Federal enforcement in 2025 delivered a clear message to the prescription drug industry: pharmacy benefit managers (PBMs) and their affiliated pharmacies are now squarely in the federal government’s healthcare fraud enforcement strategy. Regulators no longer view PBMs as passive administrative middlemen. They are treating them as financial gatekeepers whose drug pricing and reimbursement practices directly determine what federal healthcare programs, like Medicare, pay for prescription drugs.
That shift has major implications not only for national chains and PBMs, but also for independent pharmacies and other providers that operate within PBM-controlled networks.
2025 Marked a Turning Point in PBM and Pharmacy Enforcement
In 2025, the Department of Justice (DOJ), together with the Drug Enforcement Administration (DEA) and the Department of Health and Human Services (HHS), announced a $300 million settlement with Walgreens. The government alleged that Walgreens dispensed invalid opioid and controlled-substance prescriptions in violation of the Controlled Substances Act (CSA) and then billed Medicare and other federal programs for those prescriptions in violation of the False Claims Act (FCA).[1]
The DOJ also announced a multi-million-dollar settlement with CVS Pharmacy, resolving allegations that, from 2010 through 2020, it improperly billed Medicare, Medicaid, TRICARE, and other federal programs for insulin pens through premature refills, excess quantities, and falsely under-reported days-of-supply.[2] Independent pharmacies also faced six-figure FCA settlements for improper dispensing practices, signaling that enforcement is not limited to national chains.
At the same time, the Federal Trade Commission (FTC) filed a lawsuit against the nation’s three largest PBMs (Caremark, Express Scripts, and OptumRx), alleging that their pricing and rebate practices artificially inflate drug costs.[3] The DOJ and HHS also announced that drug pricing, arrangements for discounts, rebates, service fees, formulary placement, and price reporting are now priority areas for FCA enforcement.[4]
For pharmacies, the takeaway is simple: the federal government is scrutinizing the entire prescription drug ecosystem, from PBM practices to pharmacy-level dispensing and billing.
What This Means for Independent Pharmacies
Although many recent enforcement actions have focused on national chains and PBMs, the downstream consequences will be felt by independent pharmacy providers. When PBMs come under regulatory scrutiny, they often respond by increasing oversight across their pharmacy networks. That pressure inevitably flows through their pharmacy networks in the form of:
- More aggressive and expansive audits
- Increased documentation and record-keeping demands
- Stricter interpretations of contractual and compliance standards
- Audit findings framed as “fraud, waste, and abuse”
- Faster escalation to payment offsets, recoupments, and network termination, or reporting to state and federal agencies.
In the current environment, PBMs have strong incentives to shift risk. Heightened regulatory scrutiny may encourage PBMs to attribute pricing and reimbursement discrepancies to pharmacy-level conduct rather than PBM-level practices. As a result, what begins as a PBM audit can quickly escalate.
Common PBM allegations (such as documentation gaps, improper drug sourcing, or dispensing outside protocol) may be repurposed as violations of the FCA or CSA. For example, pharmacies facing allegations of inventory shortages have been exposed to FCA liability for billing of medications that were not dispensed. Likewise, pharmacies have faced CSA enforcement for failing to maintain proper controlled substance inventory and documentation.
Independent pharmacies therefore face dual exposure:
(1) commercial exposure from PBM audits, recoupments, and terminations; and
(2) regulatory exposure if those same issues attract the attention of federal or state regulators.
What Independent Pharmacies Should be Doing Now
In today’s enforcement environment, regulatory compliance cannot be treated as a back-office function. Independent pharmacies should, at a minimum:
- Maintain clear, robust policies and procedures at both the federal and state levels, with regular internal audits to ensure compliance.
- Establish clear documentation and record-keeping policies that retain prescription intake records, DUR override notes, claim submission and reversal histories, delivery confirmations, inventory and purchase records, and system access logs for the full audit lookback period and beyond.[5]
- Maintain detailed system audit trails that track when prescriptions are received, entered, reviewed, changed, billed, reversed, resubmitted, dispensed, and delivered, including timestamps, user activity logs, and edit histories.[6]
- Preserve supporting verification records, such as electronic signatures, delivery metadata, and inventory-to-claim linkages, and routinely review these materials for completeness and accuracy before responding to any PBM audit.[7]
- Ensure dispensing and billing practices are compliant with applicable terms and conditions of PBM Provider Manuals and Agreements, along with applicable law.
- Maintain complete and accurate documentation across all aspects of pharmacy operations, including inventory management and controlled substance tracking.
- Treat PBM compliance and audit response as core components of broader regulatory risk management.
How Frier Levitt Can Help
Pharmacies that understand how PBM enforcement and federal enforcement intersect will be best positioned to protect their practices, reimbursements, licensure, and good standing within payor networks. Frier Levitt represents providers nationwide in PBM audits, recoupment disputes, network terminations, and related litigation. We advise pharmacies and other providers on structuring compliance programs designed to withstand PBM scrutiny and government enforcement alike.
If your pharmacy is facing an audit, clawback, termination, or regulatory inquiry, or wants to get ahead of one, Frier Levitt can help. Contact us today to speak with an attorney.
[1] Press Release, U.S. Dep’t of Just., Walgreens Agrees to Pay Up to $350M for Illegally Filling Unlawful Opioid Prescriptions and for Submitting False Claims to the Federal Government (Apr. 21, 2025), https://www.justice.gov/opa/pr/walgreens-agrees-pay-350m-illegally-filling-unlawful-opioid-prescriptions-and-submitting.
[2] Press Release, U.S. Dep’t of Just., U.S. Attorney Announces $37.76 Million Settlement With CVS For Over-Dispensing Insulin Pens To Patients (Dec. 2, 2025), https://www.justice.gov/usao-sdny/pr/us-attorney-announces-3776-million-settlement-cvs-over-dispensing-insulin-pens.
[3] See Caremark Rx, Zinc Health Services, et al., In the Matter of (Insulin), Fed. Trade Commission, https://www.ftc.gov/legal-library/browse/cases-proceedings/221-0114-caremark-rx-zinc-health-services-et-al-matter-insulin (last updated Jan. 30, 2026).
[4] DOJ-HHS False Claims Act Working Group, U.S. Dep’t Health & Hum. Serv. (July 2, 2025), https://www.hhs.gov/press-room/hhs-doj-false-claims-act-working-group.html.
[5] See Harini Bupathi & Andrea Christine Hageman, The Importance of Metadata in PBM Audit Documentation (Frier Levitt, Jan. 16, 2026)
[6] Id.
[7] Id.
