and refills, please contact the authors.