In a recent victory, Frier Levitt successfully reversed 100% of audit findings issued by a major PBM against a Texas-based pharmacy. During the audit, the PBM heavily scrutinized the pharmacy’s drug product inventory records, alleging shortages in comparison to billed products versus purchased products . With Frier Levitt’s guidance, the pharmacy collected and submitted purchase reports and inventory records, constructing a robust appeal response highlighting the PBM’s violation of applicable state law and the PBM’s deceitful conduct. In response to the appeal, the PBM reversed all alleged shortages, including 100% of the amount at issue.
PBM Audits and Inventory Records
PBMs utilize routine audits as a tool to seek unwarranted recoupment funds from their pharmacy providers. One of the several discrepancy types most often issued to pharmacies relates to drug inventory shortages. These audits involve scrutinizing claims billed to the PBM by the pharmacy and cross referencing them with purchase records sent directly to the PBM by the wholesalers. However, PBMs create additional obstacles in allowing pharmacies to justify purchases made by implementing unrealistic standards. Specifically, Frier Levitt has experienced PBMs refusing to accept purchase records from certain wholesalers and purchase records outside the audit period, usually, one year. Therefore, pharmacies must be diligent in their records keeping policies and procedures as well as ensure they are aware requirements that are in the fine print of the provider agreements and manuals.
Additionally, it is not only important for pharmacies to have broad and robust policies and procedures, but they must also be comprehensive to reflect how different PBMs maintain differing expectations. PBMs may differ on the wholesalers they recognize as authorized versus unauthorized. Purchases from a properly accredited wholesaler may be the root cause of a discrepancy in an audit by one PBM but accepted entirely by another. Frier Levitt is well versed in appealing PBM audit findings and crafting compelling arguments when contesting adverse findings.
Finally, when faced with discrepancies and associated recoupment amounts, pharmacies must always be diligent in appealing the findings pursuant to the contractual appeal process outlined in their agreements and PBM Manuals to combat any and all audit findings, no matter how insignificant the recoupment amount may see. Failure to contest any amount of discrepant audit findings could lead to a pharmacy’s termination from a PBM network later down the road. Frier Levitt has identified such patterns where PBMs track each pharmacy’s audit history and rely on past audit results to justify terminating an otherwise compliant pharmacy. Thus, even though smaller audit amounts may not seem “worth” disputing, failure to do so may serve as the basis for severe PBM sanctions in the future, including, but not limited to, network termination. Frier Levitt emphasizes the importance of retaining legal representation and taking prompt action by pharmacies to avoid significant economic and reputational harm as well as ensure continued services to their patients.
How Frier Levitt Can Help
Regardless of the size of your pharmacy or the amount at stake, Frier Levitt is ready and able to assist you in challenging PBM abuse of your pharmacy. Our life sciences attorneys are prepared to provide guidance as your pharmacy prepares for audits as well as take an aggressive approach to fight for your rights following a PBM audit. If you have questions or need help fighting adverse PBM actions, contact us to speak to an attorney.
