The independent pharmacy space has seen a significant uptick in transactional activity over the past few years. Whether driven by retirement, consolidation, or strategic expansion, more pharmacy owners are entering the market—either looking to sell and move on or grow by acquiring additional locations amid reports of pharmacy closures, including chain pharmacies.

As someone who represents independent pharmacies in a wide range of legal matters—from audits and regulatory compliance to litigation and day-to-day counsel—I’ve increasingly been called upon to assist clients on both sides of pharmacy transactions. These deals are high-stakes. Get them right, and you protect your legacy or build a stronger foundation for growth. Get them wrong, and you're left dealing with compliance headaches, PBM issues, and exposure you never anticipated.

Below are a few of the key areas I help clients navigate on both the buy and sell side, and why experienced legal counsel is critical every step of the way.

1. Due Diligence: Don’t Buy a Lawsuit

Whether you're buying a single pharmacy or an entire network, due diligence is not just about confirming inventory or revenue. It's about understanding the risks you're inheriting—both seen and unseen.

On the buyer side, this means digging deep into:

• Pending or past PBM audits and any recoupment obligations
• Open government investigations or Board of Pharmacy disciplinary matters
• Key vendor and wholesaler contracts and any exclusivity clauses
• DEA and state licensure status and history
• PBM contract compliance 
• Employee matters, including any misclassification or labor issues
• Medicare/Medicaid enrollment and compliance status

Due diligence is where many first-time buyers cut corners—and where many deals go sideways. In some cases, I've advised clients to walk away entirely after uncovering major red flags. In others, we've renegotiated price and terms to reflect the real risk. Either way, thorough diligence helps you avoid buying into liability.

2. Structuring the Transaction: Asset Purchase vs. Stock Purchase

Many independent pharmacy deals are structured as asset purchases, which help limit the buyer’s exposure to the seller’s liabilities. But even within an asset deal, the buyer needs to understand what assets are truly being transferred—files, inventory, furniture and fixtures, lease rights, and so on.

It's also important to negotiate file transfers appropriately. In some cases, buyers are only interested in the prescription files, not the full operation. In others, they’re buying everything, but only if the PBM contracts and DEA licenses can be smoothly transitioned through stock purchase. 

I assist clients in making sure the structure matches their goals—and that every asset (and potential liability) is clearly accounted for in the agreement.

3. Change of Ownership (CHOW) Notifications: The Clock Starts Ticking

Closing the deal isn’t the end. In fact, it's just the beginning of a number of post-closing compliance requirements, especially in the pharmacy world, where state and federal regulations require prompt action.

For example:

• DEA must be updated to reflect a change of ownership, or a new registration must be applied for.
• State Boards of Pharmacy often require CHOW filings and may need to approve new ownership before or after closing.
• Medicare and Medicaid enrollment must be updated to reflect the new ownership, and some states require submission of CHOW packets in advance.
• NCPDP profile updates must be made quickly to avoid claims rejections and to ensure continuity of dispensing.

Missing these deadlines can cause major operational delays—or worse, result in fraudulent billing allegations if the new owner continues to dispense under the old credentials.

4. PBM Recredentialing and Network Implications

One of the most overlooked post-acquisition issues involves Pharmacy Benefit Managers (PBMs). After a change of ownership, PBMs generally require recredentialing of the acquiring pharmacy before they will allow claims to continue processing.

Here’s where it gets tricky:

• If the buyer fails to notify PBMs properly and in a timely manner, the PBMs can terminate the existing contracts.
• In worst-case scenarios, I’ve seen PBMs retroactively deny claims processed post-closing, arguing the buyer was never authorized under the old contract.

That's why I work closely with clients to make sure PBM recredentialing packets are submitted before the closing—or as quickly as possible after, depending on the PBM's requirements. Buyers should also understand that PBMs have full discretion to reject recredentialing, especially if the buyer has other pharmacies in the network with audit issues or sanctions. That’s another reason thorough due diligence is essential—not just on the pharmacy being acquired, but on the buyer’s own standing in the PBM ecosystem.

5. Getting the Deal Done Right

Whether you’re an independent owner looking to retire, or a growing operation looking to expand, I can assist you through every step of the process:

• Drafting and negotiating letters of intent (LOIs)
• Managing the diligence process
• Drafting and negotiating asset or stock purchase agreements
• Coordinating regulatory filings and change-of-ownership notifications
• Assisting with PBM recredentialing and network continuity
• Handling any post-closing disputes or cleanup issues

Transactions aren’t just about closing. They’re about protecting your investment and ensuring your ability to operate without interruption.

Conclusion

Pharmacy transactions involve far more than simply negotiating a purchase price. Buyers and sellers alike must navigate a complex web of regulatory, contractual, and operational issues that, if mishandled, can jeopardize the value of the deal or disrupt pharmacy operations altogether. From due diligence and deal structuring to post-closing compliance, including change-of-ownership notifications and PBM recredentialing, these transactions require specialized legal insight grounded in a deep understanding of the pharmacy industry.

With my background representing independent pharmacies and pharmacy stakeholders across the country, I am well-positioned to assist clients on both the sell-side and buy-side. My role is not only to facilitate a smooth transaction, but also to protect your interests, minimize your risk, and ensure you remain compliant throughout the process.

If you are considering buying or selling a pharmacy and want to ensure the deal is structured properly and executed with care, I welcome the opportunity to support you.