PRACTICE AREAS
Practice Areas
Practice Areas

Pharmacy Industry


Practice Leader: John W. Jones, Jr.

Pepper Hamilton LLP is experienced in the pharmacy industry. We help pharmacy clients conduct business transactions, resolve disputes and navigate government regulation so that they can grow and prosper. Whether you are seeking capital, restructuring your business, resolving regulatory matters, dealing with workforce issues, trimming your tax burden or settling a dispute, chances are a Pepper lawyer has already handled a case or transaction like yours.

Our clients include a wide range of retail, specialty compounding and long-term care pharmacies, as well as pharmacy group purchasing organizations, pharmacy networks and other industry entities. Our work for pharmacy clients also is enhanced by our strong practice representing health care providers and investors, and our nationally recognized practice representing pharmaceutical and medical device manufacturers, and a wide range of biotechnology and other life sciences companies.

Below is an outline of the services we most frequently provide to pharmacy industry clients.

Transactions

We assist clients with mergers and acquisitions, joint ventures and partnering arrangements, restructurings and reorganizations, dispositions and carve-outs, and venture capital and other transactions. We also advise clients on a wide range of agreements with vendors, suppliers, payors, PBMs, PDPs, wholesalers and customers. We are experienced in advising pharmacy clients on the regulatory compliance issues attendant to transactions, including fraud and abuse issues, safe harbor regulations, and regulatory issues impacting relationships with other participants in the medical supply chain.

Frequently, transactions involve such disparate legal areas as environmental, real estate, labor and employee benefits. Our transactional lawyers regularly team with lawyers in these and other practice areas to resolve client problems. For example, our transactional lawyers work closely with the firm’s tax group to employ structures designed to maximize the tax benefits available to our clients. Transactional lawyers also work closely with the intellectual property and antitrust practice groups in advising clients on licensing, technology transfer and other transactions.

Representative examples of our transactional work include:

  • advising a retail pharmacy chain in acquisitions and dispositions of pharmacies to a national retail pharmacy chain
  • advising an operator of institutional pharmacies in its sale to a national operator of institutional pharmacies in nursing centers, assisted-living facilities, hospitals and other long-term care settings
  • counseling a private equity firm in its acquisition of a specialty pharmacy
  • counseling the largest community-based network of independent specialty pharmacies on corporate matters, including acquisition and other transactional matters, regulatory advice, and antitrust and intellectual property matters
  • forming pharmacy joint venture with institutions such as hospitals and long-term care providers
  • negotiating and drafting agreements with vendors, payors, PBMs, PDPs, wholesalers and suppliers for a national retail and long-term care pharmacy chain
  • completed an IT outsourcing transaction for a spin-off entity combining the client’s institutional pharmacy business with that of another leading public pharmaceutical services company. The transaction involved long-term negotiations and complex structural aspects to transfer ownership of hardware and equipment, applications and all IT personnel supporting such technology, along with developing service levels to facilitate optimum performance.

Real Estate

We have significant experience in representing developers and property owners in the acquisition, financing and development of real estate, including retail pharmacy properties. Our experience includes all aspects of site acquisition, including title, purchase agreements, joint development agreements, reciprocal easement agreements, access agreements, all types of municipal agreements, and developer agreements with municipalities for the site and access to sewer and water.

We analyze the easiest way to obtaining zoning, land use approvals and highway occupancy approvals, and follow through to completion of the development. After construction, we work with the municipality to see that all required conditions for approval are met and that any operations issues are addressed. In addition to land use and zoning approvals, we assist clients in obtaining environmental permits from federal and state authorities.

Representative engagements include:

  • representing a national discount retailer in the acquisition and leasing of properties for development of discount stores (including pharmacies), including land use, zoning and all development issues
  • counseling real estate developers on land use, zoning and other development issues in connection with the development of new retail pharmacy stores
  • counseling numerous developers of retail centers in leasing with retail pharmacies, including national chains.

Regulatory

We represent pharmacies in dealing with regulatory issues affecting commercial health care transactions as well as those involving members in the medical and pharmaceutical supply chains, including pharmaceutical and medical device manufacturers and suppliers, hospitals, physicians, GPOs, outsourcing companies and other providers.

These issues generally fall under fraud and abuse laws, (including the federal Anti-Kickback Statute), Stark, civil monetary penalties law, the False Claims Act, health care fraud statutes and the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

We also assist retail, specialty and long-term care pharmacies, and other health care entities in dealing with billing, reimbursement and claims issues, including issues under Medicare Parts A, B and D, Medicaid and commercial payor requirements.

We also advise clients about their membership in or relations with group purchasing organizations, including advice about compliance with the federal Anti-Kickback Statute, and how to take advantage of the “safe harbors” that may be available.

We also advise on the federal and state law regulatory issues affecting the practice of pharmacy. Certain purchasers, such as health plans and PBMs, use formularies to promote safe, effective and cost-effective drug use. The U.S. Office of the Inspector General has identified several PBM practices as potential risk areas, including relationships with formulary committee members, payments to PBMs, and formulary placement payments.

We counsel, advise and represent third-party administrators of prescription drug programs in dealing with issues of competition, regulation, and transparency, and help these purchasers carefully evaluate and structure those relationships to avoid government scrutiny.

Representative regulatory engagements include:

  • counseling the largest long-term care pharmacy GPO in the country on fraud and abuse issues, safe harbor regulations, and regulatory issues impacting its relationships with other members in the medical supply chain, including manufacturers, suppliers and pharmacies
  • advising a Medicare Part D pharmacy network manager on rebate, discount and PDP issues under Medicare Prescription Drug, Improvement, and Modernization Act of 2003
  • counseling a national retail and long-term care pharmacies chain regarding state and federal health care regulatory issues impacting its business and negotiate and draft agreements with vendors, payors, PBMs, wholesalers and suppliers
  • advising clients in connection with interpretation and implementation of HIPAA privacy, security and transaction and code set regulations, including development of privacy policies, notices, authorizations, and business associate and data deals
  • counsel large retail, institutional and specialty pharmacies on fraud and abuse and other regulatory issues
  •  provide regulatory advice to a national pharmacy trade association.

Retail Health Clinics

Consumers’ use of retail health clinics is increasing. We help clients interested in sponsoring or operating such clinics to navigate the financial, legal and marketplace issues for involvement in convenient care and help forge alliances and agreements between the clinics and hospitals, physicians, and other health-care entities. We help physicians who partner with retail care centers as a means of providing a collaboration and referral system for patients who use the clinics, and assist the centers in responding to and complying with increasing calls from physician associations and medical standards groups for increased regulation of this growing industry.

Litigation and Enforcement

We have represented pharmacy clients in a wide range of litigation matters, from commercial disputes to consumer class actions and employment matters. We also have significant experience representing pharmacy clients in investigations, audits and enforcement actions by state and federal regulators.

Representative engagements include:

  • ongoing representation of a national pharmacy chain in the most significant federal investigation affecting the entire retail pharmacy industry, a U.S. Department of Justice investigation related to the marketing practices affecting government beneficiaries filling prescriptions at retail pharmacy chains. The Department of Justice, as well as the United States Attorney’s Offices for the Central District of California and the Eastern District of Michigan are conducting this national industry-wide investigation.
  • obtained settlement of a class action alleging that a national pharmacy chain violated the Fair Credit Reporting Act by providing to consumers electronically printed receipts at point of sale transactions which contained the expiration date of the consumer’s credit card or debit card.
  • obtaining dismissal of a consumer class action suit that alleged a national retail pharmacy chain violated regulations involving prescription records.
  • numerous class and individual wrongful termination and employment discrimination cases on behalf of a national pharmacy chain.
  • representation of a national retail pharmacy chain in numerous breach of contract and other commercial disputes with suppliers, business partners and other parties.


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