AH023 - Compliance Matters, with Heidi McKinnon, PharmD, CHC

June 21, 2024

Capital Rx

In this episode of the Astonishing Healthcare podcast, Capital Rx's Head of Compliance, Heidi McKinnon, PharmD, CHC, joins Justin Venneri for a discussion about a few of the critical issues she's tracking today that are either currently impacting or could impact the pharmacy benefits industry. With over 20 years of experience, she expertly navigates topics like the role of AI in detecting fraud, risks associated with compounding GLP-1 medications, and the nuances of digital pharmacy operations (vs. retail or mail order). Heidi underscores the need for a sound compliance framework to support business growth and meet evolving regulatory requirements. She also explains the importance of relaying the "compliance is a good thing" message from the top down. Listen below or on Apple or Spotify!


Lightly edited for clarity.

[00:27] Justin Venneri: Hello and thank you for joining us for this episode of the Astonishing Healthcare podcast. This is Justin Venneri, your host and Director of Communications at Capital Rx. And today I have our new head of compliance, Heidi McKinnon, with me, and we're going to be talking about what's on her radar now. Heidi, you're a pharmacist and have spent time in various settings. Tell us a bit about your background and what led you here to Capital Rx.

Heidi McKinnon: Hi, thanks for having me. I am a pharmacist, yes, by profession. I have been in the pharmacy profession for over 20 years. I started off as a retail pharmacist and worked at various retail settings before ending up having my own temp agency. And I had 65 pharmacists working for me at one point in the northwest Washington area. From there, the recession hit, and nobody was using temp pharmacists at that point. So, I went back into retail pharmacy, working at the largest Costco pharmacy in the country, across from their headquarters. But once upon a time, I always wanted to be a police officer. And so, when there was an opening with the board of pharmacy, I applied and I became an investigator and inspector for the Washington State Board of Pharmacy.  

And that's where I really got to explore compliance, understanding rules and regulations, the difference between a law and a rule, and learning just every facet around pharmacy compliance that one could touch on. Doing that for so long, even after going back into retail land, I always carried it with me and I became the go to person for other pharmacists that were working and asking questions.  

And in the last five years, I really focused on digital pharmacy as where I worked and learned different aspects of startup pharmacy or where the compliance touches become very complex. And so, I was very fortunate in that AJ actually found me on LinkedIn and wanted to know if I'd be interested in talking to some leaders here at Capital Rx. And now I'm the Head of Compliance here and couldn't be happier.

[02:47] Justin Venneri: The rest is history, right, as we write it. And the power of LinkedIn.

Heidi McKinnon: Right?

[02:54] Justin Venneri: So, we were talking about topics just to highlight for our internal newsletter the other day. And then we got into some of the back and forth about AI network contracting, GLP-1s, of course. And I was like, okay, let's just record. And so, as the Head of Compliance, I know you've got a lot on your radar. I just rattled off a few quick things. Where do you want to start off with your list of, you know, quote unquote, top pharmacy benefits issues to watch, compliance edition?

Heidi McKinnon: Well, for me, and from my perspective, fraud, wasting abuse is top of mind, especially for the number of claims that are adjudicated and the number of ways in which those with nefarious intent can manipulate the system.  

If you're watching OIG or Department of Justice notifications as much as I do, then you will see how many bad guys there are out there, really, and how they will take advantage of the system. And so, I get excited about AI -- in the use case, where AI can screen, we can develop the parameters, we can look for these claims and look at specifically what we know has already occurred, and is it occurring in our claims? And the other thing I have to worry about now is those with ill intent using AI to also manipulate the system,  and how do we get ahead of it? Those are things that I think about a lot.

[04:25] Justin Venneri: Okay. And then moving on. I think one of the things that's interesting is GLP-1s and companies compound versions of these medications. Can you share your thoughts on that?

Heidi McKinnon: Yeah. Oh, GLP-1s, such a hot topic now. And it really has been probably for the last few years, even while I was at Amazon Pharmacy overseeing our PBM compliance, GLP-1s were, it was like a tidal wave of claims coming through and then following closely behind PBM audits. Right, for those same GLP-1s. And it is complex, and it is in high demand.  

And so, the regulations state, the FDA says it's okay to compound a drug that's commercially available if it's unavailable in the market. The challenge is you have these GLP-1s that are exactly the same drug, but with two different marketing parameters. One is for diabetes, one is for obesity -- same drug, but slightly used differently. And so, these compounding pharmacies, although technically have the ability to do so, what's going to happen when it's back in the market? Right? And [Eli] Lilly is able to keep up with the demand, and these compounding pharmacies are not going to want to stop. These are cash driven sales. And in addition, Novo Nordisk is suing many of these compounding pharmacies because they are illegally touting themselves as creating the generic of these branded medications, which is not at all acceptable.  

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My biggest concern, having been an investigator during the time of the New England compounding center tragedy that happened in 2012, where 64 people died and over 750 people were sickened with meningitis, fungal meningitis. And I'm not saying, and I would never say, that compounding pharmacies in general, especially those doing sterile compounding, are dangerous. But I am saying where you have a spike in demand and there is revenue to be made, you are going to have those that are five star, and then you are going to have those that have no business performing compounding. And it's just the truth of the situation.  

So, my concern is that at some point there's going to be a tragedy, and I hope that doesn't happen.

[06:55] Justin Venneri: But yeah, it seems like with ever expanding indications, the possibility of a bad batch rises. Right? Is it just math?

Heidi McKinnon: It's just math.

[07:05] Justin Venneri: Okay. And then you mentioned digital pharmacies, and given your background, I understand, curious, what are your thoughts on the trend of quote unquote digital pharmacy or that a lot of pharmacies offer direct to consumer shipping as is? Can you share just an update there or what specifically you're watching or is on your radar related to digital pharmacies?

Heidi McKinnon: For me, I think digital pharmacy is really a niche in that they're somewhere in between retail and mail order. They have the allowance that you could walk in and pick up your prescription. Many of them do. They might do home delivery, same day delivery, and they might ship across all 50 states. And I think it's a great service for patients to be able to just use your app or go online and order your prescription and have it delivered to you within 24 to 48 hours, potentially.  

I think the challenges with digital pharmacy is this ever-evolving state regulatory framework, because it used to just be, oh, we had 3-4 mail order pharmacies across the country, and then states started creating these requirements -- Oh, you're going to ship into our state and need to have a non-resident license. Oh, you're going to ship into our state and have a non-resident license, now you need to have a pharmacist on staff that also has a license in our state so that that person takes ownership if something goes wrong.  

But as more and more states adopt that, now you have what -- a pharmacist that has all 50 state licenses? What happens if that pharmacist leaves? Now you have to have layers of backup on the in case. And then reimbursements don't really match what you're doing as a business through the PBM.  

So, if you are a pharmacy and you are not a cash only pharmacy, you are reliant on your payments from the PBMs. Most people have insurance, and so you're going to accept the insurance. The challenge with that is a retail pharmacy -- and if you're licensed as a retail pharmacy, which has the best reimbursement -- it's an expectation that everybody is going to come pick up their prescription. There's no expectation of additional packaging; there's no expectation of paying for shipping; there's no expectation of paying for a delivery driver.  

And so, it puts the pharmacy in this awkward situation that I'm not a retail, really, and I'm not a mail order, but the PBM is going to pay me based on what my license is. And the challenge with that is speaking with the Director of Innovation at NEBP, it's not a state problem. Right? That's a pharmacist to PBM contract problem. And so, it's something that I think eventually is going to have to change if we want to continue seeing digital pharmacy as a platform.

[10:06] Justin Venneri: Interesting. That's tricky. I mean, you have one pharmacist in every state, or you have, like you said, one pharmacist with all 50 licenses. I don't know how you manage that. And then you kind of get stuck in a more one reimbursement model where not everybody is gonna walk in the door and pick up the prescription. Right?

Heidi McKinnon: Yeah. And that's the whole purpose of a digital pharmacy, is that, the concept is that we are going to bring the medication to you.

[10:31] Justin Venneri: Makes sense.

Heidi McKinnon: That costs money.

[10:32] Justin Venneri: And then, you know, just thinking about AI, this compounding issue, digital pharmacies, what would you say are a couple of, or a few, suggestions? You know how to encourage compliance in an increasingly complex, evolving world, or trying to adapt to consumer behavior and changing economic or profit models. So how do you encourage compliance? And how do you have sort of compliance add a return on investment, or an ROI, on the compliance?

Heidi McKinnon: Yeah. The constant challenge is ensuring that your employees -- because it has to start from the top down to push this idea that compliance is a good thing. Compliance is what the business wants. Compliance is what allows the business to grow and move faster. Because when you have that framework and you have that foundation and you know you're doing things right, then you're okay. You can go as fast as you want. But until that is built, and it's ingrained in every person, it can be challenging. Because if you want to launch something that's new and innovative, but you haven't pulled compliance into the conversation, and then compliance comes in either what have we just done? Or at the very end, after everything, we have all the pieces in place and we're ready to launch. Let's make sure compliance is okay with it. And compliance says then actually, so we have this rule and this regulation, and then you've wasted all that time and money. Right?  

So compliance should be part of the conversations whenever something new and innovative is going to be discussed, just to make sure. And it's never so that compliance is the “no” right. That's why some people don't like to come to compliance first. It's like, oh, compliance is going to tell us we can't do this. It is better to have compliance be part of the conversation and think through it with the business than, you know, risk. What's going to happen if you launch anyway, and compliance wasn't involved? And now a regulatory agency has caught wind of whatever this new and innovative launch is that you just had. And then, right, you're going to end up paying a lot more.

[12:48] Justin Venneri: And as you're kind of talking through that, it occurred to me that maybe it applies to PBMs – we're a PBM -- but it's also pharmacy other supply chain. I mean, it's kind of an interesting concept that maybe a lot of leaders don't think about because maybe there's a perception that it adds friction and is going to cause delays, but it sounds like it's the opposite.

Heidi McKinnon: Exactly. And that's really where, you know, I try to educate versus dictate. I say, let me work with you. Let's try to think outside the box. Let's make sure that we're doing it correctly so that it's successful and low risk.  

You can never run a business with zero risk. Your business would not be able to grow. There's always going to be some sort of risk. And my goal is always to make sure that it's the lowest risk possible. You try zero, but zero is tough.

[13:38] Justin Venneri: Absolutes are tough. Okay, so thanks for that. And here we are at the end. And what I ask everybody and have asked everybody so far is the name of the podcast. So, what's the most astonishing thing you've seen that you can share, compliantly, of course. Good, bad, funny, just a good story would be great to hear over your career. And, you know, as it relates to the discussion topics today.

Heidi McKinnon: There's always one that stands out. So, we had two inspectors go to this long-term care pharmacy. It was an independent long-term care pharmacy, and we're doing our inspections and we're definitely seeing some red flags that we had some concerns about. The other inspector had just recently started, and so we kind of worked in tandem where he was just like, oh, I'm just a newbie. I, you know, I'm not quite sure what I'm doing here. And so, he kind of kept this owner preoccupied while I was still, like, going and asking questions through the staff.  

And we circled back with the owner, and I was like, so is there, you know, do you ever have any challenges with, like, your delivery drivers? And he's like, no, I don't. I don't have problems with my delivery drivers. And I was like, really? Like, never. And he's like, well, the last problem I had with a delivery driver, they ended up in the rose garden. I was like, I love roses.

[14:59] Justin Venneri: Oh, boy.

Heidi McKinnon: And we went in there, you know, with some trepidation. This particular long term care pharmacy, one of the pharmacists had ended up not alive in their front yard.

[15:11] Justin Venneri: That’s not good. I was not expecting that.

Heidi McKinnon: So, when you say, you know, pharmacy is the safe, most trusted profession, there are some out there.

[15:25] Justin Venneri: Okay. That's amazing. Okay. Well, Heidi, thanks so much for joining me today. Hopefully we can make this recurring. You know, we'll figure out doing an annual or some annual compliance things, you know, hot topics, things to watch, and we'll look forward to speaking with you again.

Heidi McKinnon: Thanks so much, Justin.

If you would like to learn more about Capital Rx’s full-service PBM or PBA solutions, including our clinical programs, CLICK HERE to get in touch with our team.

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