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January 18, 2019

Secondary Drug Wholesalers Get Some Relief in Federal Action Challenging VAWD-Accreditation Standards

In a decision dated December 28, 2018, Judge Kevin McNulty of the US District Court of New Jersey considered a motion for emergency relief brought by a trio of wholesale drug distributors challenging the legality of a requirement by defendant OptumRx, Inc. that all drugs on its formulary be purchased from wholesalers recognized by the National Association of Boards of Pharmacy (NABP) as verified-accredited wholesale distributors (VAWDs). The VAWD-accreditation program was created and is administered by NABP, a not-for- profit organization that counts among its members the boards of pharmacy of all 50 states and whose governing body consists entirely of current or past officers or members of the state pharmacy boards.

As implemented by OptumRx, the VAWD-accreditation requirement leaves non-accredited wholesalers unable to participate in OptumRx's pharmacy network and the pharmacies in those networks subject to audit and recoupment if they purchased pharmaceuticals from non-VAWD-accredited wholesalers. Because pharmacies do not categorize their inventories by pharmacy benefit manager (PBM), if they were subject to a PBM audit, they would face difficulty proving their purchases were made from an accredited facility. For this reason, OptumRx's implementation of the VAWD-accreditation requirement is likely to decrease access of non-VAWD wholesalers to the pharmacy networks operated by the nation's other large PBMs, such as Express Scripts and CVS/Caremark, a group that through its pharmacy networks collectively oversees pharmacy spending for nearly 80 percent of the US population.

Seeking to avoid waste of pharmaceutical inventory, the court granted some interim relief to the plaintiff wholesalers, allowing them to sell inventory with short-term expiration dates. In the meantime, the parties have been directed to engage in expedited discovery before a hearing scheduled for February 22, 2019, when the court will consider whether to take broader action against NABP's VAWD-accreditation program and the VAWD-accreditation requirement imposed by OptumRx on its pharmacy network.

If you have any questions regarding the content of this alert, please contact Linda Clark, Health Care Controversies Practice Area chair and lead counsel on this case, at or 518.429.4241


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