INTRODUCTION

A woman is anxiously waiting at the pharmacy counter and asks to see the pharmacist. She hands you a container and says, “I picked up this prescription for my father yesterday and I noticed this big black box on the patient information.” There is indeed a visible big black box that surrounds a message saying “WARNING: INCREASED MORTALITY IN ELDERLY PATIENTS WITH DEMENTIA-RELATED PSYCHOSIS.” “What should I do?” she asks, “and why didn’t someone talk to me about this when I picked up the prescription?” You think back and remember that this is called a “boxed warning”…

 

THE BOXED WARNING

The Food and Drug Administration (FDA) has several means of providing information on drug risks to healthcare practitioners and patients.¹ One example is the boxed warning (BW, formerly and colloquially referred to as a “black box warning”). The FDA requires a BW for certain medications and reserves them for the most serious risks associated with a drug.¹ It is intended “to identify and describe a discrete set of adverse reactions and other potential safety hazards that are serious or are otherwise clinically significant because they have implications for prescribing decisions or for patient management.”² A BW is designed to alert healthcare providers and patients to potentially fatal or serious life threatening or disabling adverse effects that may occur with the use of that drug.³

 

A BW is ordinarily used in situations where¹

• an adverse reaction is so serious in proportion to the potential benefits that it is essential that prescribers consider the risk/benefit before prescribing
• there is a serious adverse reaction that can be prevented or reduced in severity by appropriate use of the drug
• the FDA has concluded that the drug can be safely used only if its distribution or use is restricted.

Appropriate use of the drug in this context includes patient selection, careful monitoring, avoiding certain concomitant therapy, addition of another drug, or managing patients in a specific manner.¹

 

A BW provides a brief, concise summary of the information that is critical for prescribers to consider before providing it to a patient and includes any restriction on distribution or use.¹ Typically, a more detailed description of the risk is included elsewhere in the labeling (e.g., in contraindications or warnings and precautions sections), that must be identified by a cross-reference.¹

 

BWs have a required format. The information within the box must not exceed 20 lines, must be arranged in bullet points, and must be preceded with a bold, uppercase header containing the word “WARNING” and identify the subject of the warning.² The bolded heading and summary must be contained within the box and must be followed by the statement “See full prescribing information for complete boxed warning.”² The standardization of the BW results in a uniform, easily recognizable warning, ensuring that safety information is easily accessible for its intended audience without confusion.⁴

 

The FDA's Center for Drug Evaluation and Research (CDER) ordinarily determines whether to require a drug to carry a BW. The decision is usually based on clinical data, but serious animal toxicity may also be the basis of a BW in the absence of sufficient clinical data.⁴ CDER usually seeks the advice of an advisory committee before issuing a warning. CDER is not bound by the committee’s recommendation but usually defers to their advice.⁴

Approval of a new drug by the FDA may be contingent upon the addition of a BW. Alternatively, the manufacturer may add the warning after marketing if post-marketing surveillance detects a serious adverse effect.⁵ The FDA continuously monitors data from post-marketing surveillance, such as MedWatch, and may modify the warning if it is warranted.³

 

While the FDA mandates the warning, the drug manufacturer often drafts and incorporates it into the product's labeling subject to FDA approval.⁶ Typically, the sponsor submits initial labeling which the FDA reviews and is subject to negotiation; there is a 30-day period during which the agency and the drug sponsor can exchange viewpoints and suggest alternative language.⁶ The FDA may request edits and clarification or additional studies. The FDA may also insist on narrowing the approved indications for the drug or limit it to severe cases of the approved indication. If the FDA and the manufacturer cannot reach an agreement, the FDA has the authority to make the final determination.⁶ Moreover, the manufacturer may not issue a BW without prior FDA approval.⁷

 

Healthcare professionals should recognize that the BW is the result of a regulatory judgment and emerges from consideration of factors such as clinical trial data, post-market surveillance, mechanistic plausibility, expert opinions, and other subjective factors; it is not based on an objective or systematic standard or threshold.^8,9 The determination about a warning may be based on observed harms or anticipated harms, such as risks associated with pharmacologically similar drugs or plausible risks that have not yet been substantiated with current use.⁸

 

Drug manufacturers have an incentive to resist labeling their product with a BW since a BW may affect the prescribing of a drug, especially if alternatives exist that do not have a prominent warning.^9,10 One example is the use of atypical antipsychotic drugs (such as the one our patient above inquired about). One study examined the prescribing of atypical antipsychotic drugs before and after an FDA advisory leading to a subsequent BW in 2005. The BW warned of an increased risk of mortality associated with the use of atypical antipsychotics among elderly patients with dementia.¹⁰ Use of atypical drugs had increased at an annual rate of 34% during the two years prior to the BW. The advisory and BW were associated with a decrease in the use of these drugs beginning within one month of the advisory and continuing at least through 2008.¹⁰

 

Similar declining sales were observed for droperidol and antidepressants in children.⁹ A mail survey of 2,400 pediatricians in Canada conducted after a warning was required for selective serotonin reuptake inhibitor antidepressants found that about three-quarters of prescribers were aware of the warning and 80% of those changed their prescribing habits.¹¹ About one-third of prescribers aware of the warning followed their patients more closely and 7% stopped treatment with these drugs in at least one patient.¹¹

 

An interesting tale of the effect of a boxed warning occurred with droperidol.¹² The FDA approved droperidol in 1970 as an antiemetic and tranquilizer and prescribers used it effectively to prevent and treat postoperative nausea and vomiting. In the late 1990s, reports indicated the drug had the potential to produce cardiac complications, including QT interval prolongation, ventricular arrhythmias, and torsades de pointes. The FDA mandated a BW in 2001 because of the heart complications.¹²

 

The warning label stated that patients should be given droperidol only after failing other treatment options and also stated that prescribers should use electrocardiography prior to drug administration and continue for two to three hours afterwards to monitor cardiac arrhythmias.¹²

Following this decision, droperidol use dropped as hospitals and clinicians switched to safer alternatives that required less monitoring. The drug virtually vanished from hospital pharmacies and formularies.¹² This resulted in strong reaction from the medical community. Critics pointed out that the scientific evidence to support the BW consisted of a few hundred patients receiving varying doses of droperidol, with the vast majority of patients far exceeding the usual antiemetic dosing by as much as two orders of magnitude.¹² Most patients who suffered fatal complications had received droperidol doses of 25 to 250 mg, compared with the lower standard intravenous antiemetic dose of 0.625 to 1.25 mg. Moreover, many of the patients who received droperidol doses of 1.25 mg or less and experienced cardiac complications had confounding factors present, which were not accounted for by the FDA.¹²

 

Independent reviews of the FDA’s data concluded that droperidol’s safety and efficacy at lower doses was comparable to alternatives, but the FDA refused to drop the warning label.^12,13 In 2003, the FDA noted that it had asked the manufacturer to undertake additional safety studies or submit an extensive literature review.¹² The drug manufacturer rejected this request, citing financial constraints. However, the FDA provided further clarification that the BW was only meant to apply to droperidol doses specified in the package insert, which was an initial dose of 2.5 mg, since that was the only data available to the agency.¹² The FDA could not assess the safety and efficacy of the lower antiemetic dose and considered this to be an off-label use.¹² The FDA reasserted that it does not regulate off-label drug use as deemed appropriate by a clinician's professional judgement. Subsequently, the drug regained some use in emergency departments.¹²

 

PAUSE AND PONDER: How can you balance providing important risk information while not instilling reluctance to use a medication when counseling?

 

The BW is not permanent. Warnings can be removed or modified (see below) if new, robust scientific evidence shows the risks are overstated or don't apply to current patient populations.^3,8 Some circumstances that would justify removal of a BW include conclusions based on outdated or flawed original studies; better follow-up studies that show a more favorable risk/benefit relationship; warnings that overstate the risk and result in patients avoiding needed treatments; or advocacy from medical organizations.³

 

BACKGROUND

The boxed warning was first implemented in 1979 and currently, more than 400 products carry the warning.^5,9 One analysis determined that the estimated probability of acquiring a new boxed warning or being withdrawn from the market over 25 years was 20%.¹⁴ Many serious adverse drug reactions are not identified until after FDA approval, and a drug’s safety profile often remains uncertain for several years on the market.¹⁴

 

A study of 222 drugs approved between 2001 and 2010 found that 123 resulted in postmarket safety events sufficient to trigger a regulatory response; 61 of these were BW, 59 were safety communications, and three drugs were withdrawn from the market.¹⁵ The median time from approval to first postmarket safety event was 4.2 years.¹⁵ Eight of the BWs were preceded by a safety communication but only four of these safety communications described the safety risk that triggered the subsequent BW.¹⁵ Biologics and psychiatric medications were the most likely to receive a warning.

 

Drugs that were given FDA fast-track approval status were more likely to receive a boxed warning.^15,16 One study found that fast-tracked drugs were 3.5 times more likely to receive a BW after already being prescribed to patients.¹⁶ The study, looking at 200 approved drugs, found that 30 received a BW and 11 were eventually withdrawn due to safety concerns.¹⁶

 

Familiar examples of drugs requiring a BW include atypical antipsychotics (such as the one the woman asked the pharmacist about), antidepressants, opioids, benzodiazepines, anticoagulants, non-steroidal anti-inflammatory drugs, isotretinoin, certain antibiotics, and biologics.³

 

An early example is the antibiotic, chloramphenicol. Chloramphenicol received a black box-like warning in 1961 before the 1979 regulations were enacted due to concerns over an adverse effect: fatal aplastic anemia (a rare life-threatening hematologic condition marked by bone marrow failure and subsequent low levels of red and white blood cells and platelets in the blood).¹⁷ The FDA first warned prescribers through other types of label modifications, but inappropriate use of the drug continued, prompting the FDA to issue its first box-like warning.¹⁷ The warning was directed to prescribers and appeared in the Physician’s Desk Reference, without direct communication to patients.¹⁸

 

When a BW is warranted, the FDA usually requires it for all members of a drug class.³ The rationale is that the characteristics necessitating the warning are usually shared by different pharmacologically similar therapeutic agents.  However, there are also circumstances where a BW is not universal for all drugs in a category; for example, two pharmacologically similar drugs may have different pharmacokinetic profiles.⁹

 

A boxed warning can also be applied when a drug poses risk-benefit considerations that are unique among drugs in a class.¹ It is important to identify when a drug is uniquely associated with a particular risk and is therefore designated as a second‑line therapy for that reason.

 

Although the BW is intended to warn prescribers, pharmacists, and patients, many researchers and clinicians question this labeling approach’s effectiveness.⁵ One study of hospital residents and attending physicians found that they had a limited knowledge of which medications carried BWs and the content of the warnings.^5, Needless to say, this may put patients at risk.

 

Another study investigated how frequently physicians prescribe BW drugs and whether they do so in compliance with the warnings. The study used automated claims data from almost one million U.S. patients from 10 geographically diverse health plans.¹⁹ They found that over a 30-month period, the range of compliance with BWs among prescribers varied from 0.3% to 49.6%.^19,20 More than 40% of health plan enrollees received at least one medication that carried a BW that could potentially apply to them. Most prescriber non-compliance occurred with recommendations for baseline laboratory monitoring. The authors speculated that the lack of consensus regarding the value of laboratory monitoring, for example of liver function testing in preventing drug‑induced liver failure, may explain why some physicians choose not to monitor some laboratory results, given the limited evidence supporting their effectiveness.²⁰ In contrast, they found few instances of prescribing BW drugs to pregnant women that were absolutely contraindicated in pregnancy.^19,20 The authors commented that evidence shows that BWs may not adequately function as risk communication tools so consequently, the FDA and manufacturers increasingly implement strengthened risk management programs for certain drugs.²⁰

 

OTHER RISK MANAGEMENT PROGRAMS

The FDA has other risk management programs in addition to BWs.²¹ The Durham-Humphrey Act of 1951 may be considered the first risk management program, since it established the requirement that certain prescription drugs could only be used under the supervision of a licensed healthcare practitioner.²¹ (Prior to the act, the manufacturer decided if its drug would be prescription or OTC.) In the 1980s, the FDA occasionally asked companies to develop special safety programs called Risk Management Programs (RMPs) or Risk Minimization Action Plans (RiskMAPs) to mitigate serious risks for a limited number of drug products that offered substantial therapeutic benefits.²¹ These programs consisted of education for patients and providers and distribution restrictions.^21,22

 

Some other current risk management programs include Patient Package Inserts (PPIs), the Risk Evaluation and Mitigation Strategy (REMS), and Medication Guides (MGs). FDA’s primary risk management tool is communication through FDA-approved product labeling for healthcare providers and patients.²¹ The FDA considers labeling to be sufficient to ensure that benefits outweigh the risks for most drugs. However, the FDA may determine that additional precautions, such as REMS, are needed in a limited number of cases.²¹

Patient Package Inserts

The forerunner to the boxed warning was the now-familiar patient package insert (PPI) which was first put into place in 1970 for oral contraceptives (OC) and expanded in 1977 to include estrogen-containing drugs.^23,24 The PPI includes a warning regarding the most serious adverse effects of drugs and is required to be placed in or accompany each package dispensed to the patient.²³ The FDA's rationale for mandating direct information to patients was based on the elective nature of OC use by otherwise healthy women and the potential for serious (sometimes fatal) adverse effects.²⁵ The inclusion of a warning to patients also provided an opportunity for patients to participate with physicians in making a decision about their therapy.²⁵ The agency's action came as a result of several studies published in 1970s that indicated an association between the use of conjugated estrogens and an increased risk of endometrial cancer in women. A recommendation by the FDA’s Obstetrics and Gynecology Advisory Committee also contributed to the decision.²⁶

The institution of the PPI prompted litigation.²⁶ The Pharmaceutical Manufacturers Association and others, including the National Association of Chain Drug Stores, sued the FDA alleging that the Food Drug and Cosmetic Act (FDCA) did not grant the authority to make these types of requirements and that the PPI interferes with the physician-patient relationship.²⁶

 

The court rejected these arguments. The judge ruled that the FDCA does provide the FDA with authority to require these warnings and concluded that when the FDA “determines that the possible side effects of a drug when used as customarily prescribed are sufficiently serious as to be material to the patient's decision on use of the drug, he or she may require disclosure of those side effects on the labeling.”²⁶ Moreover, the court agreed with the FDA’s point that new studies showing that estrogen may be "unsafe for use" under the conditions explained in the labeling justified the development of the PPI since labeling that did not disclose the risks involved would be misleading.²⁶

 

The manufacturers asserted that, “requiring the physician to communicate information emanating from Washington without regard to his or her professional judgment concerning the accuracy of the advice or the desirability of the patient being exposed to it” interfered with the physician-patient relationship.²⁶ The court reasoned that the requirement does not preclude a physicians from exercising their judgement since they are “free to discuss the matter fully with the patient, noting his own disagreement and views” and that the labeling requirement actually encourages this behavior. The court stated that the manufacturers “urge recognition not of a right to exercise judgment in prescribing treatment, but rather of a right to control patient access to information.”²⁶

 

It is also worth noting the messages submitted to the FDA during the public comment period prior to the enactment of the PPI.²⁵ The agency received more than 1,000 comments with consumer groups supporting the development of warning labels.²⁵ The comments revealed that patients often do not understand the language healthcare professionals use. Further, patients exposed to oral information usually are not attentive to it, often do not remember it, and are unwilling to ask for clarification.²⁵

 

PAUSE AND PONDER: How do you think these findings from 1975 would be applied today? In what ways are they (or aren’t they) still relevant?

 

The FDA initially proposed requiring PPIs for 50 to 75 drug classes during a pilot phase, with plans to expand the requirement to nearly all prescription drugs afterward.²⁵ Obviously, this has not yet occurred.

 

Risk Evaluation and Mitigation Strategies

Another warning that the FDA uses to alter patient behavior impact pharmacists and technicians: the REMS.  REMS are designed to help reduce the occurrence or severity of a particular serious adverse event produced by a drug and may go beyond mere communication.²⁷ FDA can require a REMS for prescription drugs and biologics if the agency determines a warning is necessary to ensure that the benefits of the medication outweigh the risks. These medications would not be approved—or would be withdrawn—without a REMS due to their known or potential serious risks.²⁷

 

The FDA’s authority to require REMS was established by the passage of the Food and Drug Administration Amendments Act of 2007 (FDAAA).²⁸ The FDAAA expanded the FDA’s authority to manage risks. The FDA’s practice already included most of the REMS elements, but the new law created the authority to utilize risk evaluation and mitigation strategies and provided for structure, enforcement, and dispute resolution.²² Prior to FDAAA (before 2007), 16 drugs were approved with restrictive risk management programs, including clozapine (the "No Blood, No Drug" program) and thalidomide (the "System for Thalidomide Education and Prescribing Safety" program, or S.T.E.P.S.).²²

 

In determining whether REMS is necessary, the law requires consideration of the following factors²⁹:

• the estimated size of the population likely to use the drug involved
• the seriousness of the disease or condition that is to be treated with the drug
• the expected benefit of the drug with respect to such disease or condition
• the expected or actual duration of treatment with the drug
• the seriousness of any known or potential adverse events that may be related to the drug and the background incidence of such events in the population likely to use the drug
• whether the drug is a new molecular entity

 

A REMS is a required risk management plan that can include one or more elements to ensure that the benefits of a drug outweigh its risks.²⁹ If the FDA determines that a REMS is necessary, it may require additional resources describing the risks including a PPI or a MG (see below).²⁹ They may also require “elements to assure safe use” (ETASU) as part of a REMS if the documentation is not adequate to mitigate a serious risk.²⁹

 

ETASU may include one or a combination of the restrictions described in Table 1.²⁹

 

Table 1. Possible Prescribing Restrictions Associated with ETASU29

Prescribing may be limited to healthcare providers who have a particular training or experience or are specially certified Dispensing only from certified pharmacies or healthcare settings or restricted to certain settings such as a hospital Dispensing restricted to patients subject to monitoring or who provide evidence of safe use conditions such as a laboratory test Enrollment in a patient registry

 

FDA’s determination as to whether a REMS is necessary for a particular drug is a drug-specific inquiry, reflecting an analysis of multiple, interrelated factors and of how each component applies in a particular case.²⁹ In conducting this analysis, FDA evaluates whether “any drug‑specific risks outweigh the drug’s benefits and whether additional interventions beyond FDA‑approved labeling are needed to ensure that its benefits continue to outweigh its risks.”²⁸ FDA relies on both premarketing and postmarketing risk assessments in making the determination. Pharmacy employees can consult FDA’s website (https://www.accessdata.fda.gov/scripts/cder/rems/index.cfm ) to view which drugs currently require a REMS.

 

While FDA determines that a REMS is necessary, specifies the requirements, and approves the specific programs, the drug’s manufacturer is responsible for developing and implementing the program.²⁷ Some manufacturers develop these programs themselves while other manufacturers hire vendors or other companies to develop and implement the programs on their behalf.

 

The law requires that when a drug has a REMS, any generic equivalents for these drugs must also have a REMS.²⁷ Sometimes, the brand name manufacturer and the generic version’s manufacturer jointly develop and implement a REMS (referred to as a “shared system REMS”). At other times, the brand name drug and the generic have different REMS, but both must meet the same goal(s) and requirements.

 

The law permits waiving REMS distribution or use restrictions for certain medical countermeasures during a declared public health emergency and establishes a pathway to ensure access to REMS restricted drugs for off-label use in serious or life-threatening conditions.²⁹ It does not appear that the FDA has ever exercised this option.

 

REMS can affect healthcare practitioners and patients in many ways.³⁰ Some medications with a REMS can only be dispensed in specific healthcare settings, such as hospitals or infusion centers. Many REMS do not require pharmacists to do anything outside of their normal dispensing activities. However, for certain REMS, pharmacists and other dispensers may need to complete certain requirements in order to dispense the drug. These may include completing training, verifying safe use conditions (e.g., verifying required laboratory monitoring or that a patient or healthcare provider is enrolled in the REMS), counseling patients, and/or providing the patient with educational materials or a MG prior to dispensing a medication with a REMS.³⁰ Certain REMS may require the pharmacies to become certified. For example, the anticonvulsant vigabatrin is only available in an inpatient setting or from pharmacies that are able to comply with the REMS’ requirements. Another example is mifepristone, discussed below.

 

Some drugs require both a BW and a REMS. Pharmacists and technicians have probably encountered the dual warnings for isotretinoin. The FDA approved isotretinoin for the treatment of severe acne in 1982.²² Isotretinoin is highly teratogenic and the FDA issued multiple warnings against the use of the product during pregnancy: in three sections of the package insert (warnings, precautions, and contraindications) and also in a patient information brochure and in information to prescribers.²² Shortly after approval, reports of human malformations emerged in patients taking the drug. As a result, health communication letters were sent to 500,000 prescribers and 60,000 pharmacists reminding them about the warnings on the package insert. The 1982 warning was sufficient to inform users of the dangers from the drug and also provided protection for the manufacturer to avoid liability, at least according to the Florida Supreme Court.³¹

In 1988, following a meeting of the Dermatologic Advisory Committee, warnings were upgraded and an isotretinoin Pregnancy Prevention Program (PPP) was implemented; this was the first risk management program introduced by a pharmaceutical company.^22,31 The program included several elements: a boxed warning; informed consent for female patients; a PPP kit for physicians containing patient information brochures and pregnancy counseling materials for the prescriber; a prescriber tracking survey; and annual and quarterly meetings with FDA.²²

Pharmacy personnel are aware that isotretinoin also has a REMS designation, the iPLEDGE program.³² The iPLEDGE Program was originally implemented in early 2005 and approved as the iPLEDGE REMS in 2010. The goal of the REMS was to inform prescribers, pharmacists, and patients about isotretinoin’s serious risks and safe-use conditions and prevent fetal exposure to the drug. One of the REMS requirements is that prescribers must be enrolled, and the dispensing pharmacist must receive a Risk Management Authorization (RMA) before filling and dispensing prescriptions.³²

 

Isotretinoin has also been associated with an increased risk of neuropsychiatric adverse events including depression, anxiety, and increased suicidality.³³ These risks prompted the FDA to issue a BW in 2005, but these observations have been refuted.³³

 

Another example of a drug that carried both a boxed warning and a REMS is the atypical anti-psychotic drug, clozapine. The FDA approved clozapine for treatment-resistant schizophrenia in 1989 and its labeling included a warning due to a risk of producing severe neutropenia.³⁴ The initial requirement called for weekly white blood cell monitoring. The requirement was revised in 2005 to weekly monitoring for the first six months of therapy, biweekly monitoring for months six to 12 months, and monthly monitoring therafter.³⁴ The monitoring protocol formally became a REMS in 2015.³⁵ The REMS was lifted in 2025 as a result of evidence suggesting that the risk is no greater than for other antipsychotics and a decision by FDA to decrease the burden on the healthcare delivery system and improve access to clozapine.^35,35

 

Clozapine and most other second-generation antipsychotic drugs also carry a BW warning of increased risk of death related to psychosis and behavioral problems in elderly patients with dementia.³⁵ (Where have we seen this lately?)

 

A REMS that generated considerable controversy is the one for the abortion drug mifepristone. The FDA approved mifepristone but concluded that certain restrictions were necessary to ensure its safe use. It received both a BW for rare, but potentially fatal, bleeding episodes, and a REMS.³⁶ The initial REMS in 2011 required prescribers to be certified. They also needed to demonstrate necessary qualifications to assess whether patients are appropriate candidates for the drug and provide intervention in case of complications. It also restricted dispensing to in-person in a clinic, medical office, or hospital visit. (Notably, the so called “in-person dispensing requirement” was temporarily lifted during the COVID-19 public health emergency, permitting telehealth prescribing.) The FDA determined in 2021 that the REMS should be modified to reduce the burden on the healthcare delivery system and improve access to this time-sensitive medication. The modifications removed the in-person requirement and also permitted pharmacies to become certified to dispense the drug. These changes spawned numerous lawsuits by states and healthcare providers on both sides of this highly contentious issue: one side wanting to reinstate the in-person requirement and the other to eliminate the REMS. Some of these suits are still ongoing.³⁷

 

REMS have also created another controversy. The FDA, the Federal Trade Commission, generic drug manufacturers, and some members of Congress have expressed concern that brand-name manufacturers are using REMS to prevent or delay generic drugs from entering the market. The Director of the CDER, for example, has testified that some brand pharmaceutical companies have used REMS and distribution restrictions to impede competition by withholding or refusing to sell samples of the branded drug to the generic company for purposes of bioequivalence testing and prolonging negotiations related to developing a single, shared system of REMS.²²

 

MEDICATION GUIDES

Another means of alerting patients to potential risks is the MG.³⁸ An MG is part of the FDA-approved prescription drug labeling for certain prescription drugs when the FDA determines that³⁸

• Patient labeling could help prevent serious adverse reactions
• The drug has serious risk(s) relative to benefits of which patients should be made aware because information concerning the risk(s) could affect patients' decision to use, or to continue to use, the product, or
• Patient adherence to directions for use is crucial to the drug’s effectiveness

 

The medication’s manufacturer develops MGs, but the FDA must approve them. They are required to be distributed to the patient or the patient’s agent at the time of dispensing in paper form although the patient may request electronic delivery instead.³⁸

 

The MG contains information on proper use of the drug product, such as contraindications, how to use the drug properly (e.g., adhering to dosing instructions and what to do in case of an overdose), adverse reactions reasonably likely to be caused by the drug product that are serious or occur frequently, activities to be avoided while taking the drug, risk to special populations, or risk of dependence.³⁹

 

It is important to appreciate that while MGs may be required for drugs with a BW, not every BW triggers an MG.⁸ Consequently, many high-risk discussions may not take place. BWs are primarily intended as signals to healthcare providers providing guidance on what clinicians prescribe and how pharmacists should dispense and function and less as direct patient alerts.⁸ Their effectiveness in changing behavior has been questioned.⁸ Moreover, even the MGs may not achieve their desired result.

 

A recent study utilizing 449 patients seeking primary care services (18 to 85 years old) analyzed 185 patient Medication Guides.⁴⁰ The authors found that the guides averaged almost 2000 words with a mean reading level of 10-11^th grade. Only one guide was deemed suitable for readability. None provided summaries or reviews. Moreover, comprehension of the guides was poor, especially among patients with low or marginal literacy. The authors concluded that current MGs are of little value to patients, as they are too complex and difficult to understand especially for individuals with limited literacy.⁴⁰ The SIDEBAR describes “plain language” communication tips that manufacturers should use to simplify such patient communications.

 

 

SIDEBAR: What is Plain Language?
The U.S. Department of Health and Human Services designed Plain Language Guidelines to help communicators present information so that readers can find, understand, and use information quickly. The guidelines emphasize clarity, organization, and audience awareness—principles that are especially important in healthcare, where misunderstanding can have serious consequences.

 

A central tenet of plain language is writing for the intended audience. This means identifying who the readers are, what they already know, and what they need to do with the information. For example, materials written for patients should avoid technical jargon or, when technical terms are necessary, define them clearly. The guidelines encourage writers to anticipate readers’ questions and structure content so that answers are easy to locate.

 

Organization is another key principle. The DHHS recommends placing the most important information first—often referred to as “front-loading.” Readers should not have to work through dense paragraphs to find critical instructions or key messages. Effective use of headings, subheadings, and logical flow allows readers to scan documents and quickly identify relevant sections. Bulleted or numbered lists are encouraged when presenting steps, recommendations, or multiple items, as they improve readability and reduce cognitive load.

 

Word choice plays a significant role in plain language. The guidelines advocate for using common, everyday words instead of complex or unfamiliar terminology. For instance, “use” is preferred over “utilize,” and “help” over “facilitate.” Writers should keep sentences relatively short and direct. Active voice—sentence structure that clearly identifies who is responsible for an action—makes instructions more actionable and less ambiguous.

 

Design and formatting are integral to comprehension. Adequate white space, readable fonts, and consistent formatting make documents more approachable. The guidelines suggest avoiding large blocks of text and instead breaking content into manageable chunks. Visual aids—such as tables, charts, or icons—can enhance understanding when used appropriately, but they should complement, not replace, clear writing.

 

Another important aspect of the DHHS Plain Language Guidelines is testing and revision. Reviewing materials with real users whenever possible ensures the content is understandable and useful. Feedback can reveal gaps in clarity or assumptions about reader knowledge that may not be true. Revising based on this input is an essential step in producing effective communication.

 

Ultimately, the DHHS Plain Language Guidelines are not about “dumbing down” content but about making it accessible and usable. In healthcare and public health contexts, this approach supports better decision-making, improves patient outcomes, and promotes equity by ensuring that information is understandable to people with varying levels of literacy and background knowledge.

 

 

In May 2023, the FDA published a proposed rule about a new type of FDA-approved patient labeling, known as Patient Medication Information (PMI).³⁹ The intent of the PMI is to highlight essential information that patients need to know about the prescription drug product, including basic directions on how to use the product.

 

PAUSE AND PONDER: What information do you think a PMI should contain to successfully provide adequate warnings to patients?

 

RECENT DEVELOPMENTS

As noted above, the inclusion of a BW is not necessarily permanent. An important example is the smoking cessation drug varenicline. The drug was approved in 2006. Shortly after its approval, anecdotal reports from popular press and internet sites, post‐marketing case reports, and reports to the FDA's Adverse Event Reporting System suggested that some patients prescribed varenicline had experienced suicidal thoughts and aggressive and erratic behavior.⁴¹ The FDA initiated safety reviews in response to these reports and concluded that the drug was associated with adverse psychiatric events.⁴¹ The agency issued a public health advisory in 2008 and mandated a boxed warning in 2009.⁴³ Subsequently, a large clinical trial of patients with and without psychiatric illness found that the drug was not associated with an increased incidence of clinically significant neuropsychiatric adverse events. The FDA removed the boxed warning in 2016.⁴²

 

FDA has recently lifted the boxed warning on hormone replacement therapy (HRT) drugs, which are commonly used to treat menopause symptoms.⁴⁴ The warning was mandated in 2003 based a study of more than 16,000 post-menopausal women receiving conjugated equine estrogens plus medroxyprogesterone.^3,44 The study found an increased risk of breast and endometrial cancers, stroke, blood clots, heart attacks, and dementia associated with the use of the hormone therapy.^3,44 Following the implementation of the label, the use of these treatments among postmenopausal women decreased from 30% to 5% over the next two decades.³

 

FDA removed the BW in November 2025, citing “fear and misinformation surrounding hormone replacement therapy.”⁴⁴ The FDA justified the change by noting problems in the initial research, including “the average age of women in the study was 63 years—over a decade past the average age of a woman experiencing menopause—and study participants were given a hormone formulation no longer in common use.”⁴⁴ Moreover, randomized studies showed that women who initiate HRT within 10 years of the onset of menopause (generally before age 60) have a reduction in all-cause mortality and bone fractures, and may reduce the risk of cardiovascular disease and Alzheimer’s disease.⁴⁵ The FDA’s actions further illustrate the effect that a BW has on prescribing and use and also the dynamic nature of the warnings. Of note, an epidemiologist pointed out that these changes in labeling were not the result of new information but rather a reconsideration and reassessment of the risk-benefit for these drugs.³ However, FDA is not seeking to remove the boxed warning for endometrial cancer for systemic estrogen-alone products.

 

PAUSE AND PONDER: How would you have handled the situation presented at the beginning of this activity?

SUMMARY

The FDA has a number of tools that can be used to communicate drug risks to healthcare providers and patients. These include boxed warnings, REMS, and MGs. Pharmacy personnel should be aware of these different tools and how they are developed to manage the risk-benefit of drugs. In addition, pharmacy personnel should recognize that the warnings are subject to change and need to remain aware of the evolving judgment on how risks should be managed. They also need to be ready to answer questions from patients receiving these warnings.

 

 

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INTRODUCTION

Meet Charlie. Charlie is a newly licensed pharmacist who is excited to start his new job at a busy community pharmacy. During his training, a more experienced coworker, Hazel, instructs Charlie to override insurance claim rejections. She shows him the prior authorization override code to submit claims. She tells him, “You don’t actually need to contact the prescriber and have them obtain prior authorization for it to work. It’s just a workaround everyone does.”

 

The next day, the insurance program rejects a prescription for Reimbursitol because it requires prior authorization. Its cash price is more than $1,000, and Charlie dreads informing the patient. Hazel tells Charlie to enter the override code, even though they have not contacted the provider and the insurer has not approved the prior authorization. The claim goes through, and the pharmacy receives payment for Reimbursitol. Charlie is eager to fit in and lacks experience, and this workaround streamlines his workflow, so he follows this process for several prescriptions over the next few weeks.

 

Healthcare fraud imposes an enormous burden on the healthcare system. Experts estimate that fraud accounts for 3% to 10% of healthcare expenses annually, resulting in billions of dollars lost each year.¹ In 2024, the United States (U.S.) spent $5.3 trillion on healthcare, or about $15,474 per person. A large share of this spending was divided among the following²

• Medicare: $1.118 billion (21%)
• Medicaid: $932 billion (18%)
• Private health insurance: $1.645 billion (31%)
• Out-of-pocket spending: $557 billion (11%)

 

Based on these figures, fraud could account for losses of $159 billion to $530 billion in just one year.

 

Not only does fraud affect healthcare on a national level, but it directly impacts pharmacies. For example, in 2019, an independent pharmacy chain allegedly submitted false claims to Medicare and Medicaid for prescription medications by switching from a lower cost to a higher cost product without a medical need or prescription. Investigators allege that pharmacy staff switched patients from an inexpensive to an expensive medication and billed federal healthcare programs for reimbursement of the high-cost item. This change in therapy inflated the complexity of the product dispensed, which was not medically necessary and resulted in larger reimbursement payments, In some cases, the pharmacy dispensed the expensive item and billed federal payors without a valid prescription. The case resolved in 2022 with the pharmacy paying $2.05 million and implementing training programs regarding fraud and compliance.^3,4

 

The water can sometimes seem muddy when it comes to billing practices and legal regulations. Understanding the laws and regulations that govern healthcare can enable pharmacy team members to identify, report, and prevent fraud and abuse, rather than falling victim to unsavory practices.

 

FRAUD, ABUSE, AND WASTE: WHAT'S THE DIFFERENCE?

Although fraud, waste, and abuse are often grouped together, each carries a distinct definition, intent standard, and regulatory implication.

 

Fraud is an intentional deception or misrepresentation that could result in an unauthorized benefit. It is intentionally wrongful and considered criminal.^5,6 An example of fraud is billing for services that were not provided.⁷

 

Abuse is provider practices that are inconsistent with accepted practices, resulting in an unnecessary cost to the health care system. There is usually not criminal intent, but it still leads to financial loss by the payor.^5,6 An example of abuse is billing for medically unnecessary services.⁷

 

Waste is misuse or inappropriate use of resources that results in unnecessary costs to the healthcare system. It is not associated with deceptive intentions.⁶ An example of waste is ordering excessive or unnecessary tests or services.

 

See the SIDEBAR for a quick overview of additional law terminology.

 

 

SIDEBAR: A (Very) Brief Law Terminology Refresher^8,9

Law: A broad term for all rules that govern conduct, such as statutes, ordinances, and regulations. For example, the Controlled Substance Act is a federal law regulating agents with potential for abuse.

 

Act or statute: Both refer to a specific type of law. An act is a formal, written law passed by a legislative body, such as Congress or state legislature. A statute refers to the written law itself, typically as it is codified in the U.S. Code. For example, the False Claims Act began as a bill in January 1863. When President Lincoln signed it in March 1863, it became law. It is currently published in the official U.S. federal code as 31 U.S.C. §§ 3729–3733.

 

Ordinance: A local law in place to ensure public safety, health, and general welfare. Ordinances often regulate fire and safety regulations, housing standards, parking regulations, snow removal, littering, public streets and sidewalks, and zoning. Examples of ordinances pertaining to pharmacy include zoning, signage, and operating hours.

 

Regulation: A rule issued by administrative agencies that have legislative authority over a specific area to enforce rules or statutes. For example, the state board of pharmacy may regulate how many CE hours pharmacists and technicians must complete each year, or for how many years documentation must remain on the pharmacy premises.

 

 

Table 1 offers a brief side-by-side look at civil versus criminal law.

 

Table 1. Overview of Criminal Law vs. Civil Law^10-12

	Criminal Law	Civil Law
Objective	Punish wrongdoing and protect society	Settle disputes between individuals or entities
Initiating party	State/federal government (prosecutor)	Private party (plaintiff)
Burden of proof*	Very high: beyond a reasonable doubt	Lower standard: Preponderance of the evidence (must be proven more than 50% likely that plaintiff’s claims are true)
Potential penalties	Jail/prison, fines	Financial compensation
Examples	Theft, assault, arson, murder	Breach of contract, personal injury, property disputes
Pop Culture Example (TV)	Law & Order	Judge Judy

*Burden of proof is the responsibility to present enough evidence to win the case and meet the applicable legal standard. It usually lies with the party initiating the case. In other words, the prosecutor or plaintiff must find the defendant guilty rather than the defendant proving their innocence.

 

 

COMPLIANCE IN ACTION: FEDERAL LAWS AND REGULATIONS

Several federal laws and regulations are in place to prevent and address fraud. The False Claims Act (FCA), Anti-Kickback Statute (AKS), Physician Self-Referral Law (Stark Law), and HIPAA establish important compliance requirements for healthcare.

 

False Claims Act (FCA)

The False Claims Act (FCA; 31 U.S.C. §§ 3729–3733) is a civil federal statute dating back to 1863 in response to contractor fraud during the American Civil War.¹³ Still in effect today, the FCA allows the federal government to recover losses through civil lawsuits for false or fraudulent claims, seek financial penalties, and pursue criminal charges for that conduct.¹⁴

 

Knowingly submitting false claims or conspiring to submit false claims violates the FCA.¹³ In the healthcare setting, the FCA applies whenever a federal payor is involved, such as Medicare or Medicaid. Examples of healthcare-related FCA violations include submitting false or fraudulent claims for payment, billing for services not rendered, and upcoding (billing for a more expensive service than was actually obtained by the patient).¹⁵

 

Civil liability under the FCA does not require a specific intent to defraud. In its definition, the FCA uses the term “knowingly” to include individuals who knew the claim was false, deliberately ignored that it was false, or ignored signs that it was false. Violations carrying civil liability consist of recklessness or deliberate ignorance and do not require intent. In other words, an individual who “looks the other way” or “should have known” may be violating the FCA.¹⁶

 

Civil penalties under the FCA are up to three times the government’s loss plus inflation-related fines ($11,000 for Medicare or Medicaid fraud) per claim. Because each item or service billed counts as a claim, losses and fines can accumulate quickly.¹⁶ The FCA includes a whistleblower provision (“qui tam”), which allows private citizens to submit a claim on the government's behalf for a share of recoveries, usually between 15% to 30%.³ Whistleblowers can be business partners (current or former), hospital or office staff, patients, or competitors.^13,16

 

In addition to seeking civil penalties under the FCA, the government may also bring criminal charges where appropriate. More severe cases—those with intentional fraud—may face criminal prosecution. Criminal penalties include imprisonment and criminal fines.¹⁶

 

Anti-Kickback Statute (AKS)

The Anti-Kickback Statute (AKS; 42 U.S.C. § 1320a-7b(b)) ensures that healthcare providers make clinical decisions objectively and appropriately based on patient need, not financial incentive. This federal criminal law prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration to entice or reward referrals. It also prohibits creating federal healthcare business involving items or services that are reimbursable by programs like Medicare, Medicaid, or other federal health programs. Remuneration is considered anything of value, and in this instance, it covers a wide range. Examples include–but are not limited to–free rent, hotel stays, meals, bribes, rebates, and excessive compensation.¹⁶

 

The AKS applies to both the party offering the kickback and the party receiving it. This means that it is illegal to accept payment for referring patients, and it is illegal to pay to have patients referred.¹⁶

 

AKS violations carry both criminal and civil penalties that can be extensive and overlapping. Violations of the AKS are classified as felony crimes under federal law and can result in jail time.¹⁶ Criminal penalties can include fines up to $25,000 per violation and/or up to a 5-year prison term. Civil penalties fall under the Civil Monetary Penalties Law and carry penalties of up to $50,000 per kickback plus up to three times the remuneration value.

 

Furthermore, AKS violations may also create liability under the FCA and incur the penalties associated with FCA violations. In addition to the criminal and civil penalties, AKS violations can result in ineligibility to participate in federal health care programs.^14,16

 

Physician Self-Referral Law (Stark Law)

The Physician Self-Referral Law (42 U.S.C. § 1395nn), often called the Stark Law, is a civil law that prohibits physicians from referring Medicare or Medicaid patients for designated health services (DHS) to parties with which the physician or an immediate family member has a financial relationship, unless an exception applies. Simply put, physicians should not profit by referring patients to services in which they have a financial stake.¹⁶ See Table 2 for a list of DHS.

 

Table 2. Stark Law Designated Health Services (DHS)¹⁷

1. Clinical laboratory services

2. Physical therapy

3. Occupational therapy

4. Outpatient speech-language pathology

5. Radiology and certain other imaging

6. Radiation therapy

7. Durable medical equipment and supplies

8. Parenteral and enteral nutrients, equipment, and supplies

9. Prosthetics, orthotics, and prosthetic devices and supplies

10. Home health services

11. Outpatient prescription drugs

12. Inpatient and outpatient hospital services

 

The Stark Law is a strict liability statute, meaning that a violation can exist even without specific intent to break the law. Any violation—even an accidental one—is a violation of the Stark Law.¹⁶

 

Civil penalties include fines and ineligibility to participate in federal healthcare programs.¹⁶ Although the Stark Law addresses physician referrals, pharmacists and technicians may be indirectly affected. For example, if a physical refers Medicare or Medicaid patients to a pharmacy which he or she has a financial interest, it may violate the Stark Law, unless an exception applies. A complete list of regulatory exceptions to the Stark Law is beyond the scope of this activity; however, exceptions that may apply to a pharmacy setting include the in-office ancillary services exception, bona fide employment relationships, and fair market value compensation arrangements.^18,19 Pharmacy team members can contact their legal or compliance departments if concern exists regarding Stark Law and/or its exceptions.

 

Health Insurance Portability and Accountability Act (HIPAA)

While HIPAA is often perceived as primarily protecting patient privacy, it includes fraud provisions. It is a crime to knowingly use, obtain, or disclose protected health information (PHI). Criminal penalties for HIPAA violations, addressed under 42 U.S.C. § 1320d–6, can be substantial and vary depending on the nature and extent of the violation. A basic violation can result in fines up to $50,000 and/or up to 1 year in prison. When committed under false pretenses, the fines increase to no more than $100,000 and/or up to 5 years in prison. The intent to sell, transfer, or use PHI for personal gain increases the fines even further to a maximum of $250,000 and/or 10 years in prison.^20,21

 

Understanding the functions of key regulatory bodies can illustrate the many moving parts involved in governing healthcare. The SIDEBAR summarizes these organizations briefly.

 

SIDEBAR: Regulatory and Enforcement Agencies ^7,22-27

The U.S. Department of Justice (DOJ) is the federal agency responsible for ensuring justice. It enforces federal laws, prosecutes cases, oversees federal law enforcement agencies such as the Federal Bureau of Investigation (FBI) and Drug Enforcement Agency (DEA), and manages prisons. The DOJ is headed by the Attorney General.

 

The Federal Bureau of Investigation (FBI) reports to the DOJ. It enforces federal criminal law and conducts investigations, and can investigate corruption, fraud, and organized crime.

 

The U.S. Drug Enforcement Administration (DEA) enforces controlled substance laws and regulations, including the manufacture and distribution of controlled prescription drugs.

 

The Office of the Inspector General (OIG) is a federal agency that aims to counteract fraud, abuse, and waste while maximizing efficiency and accountability in the Department of Health and Human Services programs. The OIG can audit, investigate, and inspect federal programs, especially Medicare and Medicaid programs, which comprise a large portion of the federal budget.

 

The Centers for Medicare and Medicaid Services (CMS) is a federal agency within the U.S. Department of Health and Human Services. CMS oversees and regulates federal healthcare programs such as Medicare, Medicaid, and State Children’s Health Insurance Program (SCHIP). CMS collaborates with individuals, groups, and law enforcement organizations to prevent and determine fraud and abuse.

 

State boards regulate healthcare professions by overseeing licensing and renewals, enforcing professional standards, and inspecting facilities. They may also take disciplinary action when standards are not met. There are many state healthcare boards, but only the following disciplines have prescribing authority or direct access to medications: pharmacy, nursing, medical, osteopathic, dentistry, optometry, podiatry, and veterinary.

 

From Laws to Practice: Examples of Pharmacy Fraud and Abuse 

Remember Charlie? A month into his new job, he takes this CE program, reviews the earlier claims, and realizes that he entered override codes even though prior approval was never obtained. Charlie becomes worried that he might have followed bad advice.

 

PAUSE AND PONDER: Did Charlie knowingly commit fraud, or did he make a mistake after receiving misleading guidance? What responsibilities does Charlie have to correct past claims or disclose potential issues?

 

Fraud in healthcare can be committed by an individual, group, or organization.⁷ In the pharmacy setting, fraudulent activity often involves improper billing or reimbursement practices.

 

Pharmacy Billing and Reimbursement Fraud

Several types of billing fraud can occur in the pharmacy, such as billing for prescriptions that were never dispensed (“phantom claims”), dispensing a different quantity than prescribed without documentation, or refilling prescriptions without authorization. Additional fraudulent billing practices include billing for a brand-name drug while dispensing a generic (or billing for a more expensive generic than what was dispensed), adding medications to prescriptions without dispensing them, and submitting claims without an invoice to document purchase.²⁸

 

What does this look like in pharmacy practice? Here are two real-life examples involving mismatched quantities coming in versus quantities going out: A pharmacy did not have documentation supporting the medication quantities billed to Medicaid as compared to the quantities purchased from vendors over four years. The case settled for $1,333,660. Another pharmacy had similar documentation gaps; the case settled for $42,521.²⁸

 

See the SIDEBAR for more real-world examples of fraudulent healthcare schemes and consequences.

 

SIDEBAR: From the Headlines: Health Care Fraud Cases Involving Pharmacists^29-36

Between 2017 and 2022, a pharmacist submitted fraudulent claims to Medicare for medications that were never dispensed in violation of the FCA. He created fake patient profiles and fraudulent prescription entries, resulting in more than $1 million in Medicare payments to the pharmacy. In 2023, the pharmacist plead guilty to one count of healthcare fraud and was sentenced to 2 years in federal prison (after facing a maximum of 10 years). He was also ordered to pay $1.138 million in fines and restitution, and the state board of pharmacy ordered that he surrender his license.

 

From June 2014 to June 2020, a pharmacist defrauded Medicare and Kentucky Medicaid by billing for prescriptions that patients never received in violation of the FCA. The pharmacist also submitted inflated reimbursement claims by billing for expensive diabetic test strips while dispensing a less expensive item. The pharmacy collected $627,614 from the healthcare payors for the fraudulent prescriptions and $102,441 for the fraudulent test strip claims. She was sentenced to 20 months in prison with 2 years’ probation after release. She was also ordered to pay $730,056 in restitution, and she surrendered her license.

 

A pharmacist who owned a pharmacy and served as the pharmacist-in-charge coordinated a healthcare fraud scheme with two co-schemers, resulting in more than $300 million in fraudulent Medi-Cal (California’s version of Medicaid) claims. In early 2022, Medi-Cal suspended its prior authorization requirements while transitioning to a new payment system. From May 2022 to March 2023, the pharmacy billed Medi-Cal $306,521,392 for high-reimbursement, non-contracted generic drugs that normally would have required prior authorization and received approximately $204,032,151 in payments. Investigators allege that these medications were not medically indicated, often weren’t dispensed, and involved kickbacks to the two co-schemers. The co-schemers allegedly received more than $36 million in kickbacks, which the pharmacist referred to as “consulting services.” One co-schemer was a nurse practitioner who received kickbacks for writing the fraudulent prescriptions without evaluating patients, medical records, or medical necessity. The state charged her with two counts of healthcare fraud. The other co-schemer was involved in laundering money from the fraudulent payments and has been charged with one count of healthcare fraud. In August 2024, the pharmacist pleaded guilty to two counts of healthcare fraud. At the time of this writing, he is awaiting sentencing and facing a maximum of 10 years in jail for each count of healthcare fraud. This conduct not only violated the FCA by submitting claims for services not performed but also violated the AKS.

 

Medical Provider Healthcare Fraud

Healthcare providers may also commit fraud. Examples can include double billing (submitting multiple claims for the same service), phantom billing (billing for a service, visit, or supplies that was never received), unbundling (billing components of a service separately), or upcoding.²²

 

Patient or Individual Fraud

Although not the focus of this activity, pharmacy staff should be aware of fraudulent schemes involving patients or individuals. Examples include forged or altered prescriptions, doctor shopping (seeing multiple providers to obtain prescriptions for controlled substances), diversion (selling one’s prescription medication), health care provider impersonation (billing for services or supplies without a license to do so), and benefit card abuse (using someone else’s health care card or allowing someone else to use it).²² Awareness of these patterns may help pharmacy staff recognize fraudulent activities.

 

Speak Up! Don’t Look Away: Addressing Fraud and Abuse

Prompt reporting of suspected fraud is critical to maintain compliance with laws and regulations, and to maintain the financial viability of the healthcare system. There are several ways to report suspected fraud or abuse.⁷

 

In some cases, self-reporting may result in less severe penalties.²⁸ If one realizes the billing process was questionable, the very first step is to stop submitting problematic claims. Next, individuals should consider obtaining legal counsel specializing in healthcare fraud to evaluate legal practices or risks. Individuals should determine how much money was collected in error and return overpayments. If an investment or suspicious relationship is involved, end it! If appropriate, individuals should consider self-disclosure to CMS or OIG.⁷

 

So, what does Charlie do? He reports his concern to the pharmacy manager, who audits the claims and corrects the errors. Charlie and the pharmacy team receive additional training to prevent future mistakes. Hazel’s intent and the extent of her use of override codes—and those she influenced—were evaluated during the internal audit. No legal action is taken because the issue was caught early, reported internally, and corrected. Additionally, there was not intent to defraud—it appears to be negligent error.

 

The pharmacy manager uses the incident as a choose-your-own misadventure learning example. She discusses the following potential outcomes with Charlie:

• If Charlie had continued billing incorrectly even though he knew or suspected it was wrong, he could have been subject to consequences including criminal charges, civil charges, or license suspension/revocation.
• If the manager ignored Charlie’s concerns, the pharmacy and/or manager could have faced a federal investigation and penalties. Charlie could have been protected by whistleblower protection laws if he chose to file a file a qui tam case.
• If the miscoding practices were discovered during a third-party audit, consequences could have included civil penalties and a criminal investigation (to determine intent) for the individuals involved and the pharmacy.
• If Charlie had recognized and reported the miscoding right away, it would have triggered an internal investigation with possible disciplinary action for Hazel. It also would have eliminated Charlie’s liability.

 

Contact Information: How to Report Suspected Fraud or Abuse

If a beneficiary (patient) wants to report:

CMS Hotline: 1-800-MEDICARE (1-800-633-4227)

OIG Hotline: 1-800-HHS-TIPS (1-800-447-8477)

https://oig.hhs.gov/fraud/report-fraud/index.asp

U.S. Department of Health and Human Services

Office of Inspector General

ATTN: OIG Hotline Operations

PO Box 23489

Washington, DC 20026

Complaints specific to Medicare Part C or Part D: 1-877-7SafeRx (1-877-772-3379)

 

If a Medicare or Medicaid provider wants to report:

OIG Hotline: 1-800-HHS-TIPS (1-800-447-8477)

https://oig.hhs.gov/fraud/report-fraud/index.asp

U.S. Department of Health and Human Services

Office of Inspector General

ATTN: OIG Hotline Operations

PO Box 23489

Washington, DC 20026

Contact MAC (Medicare Administrative Claiming) (https://www.cms.gov/mac-info) or Medicaid State Agency

MAC can also address billing procedures, errors, or questionable practices

 

The OIG hotline is anonymous; however, providing contact information is preferred so that follow up can occur.⁷

 

DIVERSION AWARENESS FOR PHARMACY STAFF

Diversion is the unauthorized acquisition, use, or distribution of drugs.³⁸  It can occur with medications that fall under the Controlled Substance Act, such as opioids, benzodiazepines, and/or stimulants, and non-controlled medications.³⁹ Diversion can happen at any point in the supply chain and by either healthcare workers or patients.⁴⁰ This activity will focus on diversion by healthcare workers.

 

Diversion of Controlled Substances

Addiction often drives controlled substance diversion in healthcare environments, with opioids identified as the most frequently diverted medications.³⁸ Table 3 lists commonly diverted controlled substances. Diversion of controlled substances can cause significant harm to the patient, healthcare worker, and healthcare facility.

 

Table 3. Commonly Diverted Controlled Substances^38,40

Drug class	Examples
Opioids	codeine, fentanyl, hydromorphone, meperidine, morphine, oxycodone, methadone, hydrocodone combinations
Benzodiazepines	alprazolam, clonazepam, lorazepam
Stimulants	amphetamines, methylphenidate

 

Diversion of controlled medications by a healthcare worker can result in patient harm in several ways. Consider a hypothetical situation in which a healthcare worker tampers with a vial of an injectable controlled substance. The worker removes half of the contents for her own use and replaces the remainder with another clear liquid, which may or may not be sterile, using a technique that is definitely not sterile. Patient harm can result due to^41-43

• An inadequate control of pain or anxiety from a subtherapeutic dose.
• Risk of infection if the product administered is contaminated due to the addition of a nonsterile diluent or needle sharing. For example, two outbreaks occurred in 2018 due to contamination:
  • An emergency department nurse in Washington diverted a medication and it resulted in 12 cases of hepatitis C
  • A cancer center nurse diverted medication in New York leading to 6 cases of Sphingomonas paucimobilis bacteremia.
• Risk of allergy or intolerance if the patient receives a drug other than the one prescribed due to diversion of the prescribed agent.
• Potential for adverse outcomes, such as errors and complications, if a patient receives direct care from a healthcare worker who is actively and acutely impaired, as this impairment will significantly compromise clinical judgement.

 

Diversion also poses personal and professional harm to the healthcare worker, including the risk of overdose. Diversion and administration of injectable agents present the potential for infection due to unsterile or unsanitary self-injection techniques or contamination, along with transmission of bloodborne illnesses. Professional risks include felony prosecution, civil charges, and license suspension or revocation. The worker is also liable for fraudulent documentation in the medical record and fraudulent billing if the patient or insurance provider was billed for a medication that the patient did not receive.⁴²

 

Additionally, the risks associated with the diversion of controlled substances extend to the employer or healthcare organization. Regulatory and legal consequences include the ramifications of fraudulent billing, liability for damages, and diminished community confidence in the healthcare system.⁴¹

 

Behavioral patterns of healthcare workers may be associated with potential medication diversion. Red flags include^38,44

• Unexpected absences or late arrivals
• Disappearance from the worksite (frequent extended bathroom breaks or excessive time in the medication storeroom)
• Extra time at work (appearance on scheduled days off, seeking overtime, early arrivals, staying late)
• Consistently removing controlled substances towards the end of a shift
• Erratic productivity
• Errors with insufficient explanation
• Poor relationships with colleagues, including isolation or avoidance
• Insistence upon personal administration of injected medications to patients
• Trends with waste: too much or too little, delaying waste documentation procedures until the end of shift, or documenting waste with a variety of healthcare colleagues
• Trends with work areas: offering to work in non-assigned areas, preferring patients with controlled medications, or prioritizing work alongside new employees or orientees
• Creating false orders or “prefill” orders

 

Diversion of Non-Controlled Substances

Let’s check in on Charlie. A few weeks go by, and Charlie is settling into his job. He has become more comfortable with the skills and responsibilities required in his position and is adapting to the workplace culture. He notices that Hazel likes to do things her way and on her own. When Charlie tries to unpack the refrigerated delivery one morning, she takes over, telling him “I always do this. It’s too hot to leave the refrigerated items out, and I’m the fastest at putting them away.” He also notices that she’s frequently on the closing shift. When he offers to stay late so she can go home on time, Hazel says “I’ve got it. My roommate borrowed my car and is picking me up late anyway, so I might as well be the one who stays.”

 

Recently, Charlie has had trouble filling prescriptions for a popular injectable GLP-1 receptor agonist medication. It seems that the pharmacy can’t keep it in stock, even though the ordering system shows several recent deliveries. Hazel often tells patients the medication is on backorder.

 

When reviewing two GLP-1 receptor agonist prescriptions marked as “returned to stock,” Charlie can’t find the product in the refrigerator. Hazel says they were restocked earlier, adding that she will adjust the inventory herself. Charlie also notices documentation that two additional boxes were “damaged due to temperature excursion,” but he doesn’t remember a recent refrigerator breakdown.

 

PAUSE AND PONDER: Does Hazel’s behavior demonstrate red flags? Why are discrepancies with non-controlled, high-cost medications concerning?

 

The incidence of non-controlled diversion has been rising. Because non-controlled medications may not be as tightly regulated as controlled medications, they may be easier to acquire through illegal means. Individuals may divert non-controlled medications, especially high-cost products, for their own use, resale, or to supply friends or family members who can’t afford the cost.³⁹

 

High-cost medications that are commonly diverted include antiretrovirals and oncology medications. Other agents often diverted are performance-enhancing agents (such as erythropoietin) and psychoactive medications (such as cyclobenzaprine, quetiapine, and trazodone).³⁹ The sedative and anxiolytic effects of atypical antipsychotics have increased their desirability for misuse or diversion. These medications can be used alone for insomnia or anxiety or in combination with other illicit substances for either calming or enhancing effects.⁴⁵

 

Another potential area for diversion involves medications used in the management of opioid use disorder, including diphenhydramine (for histamine-induced pruritus), ondansetron (for withdrawal-related nausea and vomiting), and naloxone (for overdose reversal).³⁹

 

Picking up the Pieces: Prevention and Reporting

In a perfect world, medications would make their way to patients without illegal interception by an intermediary. But this world—the real world—isn’t a perfect one, and diversion happens. How should the pharmacy team handle it?

 

At the end of the month, Charlie is reviewing a routine inventory variance report for high-cost medications. When he completes a physical count of the items in stock, Charlie finds that the pharmacy is short four boxes of the GLP-1 receptor agonist medication. The system shows two prescriptions that were billed and later reversed to “never picked up,” and two boxes that were documented as “temperature excursion — product damaged.” However, the refrigerator logs do not show temperature fluctuations for that time.

 

PAUSE AND PONDER: How should Charlie address this discrepancy?

 

The strongest defense is a good offense. Some strategies for preventing and detecting diversion include³⁸

• Establishing a diversion program. This is a big task, and it can be challenging to find the time, energy, and resources when it is simply tacked on as an additional responsibility to an existing job description. Ideally, a position (or positions) would be dedicated solely to this role.
• Establishing to whom the program reports internally—compliance, risk management, legal, pharmacy, nursing, and so on. This will vary depending on the size and structure of the organization.
• If appropriate, including members across all disciplines in the organization, such as pharmacy, nursing, anesthesiology, medical directors, security, risk management, compliance, legal, human resources, occupational health, and employee assistance programs. Organizations can consider creating a subset Response Team for initial investigations.
• Having policies for diversion monitoring, investigation, and events.
• Conducting audits to identify and investigate discrepancies sooner rather than later. Early action may minimize risk to patients, employees, and the organization.

 

Monitoring for diversion of non-controlled medications may require a more nuanced strategy. Because these medications aren’t regulated as stringently as their controlled counterparts, they may be more easily diverted. The above recommendations apply for assessing non-controlled diversion, along with a few additional points³⁹

• Identify non-controlled medications at risk for diversion and consider storing them like controls—locked and routinely inventoried.
• Monitor inventory, especially noting excessive restocking and unexpected unavailability.
• If appropriate and/or feasible, utilize diversion analytics software programs to identify access, dispensing, and behavior patterns.
• For facilities with automated dispensing cabinets, review reports for overrides (who and what), canceled transactions, inventories, and discrepancies. Investigate any outliers.
• Establish a confidential reporting system for employees.
• Investigate and respond to all suspicious findings.
• Educate employees about commonly diverted non-controlled medications and the steps provided by the facility to prevent, identify, and report suspected diversion.
• Use staff feedback and facility data to evaluate and adjust the process as needed.

 

Charlie brings the discrepancy to the pharmacy manager, who begins an official internal audit. The audit shows that the claim reversals and inventory adjustments for the missing GLP-1 receptor agonist medications were completed with Hazel’s credentials. Security footage from two closing shifts shows Hazel placing small, boxed items from the refrigerator into her personal bag after other staff had left during times that correspond with the claim reversal.

 

PAUSE AND PONDER: How does reporting differ for controlled versus non-controlled discrepancies? What consequences could one expect for Hazel’s actions?

 

Controlled diversion requires reporting at local, state, and federal levels. Local law enforcement should be contacted, and the appropriate state licensing boards should be notified.^38,40,46 The state health department should be notified if patient risk occurs, such as tampering or product contamination.⁴³ If the diversion occurred after the prescription was filled and dispensed, it should be reported to the state Medicaid agency–even if it was filled using private insurance or cash. Incidents with diversion are often linked to other acts of fraud, waste, or abuse involving Medicaid, and reporting each occurrence may help to identify other activities.⁴⁰

 

Under federal regulations, DEA registrants (such as pharmacies) must notify the appropriate DEA field division office within one business day after discovery of significant loss of a controlled substance, and DEA Form 106 must be filed within 45 days.⁴⁷ Additionally, the FDA Office of Criminal Investigations (FDA-OCI) holds federal jurisdiction and can assist facilities when drug tampering of a controlled substance is involved.³⁸

 

Although controlled diversion carries stricter federal regulations, noncontrolled diversion is unethical, unprofessional, and can lead to significant legal and financial consequences, including license suspension. Incidents of non-controlled diversion usually are addressed by an internal investigation and documentation, state board notification, and local law enforcement notification.⁴⁶ Staff should correct insurance claims if applicable. Notification to the DEA is not required for non-controlled diversion.

 

How is the loss addressed at Charlie’s pharmacy? The pharmacy manager places Hazel on administrative leave and begins an investigation. Law enforcement is contacted regarding suspected internal theft of prescription medications. The compliance and legal departments are notified, the loss is documented, and the affected insurance claims are reviewed.

 

CONCLUSION

Where does this leave Charlie?

 

The next Saturday night, Charlie closes the pharmacy and meets with his new friend, Harry, who also works at the pharmacy.

 

“Well, this has been…” Charlie pauses to find the right words.

 

“Interesting,” volunteers Harry.

 

The two colleagues reflect on the past several weeks. They agree that they have both learned a lot in a short amount of time. They now understand the importance of accurate billing practices and prompt reporting of miscoding errors, and they appreciate that management implemented training to prevent future errors. They are also aware of medications with potential for diversion, along with behavioral red flags that may suggest suspicious activity. Charlie has even volunteered to spearhead a diversion program that encompasses both controlled and non-controlled products, including inventory assessment and staff education.

 

Together, they can look forward to stronger pharmacy practices related to billing accuracy, diversion prevention, and regulatory compliance.

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