It has come to our attention that Prime Therapeutics (Prime), a Pharmacy Benefit Manager (PBM) that maintains contractual agreements with many independent pharmacies nationwide, is in the process of issuing both audit and termination letters to many of its contracted pharmacies. Receipt of either a notification of audit or a termination is an event that cannot be ignored.

Prime appears to be focused on violations (or potential violations) under the Drug Supply Chain Security Act (the “Act”), specifically the requirement that wholesalers in the supply chain are properly licensed with the FDA. Pharmacies must confirm that they are dealing only with properly authorized trading partners and maintain appropriate records. Given that many of the provisions of the Act became effective in 2015, the time frame for an audit or termination is important in evaluating each case individually. Specific contract provisions and state laws may also affect your rights in an audit or termination.

In either an audit or termination scenario, pharmacies are faced with a limited amount of time in which they may act to assert their rights. In some instances, the clock begins to tick even prior to receipt of the audit or termination letter. The time frame in which you may act is defined by your contact, but may be as little as 30 days from the date on which the letter is issued (not the date it is received.)

The audit/termination activity currently seen with Prime raises two important points: (1) Contact counsel immediately upon receipt of a letter from Prime for an evaluation of your rights under your contract with Prime and, (2) Contact counsel for a review of your pharmacy’s compliance with the Drug Supply Chain Security Act.