Pharmacy Benefit Managers (PBMs) are sharpening their audit strategies in 2025, and the stakes have never been higher. From increased scrutiny of third-party relationships to more aggressive investigations, today’s audit landscape demands operational transparency, meticulous documentation, and proactive compliance at every level. Pharmacies must be prepared to defend their practices and protect their network access.
In our recent webinar, Frier Levitt Partner Harini Bupathi provided an in-depth look at the evolving PBM audit environment, offering critical insights into the latest audit trends, common triggers, and best practices for pharmacy protection. Drawing on years of experience representing independent, retail, and specialty pharmacies nationwide, Harini outlined actionable strategies that pharmacy owners and staff can implement to reduce risk and improve audit readiness.
In this article, we break down the key themes and takeaways from the webinar and explore what your pharmacy can do now to stay ahead of PBM audits in 2025, especially as PBMs often review pharmacies and their network performance at the end of the year.
PBM Audit vs. Investigation: What’s the Difference?
Understanding the evolving PBM audit landscape and that all PBM reviews are not the same is crucial. PBM reviews come in two primary forms: audits and investigations. Audits are typically routine or planned and may be covered by State Fair Audit laws, while investigations are initiated based on suspected fraud, waste, or abuse (FWA) and carry fewer protections for pharmacies. These investigations often come with short deadlines, broader documentation requests, and increased risk of penalties, including network termination.
Key Insight: PBMs are increasingly categorizing their reviews as investigations, likely to bypass Fair Audit laws and increase their authority over audit outcomes.
2025 PBM Audit Triggers: What Will Get You Flagged
Audits and investigations are often driven by data analytics that identify outliers in prescription volume, billing patterns, or geographic patient/prescriber connections. For example, some triggers could include a sudden increase in claims volume or in the billing of high-cost medication, dispensing prescription written by non-local prescribers, referrals from government agencies, etc.
Act Now: If your pharmacy exhibits any of these patterns, you may face an increased risk of audit or investigation. Pharmacies should regularly review claims data to identify any outlier behavior and consider reviewing their practices to ensure they are consistent with what PBMs require pursuant to their Provider Manuals and Agreements.
Most Common and Costly Audit Discrepancies
PBMs frequently identify the following issues in pharmacy audits. These discrepancies often result in recoupments, terminations, or referrals to state boards:
- Inventory Reconciliation Shortages
PBMs match purchase data against dispensing records. If purchase volumes don’t align with what was billed even due to timing issues or missing records, PBMs may seek reimbursement for the difference. Shortages also result when purchases are made through unapproved or unlicensed wholesalers, pharmacies fail to report bulk purchases, submit the wrong NDC, etc.
Act Now: Pharmacies should continue to review their obligations under a PBM’s Provider Manual to make sure their purchasing is consistent. They should also maintain a comprehensive record of all wholesalers (primary, secondary, marketplace, other pharmacies, etc.) and ensure any bulk purchases are disclosed in advance when required.
- Co-Pay Collection Failures
PBMs continue to require proof that co-pays were collected. This could require pharmacies to provide merchant processor reports, bank deposits for cash payments, as well as signed financial hardship policies. In fact, some PBMs even require pharmacies to submit copies of their copayment and financial hardship policies during an audit.
Act Now: Pharmacies should review their current practices, ensure they are memorialized, and importantly, maintain sufficient documentation to demonstrate proof of copayment from their patients.
- Patient and Prescriber Denials
In the course of an audit or an investigation, PBMs may contact patients or prescribers to confirm prescriptions were requested, received, and dispensed appropriately. If either the patient or the prescriber denies the accuracy of any detail of a prescription, and the pharmacy lacks documentation, the claim may be flagged and subject to chargeback.
Act Now: Pharmacies should always document patient consent and prescriber communications, especially for changes or refills. In addition, pharmacies should maintain detailed delivery confirmations, call logs, etc., particularly as required under the terms of their PBM Provider Agreements and Manuals.
Third-Party Vendor Risk: A Growing PBM Concern
PBMs are cracking down on pharmacies that have unauthorized third-party vendors that submit “test claims” without prescriptions, access reimbursement data, and interface with your pharmacy systems using shared credentials. These “claims phishing” practices are viewed as unauthorized access to confidential data and can result in significant penalties or lead to immediate network termination.
Act Now: If pharmacies have vendors that handle claims, benefit verification, or data access, they should review their PBM Provider Agreements and Manuals, along with any vendor agreements, immediately.
Mailing Restrictions Post-Pandemic
Since the end of the COVID-19 public health emergency, many PBMs have reinstated mailing restrictions for retail pharmacies. Some limit mailing to a certain mile radius, others cap the volume of claims that can be mailed, and some prohibit it entirely.
Act Now: Pharmacies, especially those who may consider themselves as a “specialty pharmacy” while still under a retail agreement, should review their PBM contracts and manuals to determine if mailing is allowed. Where mailing is permitted, pharmacies must understand the limits and keep sufficient delivery records to support compliance. Pharmacies that violate terms related to mailing can be subject to chargebacks, Cease and Desist letters, or even contract termination.
Manufacturer Oversight
Pharmaceutical manufacturers are now reviewing pharmacy purchasing data to detect mismatches between what’s billed and what’s bought. Recent examples include AstraZeneca reviewing pharmacies that billed for Farxiga while purchasing minimal quantities, suggesting that pharmacies were purchasing generic forms while dispensing the brand.
Act Now: While these notices may not carry legal weight, they can escalate into PBM audits or board investigations. Pharmacies should track product sourcing and ensure dispensing practices match billed claims. If you are contacted by a manufacturer, evaluate whether and how to respond, ideally with legal guidance.
Appealing PBM Audit Results
Pharmacies should not assume that “final audit results” are truly final. Many PBMs offer dispute resolution options through their provider manuals, and legal counsel can often escalate appeals, even after an audit appears closed. Importantly, several states have Fair Audit Laws that allow for a further appeal of final results. Some states also have limitations on the application of “audit fees,” which are additional, percentage-based fees that pharmacies incur as part of an audit in addition to any attempted requests for payment.
Key Insight: Consult with experienced legal counsel before accepting audit results. Pharmacies may be able to reduce discrepancies or reverse terminations through strategic appeals.
Prepare Now to Protect Your Pharmacy Later
The 2025 PBM audit environment is more data-driven, aggressive, and compliance-focused than ever before. Pharmacies must take a proactive approach to audit readiness, starting with strong documentation, comprehensive policies, vendor oversight, and legal awareness.
By investing in internal audits, staying current on PBM requirements, and keeping compliance at the center of daily operations, pharmacies can reduce their risk, preserve their network access, and continue to deliver vital care to their patients.
How Frier Levitt Can Help
If you need assistance navigating an audit or improving your compliance posture, contact Frier Levitt. We support pharmacies in navigating, responding to, and appealing PBM audits and investigations. Whether you’re currently facing a recoupment or looking to proactively strengthen your compliance strategy, our team of pharmacy-focused legal counsel, including clinician-attorneys, is here to help protect your business and preserve your network participation.
Watch our latest webinar: “Navigating PBM Audits in 2025: Key Trends, Triggers, and Protection Strategies for Pharmacies” where we dive deeper into PBM audit trends, triggers, and best practices.
Download our 2025 PBM Audit Checklist to stay ahead of regulatory scrutiny.
