Across Pennsylvania, independent pharmacies are seeing a pronounced increase in inspections and investigations initiated by the Pennsylvania State Board of Pharmacy. These visits—often unannounced—reflect a broader shift in enforcement posture and present a unique set of legal, operational, and business risks for pharmacy operators. Beyond the immediate consequences of a regulatory citation, which typically constitute reportable disciplinary actions to various payors and other State Boards of Pharmacy, a Pharmacy Board action can have a domino effect that jeopardizes a pharmacy’s contracts with Pharmacy Benefit Managers (PBMs), imperils its participation in third-party networks, and threatens long-term viability.

For Pennsylvania pharmacists, the stakes have never been higher, and pharmacists and pharmacy owners must be proactive.

The Increasing Frequency and Intensity of Board Activity

Over the past two years, numerous State Boards of Pharmacy, including the Pennsylvania State Board of Pharmacy, have been actively expanding their investigative and enforcement footprint. Multiple factors are driving this trend. First, the Board is responding to greater scrutiny from state lawmakers and public stakeholders who expect tighter control over drug supply chains, especially after the COVID-19 pandemic and the spike in compounding activity for medications like semaglutide and tirzepatide. Second, the Board's acting on tips from other agencies and payors, including PBMs, which have begun sharing audit findings or flagging pharmacies suspected of purported “fraud, waste, and abuse (FWA).” In many instances, Board investigations now follow in the wake of aggressive PBM audits.

Pennsylvania’s Board inspectors are not just focused on technical errors. Investigators are zeroing in on a range of perceived violations—everything from incomplete documentation of controlled substances and improper storage conditions to lapses in pharmacist-in-charge (PIC) oversight and improper delegation to pharmacy technicians and corresponding ratios. In the compounding space, inspectors are increasingly scrutinizing whether 503A pharmacies are adhering to non-sterile and sterile compounding standards under USP <795> and <797> and whether prescriptions have valid patient-specific orders. Telepharmacy practices, remote processing, and out-of-state fulfillment are also coming under more frequent review.

From Inspection to Investigation: The Regulatory Slippery Slope

An unannounced inspection may seem routine at first. But once the inspector documents potential non-compliance, things can escalate quickly. A pharmacy may receive a letter of concern, a warning, or even a formal notice or pleading to respond to alleged violations. If the matter progresses to formal disciplinary action, the pharmacy could face fines, license probation, mandatory corrective action plans, or, in extreme cases, suspension or revocation.

Any Board disciplinary action—even those that may be perceived as minor—is reportable. Pennsylvania’s disciplinary actions are publicly searchable and also shared across state lines through national databases like NABP’s Disciplinary Clearinghouse. This public footprint is actively monitored by PBMs and can become a red flag to PBMs, triggering greater scrutiny.

Worse still, most PBM provider manuals and contracts contain broad provisions requiring pharmacies to notify the PBM of any regulatory or disciplinary action within a set number of days. PBMs may treat a failure to report as a breach of contract. Even when reported in a timely manner, some PBMs will initiate their own investigations or terminate the pharmacy’s contract based on the Board’s findings—regardless of whether the pharmacy disputes the allegations.

PBM Fallout: How a Regulatory Issue Can Trigger Business Termination

The relationship between state boards and PBMs is evolving. While Boards of Pharmacy are tasked with protecting public health and safety through licensure and enforcement, PBMs act as payors and claims adjudicators. Historically, these two entities operated in separate lanes. That is no longer the case.

PBMs now use Board actions—especially disciplinary outcomes—as part of their network integrity checks. If a pharmacy’s license is suspended, terminated, or even placed on probation, that pharmacy may find itself immediately terminated from PBM networks like CVS Caremark, Express Scripts, or OptumRx. Termination from one major PBM often triggers cascading terminations from others, especially if the PBMs apply their “cross-termination” policies based on “common ownership” or “affiliation.” In other words, a regulatory misstep affecting one pharmacy in a group can put the entire network at risk. Even more concerning, PBMs will aggressively interpret the terms “affiliation” or “association” to capture even attenuated relationships to other pharmacies casting a wide net of potential terminations.

The financial implications are severe. A pharmacy excluded from one or more PBM networks may see a dramatic drop in prescription volume. Once flagged, it may be difficult—if not impossible—to re-enter the network, especially if the PBM maintains a zero-tolerance policy. With the highly consolidated PBM marketplace, loss of one single PBM contract can be catastrophic for pharmacies.

Compliance is No Longer Optional—It’s a Business Imperative

The reality is simple: in today’s environment, compliance with Pennsylvania pharmacy law is not just a legal responsibility—it’s a business necessity. With the Board of Pharmacy increasing its oversight, and PBMs leveraging that oversight to make network decisions, pharmacy owners must view regulatory compliance as critical to business continuity.

Pharmacies must proactively shore up their internal systems, ensuring that policies, procedures, and day-to-day practices align with the Pennsylvania Pharmacy Act and the Board’s regulations. For example, pharmacies must ensure their pharmacist and pharmacy technician licenses and registration records, drug inventories, patient profiles, and compounding documentation are complete and up to date. If the pharmacy utilizes remote order entry or performs compounding, it must ensure that all applicable USP standards and prescriber-patient-pharmacist relationships are strictly observed.

Staff training is another vital component. The pharmacist-in-charge should regularly conduct internal compliance reviews, mock inspections, and trainings. Pharmacy technicians and support staff must understand their roles and limitations under Pennsylvania law. Too often, enforcement actions stem not from intentional wrongdoing, but from training gaps and administrative oversights. This is a common misperception of legal matters related to Board of Pharmacy matters.

In the event that an inspection does occur, the pharmacy must treat it with seriousness and professionalism. Inspectors should be cooperated with, but the pharmacy should carefully document all aspects of the visit and be vigilant. Any follow-up correspondence from the Board should be reviewed by counsel before responding. Pharmacies should never ignore or delay their responses to Board inquiries or subpoenas.

Legal Counsel is Critical to Navigating the Storm of Inspections

In the event of a potential disciplinary matter, engaging legal counsel early can make all the difference. An experienced pharmacy attorney can help craft the appropriate responses to the Board, engage in discussions with prosecutors at the Pennsylvania Department of State’s Office of Legal Counsel, and, if needed, defend the matter before the State Board at a formal hearing. In fact, it is recommended that, where possible, qualified legal counsel attend Board inspections and other meetings. 

Counsel can also advise on downstream PBM implications. If a PBM demands an explanation for a regulatory action, the pharmacy must be careful in how it frames its narrative. Too much information may admit liability; too little may be seen as evasive. The goal is to mitigate risk on both the regulatory and commercial fronts.

Final Thoughts: Vigilance and Preparedness Are the Best Defense

The uptick in Pennsylvania Board of Pharmacy inspections is not a passing phase—it is a sustained shift in regulatory posture. As pharmacy practices evolve and become more complex, regulators are responding with more rigorous oversight. Pharmacies must be prepared to meet this challenge.

A single Board citation can have ripple effects that reach far beyond Harrisburg. With so much at stake—including payor contracts, network access, and licensure—pharmacies must treat inspections and investigations with the gravity they deserve. That means acting swiftly, involving counsel early, documenting meticulously, and investing in compliance as an ongoing discipline.

In the end, vigilance is not just about avoiding penalties. It’s about protecting the business, preserving patient access, and sustaining the trust that pharmacies work hard to build—both with regulators and with the payors who rely on them.