State and Federal Pharmacy Law | Linda Clark, Attorney, Partner at Barclay Damon

This transcript was generated automatically. Its accuracy may vary.

[00:00:15] Mike Koelzer, Host: Well, hello, Linda, good morning, Mike, for those that haven't come across you, and since you're not actually grown up in the pharmacy world, tell us who you are. Give us a little blip of what you do, why we're talking this 

[00:00:30] Linda Clark, Attorney: morning. Sure. So I'm Linda Clark and I'm a partner at Barclay Damon, which is one of the larger firms outside of New York city in New York and in the Northeast generally.

Um, and I'm the chair of what we call the healthcare controversies practice. Um, and what that means is that we are cross trained litigators, uh, career litigators with a lot of trial experience, but we're also trained in the substantive field of healthcare law. Um, so our firm has this. Uh, interesting hybrid area where you do have lawyers with a lot of training in particular areas.

For me, a lot of my time is spent on healthcare litigation generally, and more specifically in the area of pharmacy law and pharmacy litigation. Okay. So 

[00:01:13] Mike Koelzer, Host: Linda, back up here, when you say training, is this on the job training? Is there anything like official certification or anything, or is it like an emphasis and through that emphasis.

Train yourself. Yeah, that's a 

[00:01:27] Linda Clark, Attorney: good question. Um, in the law, uh, unlike some medical specialties. Yeah. We're not generally allowed to consider ourselves quote, unquote specialists. There's a few exceptions to that, like patent law and other things like that. But, um, we are able to describe the areas of focus, where we spend a lot of time.

I was a litigator, meaning someone who's in court frequently in a, uh, in a healthcare law firm. Oh, I see. So I went there. Litigator for a lot of different kinds of healthcare problems that needed the skills of a trial lawyer, as opposed to someone who might do the contracts and the regulatory work.

Gotcha. Um, so that's how that evolved. What we found is that unfortunately our healthcare clients have more and more need for lawyers with those kinds of litigation skills or advocacy. Yeah. Right. And so that has in and of itself become, um, a huge area of focus. And that's why we now have a substantial practice group right.

In our firm dedicated just to healthcare. 

[00:02:26] Mike Koelzer, Host: So Linda, you worked for a firm that specialized in healthcare. They found they needed more people to be litigators, which is good for you guys. And unfortunately it's maybe a sign that there's more fighting going on for lack of a better word. And then somewhere in there, did you find it?

Even more of a focus on pharmacy instead of just healthcare in general. 

[00:02:53] Linda Clark, Attorney: Yes. And, uh, the way I came to that was through a series of audits that, uh, had become very popular in New York and beyond. Um, we have a very aggressive Medicaid inspector General's office. Yeah. And we found that, um, many of our pharmacy clients were just being deluged.

With all kinds of audits, um, involving very high stakes and it was becoming sort of an existential threat, um, to the pharmacy clients. So, um, that, that became a very big deal. I'd say about maybe 10 years ago, something like that. Um, and, um, so that was the initial foray into that area. And then very quickly we saw the influences of the, um, of the pharmacy benefit managers, right.

In a lot of different ways. And so, because we had that expertise, uh, with the pharmacies litigating. These heavy duty audits from the federal government, from the state government, it was sort of a natural segue to want to have the ability to protect them from some of these, uh, the influences of these PBMs, which we know since then have, have become, you know, just so destructive to the community pharmacy 

[00:03:59] Mike Koelzer, Host: area.

I came across you on LinkedIn, because you were commenting on some stories and stuff from the pharmacy. Would this be correct in saying that you are. Responsible for your own client marketing. In other words, do you go out and try to be in the marketplace because you don't have people just knocking on your door or a marketing firm for you, your responsible for those relationships, which then can turn into.

Clients, would that be fair to say 

[00:04:38] Linda Clark, Attorney: That's exactly right. Um, like most law firms, it's very relationship driven, but there's also a broader marketing component. So, um, especially in this area that we're talking about, um, which is pharmacy law, we find that, um, substantial. Entities that are, that are in the pharmacy space, really want lawyers that know what they're talking about that know the landscape.

And so I use LinkedIn, um, something like this, for example, write, I write frequently. Um, I speak frequently at national events. Um, I use that to get the word out that we are interested in teaming up and representing pharmacies in, in substantial matters. 

[00:05:19] Mike Koelzer, Host: So it's two things. It's getting your name out there, but just having your name out there saying you.

Pharmacist is not enough. You've gotta get out there and show that you understand the problems and you're on the side of the pharmacist and things like that. So that builds up that trust more than a Billboard's gonna do that just says you're a pharmacy specialist. 

[00:05:41] Linda Clark, Attorney: Right. And, and you mentioned, um, Uh, the, the trust issue too.

And that's very important here because many large firms with the depth and the sophistication for the kinds of issues that we're probably gonna be talking about today, also have significant, uh, conflicts of interest. Hmm. So one of the things that we've done within our pharmacy law group is we've been conscientious.

Uh, avoided big conflicts by avoiding representation of, uh, players. Yes. We know that there's so much vertical space. We call it vertical integration with payers and PBMs. That is very hard as a firm to ride the fence. So we have chosen aside in the, in this battle, um, and it's, uh, squarely on the side of the pharmacies, the independent.

Pharmacies specifically, how far can 

[00:06:30] Mike Koelzer, Host: things go in your mind? You know, they start out small, but things can take off. Right. And that's where a bigger firm comes in handy. That's not gonna run 

[00:06:39] Linda Clark, Attorney: scared. Right. And what you want is a big enough firm that you have a bench. Of lawyers with the expertise.

They're not gonna be out day one of a major audit with a withhold or something that you might be experiencing and going to find the PBM manual or starting to research the law. If that's happening, it's gonna be tough going. So what we have is really kind of a SWAT team. I would say we're ready to go.

And our clients end up in very significant disputes that are different from anything else. These are not slow burning projects. Many times we have, uh, you know, regional pharmacies that are under tremendous pressure facing either termination. From one of the, the big, what is now the big three. Yeah.

Right. Pharmacy benefit manager networks. Yeah. Right. Facing perhaps a hundred percent withhold with one of those huge, huge entities. And so those are pretty much the company situations though. It's not unusual for us to have to literally parachute in, for example, I was in Honolulu, Hawaii just a couple years ago.

This year it's been Texas, Florida. Uh, New York, of course, New Jersey. And you really need someone with those skills and the knowledge to jump in on your behalf and really assist at the beginning in those difficult situations. But I'd add that even in the, uh, the less dramatic situations where you're facing a, a, a large audit, we find it's really helpful to be involved in the.

Sometimes people wait until they have sort of a final answer from a governmental authority, you know, Medicare, Medicaid, whatever we're talking about, or the pharmacy benefit managers. And by then sometimes it's too late. The record's set. The arguments that need to be made, have not been raised. You're then precluded.

And it's, uh, it's very, it's a very big uphill battle. We just took on a matter, which shall remain anonymous for now. But let's just say that this very, uh, healthy, vibrant pharmacy group was run outta business in their state, by their PBM. And they kind of came to us for a second opinion after it all happened.

And the business was lost. We immediately found a law there. That would've prevented any of that from happening. It's tough. It's not impossible at that point, but boy, yeah. If we had been involved at the beginning, none of that would've happened. There were, you know, huge dollars involved not to mention termination of that ex existential threat, right.

We've been talking about it. So that's one of the reasons that we've decided to really look at our practice more, uh, nationally, we're not in every state, but we have relationships with local firms, uh, that can support us outta the states where we have. Uh, we have maps here in my office that have all the states and what their state laws are, what the developments are legislatively yeah.

In each state, uh, each state, because as you probably know, there's this, uh, layering of laws, you have pretty limited, uh, protections under federal law. And then it sort of marries up with a lot of the local laws. And then on top of that, you have the rules, uh, that pertain to each contractual, relat. So it might be your PSA O agreement.

It could be your, uh, pharmacy benefit manager agreement. And so it's a pretty complex quilt. Of, uh, laws that define what your rights might be under, under a certain scenario, honestly, with express scripts and Optum, we're talking about two of the biggest businesses in the country. Yeah. And certainly in the top 20 looking at United healthcare.

Yeah. For example, the stakes are very high. If you don't have a firm that has the reputation, yeah. The expertise and the guts to push back in those scenarios. Right. You're, you're gonna have a difficult time. Um, and unfortunately then you get the letter. The wheel by your pharmacy letter. Sorry, you're having difficulty, uh, maybe, maybe this is your way out.

That really troubles us as lawyers and it's 

[00:10:29] Mike Koelzer, Host: way too coincidental that they don't know about the audit or the lawsuit that's going on. 

[00:10:35] Linda Clark, Attorney: Well, exactly. I think they claim that there's a firewall in turn internally. Let's say CVS Caremark, that, and they don't communicate. But I have sadly seen in these scenarios, many independent pharmacies get pressured into selling to the very pharmacy benefit manager owned or affiliated chains that are supposed to regulate them.

And that's that. Now we're talking about that fundamental rub, that conflict of interest that makes pharmacists just shake their head and wonder, you know, if there's, if there's any fairness or justice to be had in these relays. And of course, that's one of the major issues right now before the Trump administration, the Supreme court and all the state legislatures is resolving that conflict of interest part in my 

[00:11:20] Mike Koelzer, Host: French.

And I know you, you speak French 

[00:11:23] Linda Clark, Attorney: That's right. Do you do a lot of that or? Well, I was very lucky when I was 15, uh, in a public high school in New York, uh, sort of in the Hudson valley, I got an invitation to sort of try out for a rotary club scholarship in France. And so, uh, I took off for a whole year when I was a teenager and lived with seven different families in France.

No kidding. Through the rotary club. Yeah. Wow. It was an amazing experience. And so I've done my best to keep up my French over the years. Wow. Um, and try to go back. Uh, but yeah, I was very, very lucky as a kid. 

[00:11:55] Mike Koelzer, Host: Did that count as a year of school? It did. 

[00:11:59] Linda Clark, Attorney: Wow. So yeah, it was cool. I went to a. A French, a high school in a, in actually a socialist town in the Northeast of the country, closer to Germany.

And so it was a, uh, incredible cultural exchange for me too. Wow. Um, and it's really definitely changed, uh, changed my path and opened my mind. Uh, very significantly as a young person. Do you 

[00:12:22] Mike Koelzer, Host: use any actual French in your job at all or not? Not as much 

[00:12:27] Linda Clark, Attorney: as I like. It's very tough to develop a transnational practice, particularly outside of New York city and the firms that have that licensure.

Yeah. Right in cross border licensure. So that's a little tough. I mean, yeah, it's more of a social thing, so I won't be offended by your French 

[00:12:44] Mike Koelzer, Host: there is. Fricking wall at those places because about every five years or so, I own an independent pharmacy in grand rapids, Michigan and every five years or so. I, I price out my business and just see what, see what it's worth and so on from actual offers from people.

And we had some guy who said, he was. A former employee of a certain chain and, and we signed this confidentiality agreement. And so on and before, you know, somebody was calling us from there because they said, oh, we just happened to talk to them. And we know you're the only pharmacy in grand rapid that, you know, so they were trying to beat around the Bush.

It's like, come on, you guys, you're all one thing. There's no. There's no wall in those places. 

[00:13:29] Linda Clark, Attorney: Right. And it's very hard to imagine how they can do that. You know, you have the related issue, um, in terms of the wall concept with the, uh, piloting of patients. Yeah. Right. So we see a lot of examples. Where, you know, you'll have a, an order come in or a script come in and to regular customers and the customer's getting direct notification that they need to go to this, to the, you know, the preferred CVS network.

Right. And so that communication's going directly from the pharmacy benefit manager side of things and redirecting the patient away from their independent pharmacy or whatever phar pharmacy they're with and to a related Pharmac. And that's the subject of some, um, very important litigation going on in various parts of the country.

And we think that's just a prime example right? Of, uh, of the lack of any separation between that function of that fiduciary function of being responsible for managing a benefit. But also competing in the same market space. It's crazy. 

[00:14:32] Mike Koelzer, Host: And they might have, and this is being generous. They might have avoided a HIPAA situation by not actually coming out and saying, we know you got this drug at this pharmacy and come to us.

So they probably scoot around that a little bit, but it's all in one big ball of of it's one big hairball that these face 

[00:14:53] Linda Clark, Attorney: are. and, and they're not, you know, they're not coming after your, uh, your, your loser, uh, no drugs in terms of the ones that, that you lose money on. They're coming after your quote unquote specialty drugs.

Yeah. You know, anything with, uh, with a profit margin. So, um, it's, uh, I don't know. I, I, sometimes I think it's pretty transparent. Yeah. But that's why, um, that's why all the state legislatures have stepped in. I mean, you probably know, but there's. Wonderful wave of state legislation. That's been just on fire across the country, trying to deal with this situation because God loves our pharmacists.

They have been just incredible activists on the state level and have been pretty successful, um, in getting legislatures to implement reforms that would prevent. Those kinds of things are happening. Let me see if I have 

[00:15:41] Mike Koelzer, Host: this right, Linda and you, you stop me. Well, don't stop me. Just let me embarrass myself.

And then at the end you can correct me. How how's that sound fair enough? All right. 30 some states have set up these rules against the PBM antics and the PBM says. Screw you all, we're appealing to all these and they keep going about their stuff. And then Arkansas or Arkansas that's right, Arkansas. Finally, a couple weeks ago the Supreme court agreed to hear their case.

And when, if the Supreme court falls on the side of the Arkansas, You know, pharmacy lawsuit or the association, they then can finally say to the PBMs that are telling the 30 some states that have these laws and the PBMs are saying, go, go screw yourself. We're not doing anything until the Supreme court tells us we have to, that's what this a win in June or whenever this would be.

take care of where am I wrong on 

[00:16:55] Linda Clark, Attorney: that? No, you're, you're I, I think that's a pretty good description of the situation. I think that the complexity is on the part of the case that involves Arissa. Right? So, um, PCMA is the trade association for the pharmacy benefit managers. And what they've been doing is very strategically selecting cases to take up on.

Where they think they can get the court to agree with them, that the states have very, very limited ability to regulate pharmacy benefit managers. Risa. What is that? Well, that is a huge, huge network of laws, federally, that govern, um, employment benefit plans. Okay. Gotcha. It really blankets a huge portion of the benefits that people have in this country.

And the idea is that Rissa. Usually in many circumstances can preempt state law. So what the federal government has done is they've created a uniform law on the federal level. The pharmacy benefit managers through PCMA are saying halo states, you can't interfere with how these plans are being administered.

It's covered by a uniform, federal. And under the preemption concepts, you're not allowed to come in at the state level and impact and interfere with how these plans are being run under federal law. That's the gist 

[00:18:18] Mike Koelzer, Host: of it. So the PBMs and I hate to give them any benefit here. but the PBMs are not just telling the states, screw you.

We don't care about your laws. They're saying screw you. Because we think that there is a stronger federal law that supersedes all these. Ply agreements that the states are making. 

[00:18:41] Linda Clark, Attorney: Exactly. Okay. So there is this, the Rutledge case that you're talking about, which is the Arkansas case. Yes. It's very interesting because just over the last few weeks, We have had this Supreme court agreeing to take that case.

And, uh, apparently the high court is willing to take that case and draw some lines and give some guidance regarding, uh, what the permissible scope of state law will be. Um, so this is a very, very important moment. It's also very interesting in, uh, December. The court trying to figure out if it should take the case is if this is something they wanted to get into, um, used what I call as their, uh, their phone, a friend option and asked for briefs from the solicitor general of the United States.

Um, and the solicitor general came in and fully supported, uh, the Supreme court's, uh, review of the issue and really came in on the side of the independent pharmacies and against the PCMA position. So we are cautiously optimistic. That if the Supreme court gives weight to the solicitor general's sort of independent view of the situation, that it could yield, uh, a positive result here, but no one knows it could go either way.

And so we'll have to see how the Rutledge case comes out. How, how long does 

[00:19:58] Mike Koelzer, Host: a case like this last a year? 

[00:20:01] Linda Clark, Attorney: Yeah, it could, it could last a year. There's a few things that are uncertain yet in terms of briefing and the like, um, but there was a rid of cert, which is the, the permission slip, so to speak. That was granted last week, I believe.

Um, so in the, over the next year, uh, we'll see the case move through the court's normal docket. 

[00:20:20] Mike Koelzer, Host: How long is a, how long is a case like this physically in front of. The, the justices, how many hours, like one hour or, or like how long are they actually like in front of the judges? 

[00:20:33] Linda Clark, Attorney: Not very long at all.

Sometimes you're talking about minutes, 

[00:20:36] Mike Koelzer, Host: just enough to get it in the cycle. And 

[00:20:39] Linda Clark, Attorney: exactly. Now what I'm talking about is the oral argument. The case itself will be fully briefed. They'll be very sophisticated, legal work done. And then the justices will hear argument for a very short period of time and then issue a decision and, 

[00:20:52] Mike Koelzer, Host: and the arguments could be minutes.

Absolutely assuming they did all their homework and that, and just enough time for Clarence Thomas to get out there and not say anything. 

[00:21:03] Linda Clark, Attorney: yeah. Some, some of our justices are much more active than others. We, you know, sometimes you have a hot bench and sometimes you don't, but I think what's interesting about this case is the impacts of the case generally on this concept of preemption, I think that, um, many of the states like New York, you might have heard, unfortunately we had a rather comprehensive.

Re PBM reform bill. Yeah. Unfortunately it fizzled over the holidays. The governor vetoed it. Yeah. The veto message and the messaging from the governor suggested that there, they weren't sure if the law would be upheld because of all the uncertainty over, uh, this RO Rutledge issue. Um, and so if Rutledge goes the way of the independent Pharmacy.

Then I think that state laws will be much, much bolder in reigning in bad PBM behavior. If it goes the other way, then maybe it's something that Congress needs to take up in a more comprehensive way. Um, so to me, that's sort of the crossroads that we're at. 

[00:21:59] Mike Koelzer, Host: An appellate is more like they're not retrying the case.

They're just usually looking at one part. It'd be like, if my kids are fighting over something, they can't come in here and tell me the whole damn story again. If I'm the appeals judge, I'm just saying, all right, what actually happened in this part of it? That's kind of what they're doing.

They're just hearing the appeal of this whole case that someone thinks. Wrong. 

[00:22:25] Linda Clark, Attorney: That's exactly right. And E even the Rutledge case really deals with a subset of issues. So to the extent the state can, uh, can regulate the business side of, uh, pricing, for example, pricing appeals. Yeah. Pricing limitations, trying to make sure there's some floor of, uh, reimbursement yeah.

For pharmacies. Um, that's, that's one of the issues in Rutledge. It may not decide other issues like open networks, like, you know, some of the other reforms that we've seen in other states, but if it gives us guidance on more generally on this principle of can the state governments regulate, uh, side by side, uh, these plans with the federal government, that's gonna be the, in my view, the, one of the important outcomes of the Rutledge case, 

[00:23:10] Mike Koelzer, Host: if the Supreme court says, all right, they can do.

Part of it. Don't the PBMs just say, all right, we'll give you that one now. Here's another 99 things that we do. heard from yet, or is it very symbolic too? That the Supreme court, they might verbally say, let's say the states, you won this appeal, but wink, wink. We're also gonna let you win the other 99.

Is it symbolic? 

[00:23:36] Linda Clark, Attorney: Well, it depends on the decision. If the court says that the states have broad latitude. Oh, I gotcha. Um, to, uh, regulate, as they traditionally do is, you know, the, uh, pharmacy profession is generally regulat. by states. Yes. Right. And so that's why you have this sort of collision between the traditional state regulation of pharmacy and pharmacists and the, and the, and the, um, the ERISA gotcha.

Regulation of, of, uh, employment plans on the federal side. And so it's this middle area. Yeah. Um, that the, that we'll probably be hearing from the court about, and if they could decide it, uh, many different ways. Um, it could be very limited and allow a little slice of right state regulation on certain kinds of issues.

Right, right. Or it could, uh, really shoot down the PBM position on some very fundamental issues that could give them problems going forward on this conflict of interest. For example, you know, lawyers, we're spending a lot of time, uh, thinking about all the different ways it could come out, but it's, it's very difficult to predict exactly.

Um, how it will go and 

[00:24:41] Mike Koelzer, Host: there truly is a conflict. I mean, it's not just like a, um, they found one word and they're trying to fight something there truly is. It's kind of like the federal government against the states. I mean, obviously the pharmacists wanted to go one way, but are, do you think there's decent arguments on both 

[00:24:54] Linda Clark, Attorney: sides?

Yeah. Yeah, I think so. Um, it reminds me of some of the things we're seeing in other related areas. For example, you have relationships with your wholesalers, right? 

[00:25:03] Mike Koelzer, Host: Not good ones. 

[00:25:06] Linda Clark, Attorney: not as good as you'd like them to be. Right. 

[00:25:08] Mike Koelzer, Host: We just want 'em to give us everything for free and they, they don't want 

[00:25:11] Linda Clark, Attorney: to. Right.

And as you probably know, many community pharmacies depend upon relationships with major wholesalers, but then also secondary wholesalers. Right, right. Depending on what kind of pharmacy you have and what your needs are. And there have been some interesting developments there too. There we've seen the big PBMs team up with other actors, like, uh, N a P.

Right. Mm-hmm the national association of, uh, boards of pharmacy. Yeah. And create, um, accreditation standards. Uh, that you have to follow as a pharmacist. So, um, for example, I'm sure your listeners might be familiar with the VOD program. Yeah. Um, so OptumRx has said, if you wanna be in our network, then you can only buy from a VA accredited wholesaler.

So over the last couple years, we've been involved representing a group of secondary wholesalers that have been shut out, uh, of the marketplace effectively or in significant part because all of a sudden their pharmacies can't buy from. Because they're not VA, um, accredited and because of the N a P standard on, uh, accreditation, um, they may never 

[00:26:19] Mike Koelzer, Host: be because they're not big enough or there's something that VA's got some weird, like parameters.

[00:26:25] Linda Clark, Attorney: Right. And, and VOD, it's very esoteric, but they don't want to, first of all, they generally only have huge wholesalers in their accreditation list. They don't like secondary wholesalers. Um, generally they really put them through, I think, a two stringent process for accreditation and it's effectively wiped out a huge swath of the secondary wholesaler market.

Um, many have just gone away. The pressure on the pharmacies, through the PBMs using these accreditation tactics, right? Yeah. Um, you know, about other accreditation problems too, right? You have to be UAC or you have to be, you know, it's all these different accreditation VIPs and right. Uh, if you want to mail order, if you want to be a quote unquote specialty pharmacy.

And so the proliferation of these accreditation standards. Competitive side, which you know, is very important for pharmacists to be able to get their products, just like everybody else. They need to be able to get the right quality products at a, at a decent price, right. To stay in business. And then from the top, the, um, the incredible pressure you're under, from pricing.

Yeah. Uh, from the pharmacy benefit managers, from the, you know, the abusive auditing practices, all of that. It is a very tough thought right now for the pharmacist. And I, I think a lot. On the willingness of the states to step in and, um, and reign in these improper, uh, abusive practices really before it's, uh, it's too late for community pharmacy.

For sure. 

[00:27:57] Mike Koelzer, Host: I know the N CPA, I think, or somebody said that within two years they are looking at 50% of the pharmacy's closing or something like that. Right. 

[00:28:05] Linda Clark, Attorney: And I don't think people realize, uh, I think it's the kind of thing that's so distressing for pharmacists, um, that they really, it's almost a little bit of the head in the sand approach.

So. Very hard to get them to realize that there is this right now, it's happening in real time. Yeah. And we're losing that, that, that sector of community pharmacies at a rate that is very, very alarming and N CPA is great. Pot is out there, even NASP is out there trying to raise awareness, trying to support the efforts of, of some of the states.

Trying to empower pharmacies to, uh, fight back when it's appropriate. All of these organizations are working very hard. Yeah. To get the word out and empower, uh, the community, the independent pharmacies to protect themselves. Yeah. From this really onslaught of. Uh, of terminations. 

[00:28:56] Mike Koelzer, Host: It kind of sounds like when you were talking there, I hadn't really thought about this.

I've spoken about it, but I haven't thought about the reason, but I've been at the pharmacy, my, my grandpa, and then dad owned it and they've passed on. But I remember working with my dad years ago and the insurance would say, all right, we're. Instead of being AWP plus 15 or something, we're going to AWP plus, you know, 12 or something and I'd start to panic.

And my dad would say, well, don't worry about it. The wholesalers are gonna catch up and they're gonna compete and lower the price accordingly. So that spread will be there. And that seemed to always happen. Then, of course it went to AWP minus, and then, but then a week later, the wholesalers would come in and they'd offer this and that.

So that spread was always there. It almost sounds like because of all these people sleeping together, it almost sounds like part of the reason why it's not catching up again. Why that spread keeps going down among a ton of different reasons. But one of those is because of things like VAD, where they're all in bed together and they're making it hard for competition.

And so pharmacies. We're used to being pressed from the top, but we used to have a way out at the bottom with the competition of things, but it sounds almost like the VAD is saying, well, we're gonna have false competition or take away the competition by making it so hard for new players and new people to be in here.

And we're in bed with the wholesalers that that's where that squeeze finally no longer has a flexible bottom to 

[00:30:33] Linda Clark, Attorney: it. You know? I think that's exactly right. And that's very, anti-competitive. In its effect. Um, so that's why that's, that's a big problem, not to mention the price tags put on some of these accreditations.

So yeah, you know, you just, if you get your, uh, prescription delivered right. Or mail ordered, um, that can be a problem under some of these plans. If you don't, um, go get a special accreditation and pay tens of thousands of dollars, um, for an accreditation and some of the PBMs are, uh, are really trimming their network.

Through the use of those kinds of accreditations. Tell me 

[00:31:06] Mike Koelzer, Host: about that. About delivery or mail. What do I mean by that? 

[00:31:08] Linda Clark, Attorney: Sure. So many of the pharmacy benefit managers. Uh, structure their networks so that, um, you can only mail order or deliver if you are part of that mail order network. 

[00:31:20] Mike Koelzer, Host: That's what I thought you were getting at where the pharmacy can only do, right.

5% of this, or can only, you know, mail out so many percent or whatever, that kind of stuff. 

[00:31:28] Linda Clark, Attorney: Right. That's exactly right. And in the. You know, in the modern world of, um, you know, the Amazonian world yeah. If everything shows up on your doorstep. We really question how on earth that makes sense now. Right? How in any pro-competitive way you can justify, justify limiting a pharmacy's ability to deliver or even mail order.

Yeah. Under appropriate circumstances. That's not to say that there's not some drugs, right. That is a more sensitive temperature. Yeah. You know, whatever we're talking about, but for the vast majority, That's what consumers expect. And in the modern world, it's hard to imagine how you would have to pay tens of thousands of dollars for an accreditation in order to avail yourself of that sort of basic mechanism of delivering 

[00:32:13] Mike Koelzer, Host: a mailing.

The accreditation might say, we are now officially a mail order pharmacy. And so we can do a higher percentage of this and so on. That's 

[00:32:20] Linda Clark, Attorney: exactly right. And as you know, the pricing is different too, in, in, in the mail order network. So you have to make a decision as a community pharmacist or an independent pharmacy.

Yeah. Or even a chain, a small chain, independent chain. Um, you have to decide if it's worth the pay to play. Yeah. Given the impact on the, um, pricing, but I worry about those kinds of rules because it might get more difficult over time with PillPack, everything else going on, apps for everything. I worry that it's just another way of driving independent pharmacies into A corner where it's so difficult to compete. 

[00:32:55] Mike Koelzer, Host: Here's the thing that bothers me about that is I've never been one to say to people, well, you should come to my pharmacy because I've gotta, I've got my starving children and I've gotta do that. I never liked that pity party of being a small pharmacy, but it's really frustrating when they throw in these oddball laws.

really for no arguable reason. They're just throwing those things in like the percent of delivery or the percent of mail or this and that, because that's, that's just plain old stopping the competition or the different copays and that kind of thing. We don't want favors. As independent pharmacies, we just want level playing fields.

That's all we want. But when they start throwing in this delivery ratio and mail ratio and that kind of stuff, that doesn't seem fair. Yeah. 

[00:33:53] Linda Clark, Attorney: And I agree with that, you know, the newest thing, um, we actually just blogged on this, but, uh, a good example of this is the new Aran quantitate rule, right? So you have one of the PBMs coming out and saying, we're gonna have a lit, even though they're, these drugs are on the formulary.

Um, and the patients are entitled. To get these drugs from their plan, right? They're all approved. We are going to punish pharmacies that dispense too much of the following drugs. And so they have a sort of a naughty list of drugs that are on this list. And they're going to audit pharmacies and decide whether or not the pharmacies are ordering too much.

Of a specified set of drugs. And that's, that's really problematic too. Yeah. You know, this is a brand new rule we're looking at. It looks like it's drugs that have some, some, some profit margin yeah. Right. To probably offset the penicillin that you lost. Yeah. A couple months on. Right. Right. And so it's just another way that we see the pharmacy benefit managers creating a selfer.

An anti-competitive environment that really hurts pharmacies. Is 

[00:35:03] Mike Koelzer, Host: that an audit flag or are they actually saying you can't go above a certain amount of these 

[00:35:08] Linda Clark, Attorney: drugs. They're going to be auditing it where this just came out and we've been actually trying to get information from the PBMs so we can advise our pharmacies about what the mechanics are going to be.

Yeah. And we're right in the middle of that process. Right. Um, so right now they're just saying that Are quantized. So if it looks too much, um, that could be a problem. We think that again, that's the kind of thing that the states might wanna take 

[00:35:33] Mike Koelzer, Host: on. And, and if it's not too much, we're gonna come and harass you for it anyways.

[00:35:36] Linda Clark, Attorney: Exactly. So, you know, those are some of the things we're seeing right now on the. On the cutting edge of this area and, yeah. Um, so there's a lot riding, 

[00:35:45] Mike Koelzer, Host: you know, you were mentioning states and federal and so on, and that's why a lot of times, as pharmacists, we just don't know, for example, the new fad or whatever, C B, D oil and people are always calling our pharmacy.

And I've had questions about this three years ago. And my answer is I'm not gonna listen to a salesperson to tell me what the law is. I'm gonna just watch. Walgreens down the street and CVS and these stores. And once they carry it, then I'll think about carrying it. But they're my Canary in the coal mine of what's legal because I know that the minute it becomes okay to do this in the area, they're gonna be doing it.

And until that time I tell these sales people, the ones that I talk to, or the email I get or whatever, it's. No, that's who I'm watching. You can say what you want about laws, but you can also pick and choose in a state law. That's overridden by a federal law that they're not they're not telling you about 

[00:36:45] Linda Clark, Attorney: that.

Yeah. You definitely don't wanna get your legal advice from the salesperson. No, you know, actually there's a lot of issues right now, out there about how drugs are marketed to pharmacies and how pharmacies market to prescribers. That's an area of the law. That's, uh, you know, very interesting. Um, as well.

And there's a lot of limitations, yeah. On, um, how you can interact with prescribers and yeah. Any, uh, any sort of gifts or things like that. What, the big item that we see often is waiver of copays. Some pharmacies may have marketers out there. Right. Um, identifying prescribers and patients in a certain area and, you know, each, each plan, each pharmacy benefit manager more specifically has standards on what your obligations are to collect a copay document.

It. Um, what the standards are for follow up, right? How far do you have to go chasing down a copay for a client? So someone can't 

[00:37:44] Mike Koelzer, Host: say, well, we, we told them that they owed this, but then they never send a follow up or something. Well, that's not a real charge to the person then 

[00:37:53] Linda Clark, Attorney: That's exactly right. And some of the rules suggest that even sending that to a collection agency, isn't good that you have to internally document multiple calls and contact.

With the patient to demonstrate that you use due diligence in, in getting that co you could 

[00:38:08] Mike Koelzer, Host: use your brother's collection agency and they don't, they just say a prayer. That's how they wanna collect it. 

[00:38:16] Linda Clark, Attorney: Right. And it could be, you know, what, what they worry about legitimately on the other side of this is, you know, wink, wing, bad nod.

You're gonna have to pay this copay someday. We'll be in touch. Right. And then the pharmacy gets a reputation for waiving them. And that becomes sort of a, sort of an indu. Uh, for the client to come to you. Um, yeah. And, you know, the plans structure, those copays so that people have some skin in the game.

Right. So, um, they, that there's a balance there between utilization and, you know, I, I understand that and that, that makes some sense. Right. Um, I mean that, that kind of raises the big issue of the gag clauses. Right. We did have some yeah. Action, um, by the Trump administration. And, uh, in preventing gag clauses.

So only about a year and a half ago, I think it might've been two years ago. Yeah. You wouldn't have been able to say to, uh, a customer, Hey, Hey Linda, you need, you're picking up this order. Um, but I wanna let you know that, you know, your $50 copay yeah. It's more than I'm gonna charge for the drug. Yeah.

Right, right. And so that was in a very egregious situation. That was very well documented. You can imagine the profit margin for PBM. Right. Charging in a copay sometimes, you know, double, triple what, what the item actually costs for 

[00:39:34] Mike Koelzer, Host: sure. And how does that work out with, like, I know it's probably more detailed than this, but in my mind, Trump says bad ideas.

Not doing it anymore. Does that wipe out more than all of these contracts that say that? Or does a pharmacy say yeah, the contract I have in front of me still. I can't talk about it, but I know that no, one's gonna press this because the federal law now says this is okay. Did that kinda wipe those?

Contract wordings off, even though it's not officially off yet. Right. 

[00:40:08] Linda Clark, Attorney: So that's, that's part of the problem is putting the pharmacist in the position of having to sort of guess which law is going to govern under a particular set of circumstances. I see. And it's, it's in the books, right. But the federal law would be unenforceable in our communications with our clients.

You know, we blog a lot about these things and communicate with them, so, right. They kind of know what's enforceable and, and what is not. And in New York, in other places, Another great place to look. Yeah. So you have your, you have your brick, right? Your PBM manual, 300 pages. You get an update by email, at least a link to an update, right?

Yeah. 

[00:40:44] Mike Koelzer, Host: They're they're you don't even want to crack into those because they're so. They're so they're so one sided, you know? Right. 

[00:40:50] Linda Clark, Attorney: And not that, but they contradict state law. So what they do is they have an addendum. I'm always telling clients, look at the addendum for your state. Yeah. So at the back of the, the brick is a state by state addendum, and that'll tell you what the rules are, uh, typically for your state.

Um, and so you may have rights in your state, but you would never even know it. If you didn't have the ad. Right. Or if you didn't 

[00:41:15] Mike Koelzer, Host: look at it, right. Because the brick itself is not gonna be lenient. And then say, go to the end to find us being more forceful. It's gonna be as forceful as one state allows and then the addendum gonna give them clearance.

[00:41:29] Linda Clark, Attorney: Exactly. So that's a great resource for pharmacists too, to keep track of what their rights are under various state laws. Where's your 

[00:41:37] Mike Koelzer, Host: hometown. Linda, did you grow up? Uh, Poughkeepsie, New York, Poughkeepsie, New York. That's what you've heard of it. Yeah, one. You know, Chuck me and Joani yes. One of the bandmates was from there.

I remember the live performance at the Hollywood Bowl and he would say, you know, so, and so was from Poughkeepsie, New York, I think he has to do with Chuck, me. And Joani somehow 

[00:41:59] Linda Clark, Attorney: it's about halfway between Albany, which is, uh, the capital, um, of the state in New York city. So sort of mid. 

[00:42:06] Mike Koelzer, Host: You would say, okay, well, I was trying to give you a way out of this, but now I just have to ask it and I have to, it's gonna sound rude, but I guess they call us Midwest, but in the Midwest, we're all happy and nice.

And then New Yorkers are all nasty. I've never, I've never experienced it cause I've never been to New York, but they're, you know, they're short and you don't say hi to each other on the street and all this kind of stuff. And I hope I'm not bringing you any new news here. I hope you haven't just read about how everybody's real chummy.

[00:42:35] Linda Clark, Attorney: Well, I think it depends on where you are. Um, how does that affect 

[00:42:38] Mike Koelzer, Host: the law? Is the law any different because of that? 

[00:42:41] Linda Clark, Attorney: Well, it's interesting cuz I'm from, you know, let's say mid York, right? Yeah. Which is halfway between, right? Uh, the Aron deck park and, and New York city. And I practice in New York in our New York city and in our New York city office.

So you kind of hit on an interesting cultural difference between, um, New York, New York city lawyers. And upstate New York lawyers. Very, very different vibe. Okay. Um, I'm, I'm sort of cross trained because, uh, , I, I grew up in one area and I practiced in both. Yeah, yeah. You're right. I changed my mood a little bit when I'm going to the Bronx Supreme court.

So 

[00:43:15] Mike Koelzer, Host: you do have to change something when you're in the city. Yeah. A 

[00:43:17] Linda Clark, Attorney: little bit. It's more driven by the attitude and culture of the other lawyers there who are much more, you know, rough and tumble, um, which is. You just gotta make sure you know which crowd you're running with. Right, right. You have to know where you're 

[00:43:31] Mike Koelzer, Host: waking up that day and yeah, 

[00:43:32] Linda Clark, Attorney: no room for shy lawyers in New York city litigation.

That's for sure. However, I will say when the, um, New York city litigators come from the Bronx or Brooklyn, or wherever up to this Nick of the woods in upstate New York, you can have the opposite prop. Um, you have a very Gente bar, very Gente participants in the court. Um, and so the, um, the attitude that might go well in the Bronx, doesn't always play well up here to our juries or to our court system.

So everybody needs to modulate 

[00:44:02] Mike Koelzer, Host: The judge might say, you don't talk to me that way. Right. Or 

[00:44:05] Linda Clark, Attorney: my favorite thing is when somebody comes in and says, well, judge, this is how we do it in the city. Yeah. Right. Yeah. Oh boy. 

[00:44:13] Mike Koelzer, Host: yeah. You don't tell the judge. I mean, they know where you're from and they, and they're, and they have their guards up already.

For that. Yep. With all respect for customers that you have, whether they're in New York city or outside other states, do you see different attitudes and slash demands from your clients ? New York versus maybe somewhere else are they? And I know you have to tiptoe around this one because they're your customers, but do you see a different way they want to deal with you?

Yeah, I 

[00:44:52] Linda Clark, Attorney: I'd say that's more, um, metropolitan. Versus, you know, I think it's more in the bigger cities where the clients are with bigger businesses, right? So if you owned a pharmacy chain of, you know, 20 pharmacies and, uh, you're in major cities and you're on a hundred percent withhold with OptumRx and going to the pharmacy review committee.

Yeah, for potential termination, you're going to be very outspoken. Yeah. Uh, and so I think it's more the nature of where the clients are and right. What the nature and scope of the problem is. Yeah. That's a very different representation than some of my rural pharmacies in upstate New York.

Yeah. Right. Where they're in their town, right? Yes. But they're facing the same kind of problem. You never know how 

[00:45:38] Mike Koelzer, Host: somebody will. Whether it's big or small, if their livelihood is one person's business or a hundred store chain, it's often the 

[00:45:47] Linda Clark, Attorney: same. Yeah. And then there's the other area, you know, some of these problems, if you're not, um, diligent in protecting your pedigree.

Of your business with the PBMs, um, or the government, you know, these things can head toward much more serious outcomes too, in terms of fraud and abuse and having investigations crop up when you're red flag by a PBM, the pedigree 

[00:46:08] Mike Koelzer, Host: you're talking about the drug trial. 

[00:46:10] Linda Clark, Attorney: Well, I'm talking about, let's say you have, you have an audit, right?

And you've got an inventory shortage. Right. Yeah. And sometimes clients will say, you know what? I just don't wanna deal with this. I'm just, I'm just gonna pay for it. I'm not gonna worry about it. It's just too much of a headache for me. Yeah. I really caution those clients. Well, take a good look at it because the next step is going to be recoupment, right?

Could be extrapolated, meaning that it's projected over your sales. We've dealt with that. No, that's a massive headache. Then you could be flagged for the pharmacy review committee, the P. They decide if you stay in the network or not. If you get kicked out of the network, you gotta tell all the other PBMs that you got kicked out of a network, then you're facing termination by all the networks.

And if they report you, let's say on a, you know, a waiver of copay issue, something that they view as substantial or significant, right. Then you're red and flagged and reported to the OIG or the state OIG or Medicaid. So these issues can tumble quickly, even beyond an annoying audit, um, into, you know, a much more serious problem.

And that can 

[00:47:12] Mike Koelzer, Host: all come from just saying, all right, look, I, I don't wanna fight this. So I'll just say, I'll just admit to it, even though I'm not guilty, that can all stem from that instead of. Trying to fight it, even if it's a couple hundred bucks. I, 

[00:47:25] Linda Clark, Attorney: I, I think, you know, there's probably limits to that. So if it's a couple hundred bucks, you know, I would, I don't think I would tell a client that, that has the potential for that cascade of terrible 

[00:47:33] Mike Koelzer, Host: outcomes.

Everybody would understand that for a couple hundred bucks usually right. Give up or, you know, give 

[00:47:39] Linda Clark, Attorney: in. Right. But if it's, let's say it's, uh, with a, a local pharmacy, it's 15 to 20,000 on a, on, on missing inventory. Right. Uh, what if it involves, involves control? Yeah, right. Those can be significant issues. And even though you may wanna put your head in the sand, and not dig out your invoices and wrangle with your wholesalers to get those invoices right.

To the PBM, there might be very good reasons for doing that. That's the long game that you worry about. Yeah. You wanna 

[00:48:03] Mike Koelzer, Host: show some fight. Maybe it's kind of like the Hollywood stars that do or don't respond to harassment issues or something, and weak non Hollywood people. Why did they not fight that?

And then you say, well, there's a good reason too. And it's like, yeah, but wouldn't there be a good reason to at least to there's those questions that we don't know from the outside, but it does make you question it at 

[00:48:27] Linda Clark, Attorney: least. Yeah. It sure does. You know, the PBMs as regulators have to make that decision each time, is this, is this a red flag or not?

You know, it's gonna be reported. Yeah. So on that scary note, yeah. 

[00:48:40] Mike Koelzer, Host: There's one person that you follow on LinkedIn, and I'm not sure if it's by just a wild click one time or not, but Bill Gates is someone that you follow him. 

[00:48:51] Linda Clark, Attorney: I like to see what he's doing. I think that in his current role he's been in my view, um, a bit of a vision.

With the, the global sanitary issues that he's dealing with. Yeah. Interesting. You know, finding the, you know, what could be the game changing technology. Yeah. That will make, uh, you know, some terribly suffering communities. Yeah. More safe. Right. And, uh, so I find those things very, very interesting. Yeah. And so that's why I follow him.

Did you watch his Netflix special? I did. That's why I ended up following him. You did too. Obviously I thought that was, uh, jaw, jaw dropping. Really fascinating. Yeah. And the way they ran into problems now, because the current geopolitical scheme is right. Yeah. Was, was really unfortunate too. So those kinds of leaders I find, um, very inspiring.

Yeah. I will try to keep it up. On them as I, you know, work my way through my career and, uh, and be inspired. That's not always easy in a litigation environment, but, uh, I think that's a great use of LinkedIn and things like that. 

[00:49:52] Mike Koelzer, Host: Bill Gates was really cool. They basically have a solution too. using nuclear power and using old nuclear waste, even for nuclear power, but it got stopped because of the accident over in Japan, whenever that was.

And so it was just PR basically, which has stopped that for now, because nobody wants to hear about nuclear power after there was an accident. It's cool to see somebody. Really tackling something. That's not, what's the word for, it's not sexy, 

[00:50:26] Linda Clark, Attorney: right? Or self-serving really at this 

[00:50:28] Mike Koelzer, Host: point or self-serving yeah.

It's not self-serving to, you know, for gates to say that I found out how to get half the world to be able to flush a toilet finally, or something like that is neat to see real solutions. They're not self-serving, they're not trying to join a certain status club. What kind of customers could best be served by 

you?

[00:50:49] Linda Clark, Attorney: What, what, what I see is that, um, larger volume pharmacies really need a regular stream of advice. And so we encourage your, the encourage, those larger entities, um, to get, get a retainer with us and then use us as they have questions. So they avoid trouble down the road. We have a team. In addition to our litigator group, we have a team that does pharmacy sales, you know, very sophisticated transactions.

Um, oh, selling pharmacies, right? Compliance plans, all those businesses, combining pharmacies, regulatory issues, licensing issues. So we have that whole panoply of gotcha. Needle work within the pharmacy group. Um, with the, the independent pharmacist. Usually, you know, in fairness they will call us when they need us.

They'll usually get our name from one of the state associations word of mouth, or, you know, even LinkedIn or, or, or something like this. Yeah. Hearing a podcast and, and they'll get a hold of us, uh, when they need us, because they just don't have the volume or the budget really to keep up a law firm on retainer in those situations.

And that's fine too. We're happy to be there, you know, when you need us, but the larger entities, multi. Some of the regional chains, specialty, you know, uh, functions, mail order, um, those kinds of things all involve more sophisticated issues and probably require some more proactive consultation. Is there any 

[00:52:12] Mike Koelzer, Host: information that comes from you that people that are independents without an issue right now, they're hoping not to have an issue.

Is there any way they should be? Connecting with you. Sure. 

[00:52:27] Linda Clark, Attorney: So LinkedIn, I find, is a pretty effective, powerful tool to reach pharmacists. So I'm, I'm easily found on LinkedIn, 

[00:52:35] Mike Koelzer, Host: is that where you're finding the most impact and so on with pharmacists 

[00:52:38] Linda Clark, Attorney: Now, I think that's the best gateway, um, to pharmacists. Both directly and through their associations that they follow.

Um, yeah. So I'm lucky enough to be called upon to, to speak at, at some of these organizations, including, you know, PISA in New York, N E P and DC, N CPA, uh, national community pharmacist association. So we're meeting up in, um, the, in February. At their multi-location, uh, conference in Fort Myers, Florida. So I'll be there.

We'll be, we'll have a booth and, um, I'll be making some remarks for a sponsor, so, oh, hopefully I'll see some of your listeners there. How long are you there for it? Um, I'm gonna be there for all three days. Um, I think we're going to be introducing a keynote speaker and making some. I think by February, I think people will still be very interested in the Rutledge case.

So maybe I'll give a little bit of an update on that and otherwise it's, it should be a great time. What dates are 

[00:53:32] Mike Koelzer, Host: that? It's 

[00:53:33] Linda Clark, Attorney: the 19th, the 20th and the 21st of February. And it's in Florida. So it's not a tough gig, you know, when you're from New York. 

[00:53:40] Mike Koelzer, Host: Well, Linda, it's been a lot of fun talking 

[00:53:42] Linda Clark, Attorney: to you. Yeah.

Thank you so much for the opportunity. It's a lot of fun to talk with someone so knowledgeable about something I'm so passionate about. So thank you again. And 

[00:53:50] Mike Koelzer, Host: likewise, it's cool too. Talk to somebody that has such a strong background in one field, but is able then to relate completely to. My field, we know what the same terms are, and then you can talk from there without having to explain every little topic.

So that's really great. And I'm sure that your clients very much appreciate knowing that you haven't been totally corrupted by the, uh, Industry cuz you're not one of us, but you are one of us in terms of empathy and knowledge of what we do. Absolutely. We'll keep in touch with Linda. I very much appreciate it.

Sounds great. All right. Thank you. Take care.