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Some of the biggest customers of Philidor Rx, the consolidated specialty pharmacy tucked inside embattled drug giant Valeant Pharmaceuticals, are seeing red flags. Two of the nation’s biggest pharmacy benefits managers, CVS Health and Express Scripts, both said on Thursday they are cutting ties with Philidor Rx after finding the noncompliance with provider agreements…The terminations add a new headache to Valeant Pharmaceuticals as it tries to recover from an onslaught of scrutiny from lawmakers, regulators and investors into its business practices.

Expecting a flurry of legislative activity in Congress in the weeks ahead, and a highly aggressive 2016 election season, the National Association of Chain Drug Stores is making a major push for its NACDS RxIMPACT Pharmacy Advocates group on LinkedIn…On Wednesday, the group had 934 members, with a goal to reach 2,500 by Nov. 3. The purpose of the group is to connect grassroots pharmacy advocates from across the country, and grow its ranks to be poised for action when critical issues arise in Congress, the White House or in the states…“Engagement by pharmacy advocates breathes life into the policy making process. As a constituent, when you meld care stories with issue positions you really personify the impact of legislation. That type of powerful communication can be a game-changer for pharmacy”...

Novartis agreed to pay about $390 million to wrap up federal kickback claims before the $3.3 billion case went to trial. The Justice Department and a number of U.S. states had sought up to $3.4 billion in damages in the case, which zeroed in on the Swiss drugmaker's relationships with specialty pharmacies…settlement, together with other one-time charges, knocked down Novartis' third-quarter net income, which declined to $1.8 billion…Novartis offered special deals to pharmacies to boost prescriptions of its transplant drug Myfortic (mycophenolic acid) in a head-to-head competition with Roche's CellCept (mycophenolate mofetil). The drugmaker set up another scheme to increase refills of its iron chelation drug Exjade (deferasirox)…

Nothing sends a shock of fear through a hospital C-suite quite like the word audit. And the second phase of HIPAA audits is slated to being in early 2016…Those CIOs, CISOs, CEOs, General Counsel and privacy officers unfortunate enough to receive notification of an impending HIPAA audit from the Health and Human Services Department's Office for Civil Rights will invariably feel that pressure…While security is a crucial aspect to any health organization, it's another thing entirely to plan accordingly for an OCR audit.

…tips for healthcare organizations potentially facing an audit:

1. OCR is moving forward with HIPAA compliance audit program
2. Compliance audits expected to be in hundreds; not thousands
3. OCR has been transparent on topics it will target
4. Prepare now in case your organization is selected
5. Educate staff and leadership on how your organization is preparing for an OCR audit

OCR will look into security, privacy and breach notification rules to analyze risk, safeguards and implementations, especially those associated with electronic health information and device encryption.

Wow. Walgreens Boots Alliance is acquiring Rite Aid. As I told The New York Times: “The pharmacy consolidation endgame has begun.”…Given the consumer angle, the deal has been widely covered.

Here are two significant news reports that outline the transaction’s high points:

• Walgreens to Buy Rite Aid for $9.4 Billion in The New York Times
• Walgreens, Rite Aid Unite to Create Drugstore Giant in The Wall Street Journal

..here are the surprisingly skimpy official company documents:

• Press release…
• Fiscal year end 2015 and 4Q earnings conference call (See page 19.)

The deal was not a total surprise. In April, I asked Will Walgreens Boots Alliance Buy Rite Aid?

1. WBA is doubling down on retail pharmacy.
2. Surprisingly, WBA is claiming that mega-scale with payers did not drive the deal.
3. Envision Rx is a learning opportunity, not a strategic driver.
4. The FTC will approve the deal.
5. The deal adds even more complexity and opacity to WBA.
6. It’s good for AmerisourceBergen, but horrible for McKesson.
7. Wholesaler outsourcing will make integration easier.
8. WBA will (probably) proceed with its ABC warrants.
9. All hail our global channels overlord.
10. Big deals beget more deals.

Kno2…announced that Surescripts had selected the company’s platform to connect health technology vendors and their users, allowing them to exchange information through Surescripts’ Clinical Direct Messaging…Kno2's platform makes any documents interoperable, allowing clinical documents move between different health care professionals and vendors. Additionally, the company makes APIs available to vendors who want to connect to Surescripts’ network, which can reduce costs associated with implementing direct messaging and getting Electronic Health Record certification. Kno2 also streamlines the process of verifying identities for providers, which takes that responsibility off of vendors.

Rite Aid had a market value of about $6.4 billion before news reports of merger talks...Walgreens Boots Allianceis near a deal to buy Rite Aid....potentially uniting two of the country’s biggest drugstore chains…meaning a takeover could be worth more than $8 billion after a likely premium from Walgreens. Rite Aid also has $7.4 billion of debt…would create a new pharmacy giant with heightened influence with drug makers, pharmacy benefit managers and others in the health care industry.

Mischaracterization of Specialty Pharmacies: NASP (National Association of Specialty Pharmacy) Corrects the Record….published recently in the New York Times mischaracterize specialty pharmacies. The fact that a company calls itself a specialty pharmacy does not make it so. Simply stated, charging high prices for medications does not define a specialty pharmacy…A specialty pharmacy is a state-licensed pharmacy that solely or largely provides only medications for people with serious health conditions such as cancer, hepatitis, rheumatoid arthritis, HIV/AIDs, multiple sclerosis, organ transplantation, or bleeding disorders…specialty pharmacies are often accredited by independent third parties such as URAC (Utilization Review Accreditation Commission) or the Accreditation Commission for Health Care…Specialty pharmacies provide medications and related high touch health care services to seriously ill people who need complex medications, assistance in using these medications properly and not infrequently, assistance with reimbursement. Specialty medications have a complex profile, often requiring intensive patient management as well as special handling and administration assistance…

Blair Green Thielemier, PharmD…specializes in marketing and implementing new clinical services, such as Medication Therapy Management, in community retail pharmacies. Blair helps to identify opportunities for clinical services, increase workflow efficiency and train pharmacy staff members to offer these services in a sustainable, systematized way…Part D Enhanced Medication Therapy Management model will test methods of optimizing medication use and improving care coordination among Medicare Part D beneficiaries in hopes of finding the most effective ways to attain the objectives of MTM programs. CMS is granting basic, stand-alone prescription drug plans the flexibility to design enhanced MTM programs that include interventions beyond the traditional approach. (podcast 29:19)

...Valeant Pharmaceuticals finally explained its complex interactions with Philidor RX Services, a so-called “specialty pharmacy” that has a previously-undisclosed financial relationship with Valeant...Valeant has been labeled the “Enron of the pharmaceutical industry,” although I don’t know if any of the alleged shenanigans are true…the controversy has tarred the entire specialty pharmacy industry along with manufacturers’ legitimate specialty pharmacy relationships…Philidor RX is not a specialty pharmacy. I also suggest what the Valeant-Philidor relationship could mean for payer surveillance of manufacturers’ copay offset programs…I believe (hope?) that over time, everyone will recognize the differences between a true specialty pharmacy and a company such as Philidor...expect greater scrutiny of manufacturers’ specialty channel strategies. Smaller independent specialty pharmacies should also expect greater oversight, as manufacturers and payers work to validate the business operations of their trading partners.