PBM Enrollment Denials for Common Association Regardless of Acquisition Structure

In the world of Pharmacy Benefit Manager (PBM) enrollment, guilt by association is one of the most common reasons PBM’s deny new pharmacy owners network access. Boesen & Snow often represents new clients who come to the firm with PBM enrollment denials due to alleged common associations with persons or entities with significant audit findings or terminations. It is common for PBMs to either not name the alleged bad actors or to name them but provide no context. Many new clients are dumbfounded: “I have no idea who that person is,” they swear. This is because—more often than not—there is no common association! Additionally, new clients are shocked to learn that they are not shielded from common association allegations even when the structure of their acquisition was an asset purchase agreement rather than a stock purchase agreement. To the PBMs, if you lie down with dogs, if you lie where a dog once sat, or if you or anyone you ever knew ever met a dog, you have fleas.

Recently, a client hired the firm to appeal a PBM enrollment denial for common association. The client had purchased a pharmacy that had obtained its state permit only two months earlier, which had no PBM contracts, no staff, and no dispensing history. She had never met the pharmacist-in-charge (PIC) who never served one day in that role after the change of ownership. She had never met the seller before the transaction and there was no ongoing relationship. It was an arm’s length transaction and a complete fresh start in the operation. As it turned out, the seller and the former PIC did, in fact, have a long history of PBM terminations. Despite there being no relationship at all and no operational overlap, multiple PBMs had suspended or terminated the pharmacy due to common association.

Another client received notice of PBM enrollment denial for common association with two named pharmacies. Despite his best efforts, the owner could not figure out how the two pharmacies were connected to him. As it turned out, a pharmacist who had worked briefly at the company at the time of credentialing but who had long-since left the company before the PBM denied enrollment, had worked at one of the named pharmacies. There was no way for the client to have known this. PBM audits and terminations are not publicly available. No background check would have revealed the fact. Boesen & Snow successfully convinced the PBM to permit enrollment and helped the client with forms and processes to uncover such issues moving forward, but the pharmacy had to wait almost a year before finally obtaining its contract.

Examples like these are commonplace. By the time clients come to the firm with their denials in hand, the PBM has already dug its heels in, making it even more difficult to distance our clients from the bad actors. It is critical that anyone interested in purchasing a pharmacy and taking over or obtaining PBM new PBM contracts engage in due diligence to uncover any negative PBM audit history associated with the previous owner’s operation. This would include any history associated with the pharmacist-in-charge or any individual employee.

Boesen & Snow represents companies and individuals buying and selling pharmacies and applying for PBM enrollments or fighting enrollment denials. It is critical that before you purchase a pharmacy, you understand the risk of guilt by association and engage experience counsel to help with your transaction, due diligence, and credentialling processes. If you have already received an enrollment denial due to common associations, preparing a robust rebuttal with attorneys experienced at fighting PBMs is your best tool to fight back. If a PBM has denied your pharmacy enrollment due to common association or to prevent that from happening, contact Boesen & Snow today for a complimentary initial consultation.