As this year winds down, New Jersey pharmacies face increased scrutiny from Pharmacy Benefit Managers (PBMs) through intensified audits and Fraud, Waste, and Abuse (FWA) investigations. Understanding how these reviews work and how to respond has never been more important. During a recent webinar for the New Jersey Pharmacists Association, Frier Levitt attorneys Harini Bupathi and Benjamin Youssef outlined the most pressing audit and network compliance trends that pharmacies should expect as they move into 2026. Their guidance highlights practical steps pharmacy owners, pharmacists in charge, and compliance professionals can take now to reduce risk and strengthen their operational posture.
Trends Driving Audit Findings and PBM Terminations
With proactive planning and a clear understanding of PBM policies, pharmacies can mitigate these risks. Here’s a closer look at the most common “red flags” pharmacies should be aware of, along with strategies for navigating them.
- Inventory Shortages
Inventory shortages remain the most common and most significant issue identified during audits. PBMs compare total units purchased during the audit period with total units billed and dispensed. Problems often arise not because inventory was lacking, but because PBMs refuse to accept purchases outside their narrow lookback windows or purchases from wholesalers they do not recognize.
- Copay Collection
PBMs continue to scrutinize proof that pharmacies collected required copays at the point of sale. Receipts, merchant statements, and deposit logs must align with claims billing records. Financial hardship policies must be documented, consistently applied, and supported with clear eligibility criteria. PBMs also reject copay collection performed after the audit was initiated, regarding it as reactive rather than compliant.
- Patient and Prescriber Denials
Even when pharmacies maintain complete documentation, PBMs may still cite denials from patients or prescribers who do not recall authorizing or receiving a prescription. These denials may lead to the rejection of signature logs or delivery records. Pharmacies should maintain detailed contemporaneous notes of patient communications and ensure delivery and receipt documentation is complete.
- Prior Authorization Practices
PBMs are increasingly focused on any involvement pharmacies may have in the prior authorization process. Improper submission assistance or unauthorized communication with payors or prescribers may be raised as potential fraud, waste, or abuse concerns.
Operational Pitfalls That Increase Termination Risk
Pharmacies should recognize that audit results often compound over time. Even small discrepancies can produce significant consequences when they appear repeatedly in subsequent audits. Patterns such as recurring NDC billing errors, continued mailing after receiving a cease-and-desist notice, or repeated shortcomings in copay documentation are frequently viewed by PBMs as evidence of ongoing noncompliance. When these issues persist, PBMs are far more likely to pursue network termination or other disciplinary action, regardless of the dollar value associated with the findings.
Proactive Measures to Strengthen Audit Readiness
A strong compliance posture requires a proactive rather than reactive approach. Pharmacies should maintain complete purchase records from all wholesalers, including proof of payment and independent documentation, and conduct routine internal inventory reconciliations. High-dollar and high-risk claims, such as specialty medications and GLP 1 products, should receive heightened review. Clear policies addressing copay collection, financial hardship, auto refill practices, delivery versus mailing, and prior authorization involvement must be implemented and consistently followed. Staff should be trained and retrained regularly to ensure alignment with these policies. When internal reviews uncover discrepancies, corrective actions should be documented and monitored. Ignoring or minimizing audit findings, even small ones, can result in serious consequences including monetary recoupment, board of pharmacy referrals, network termination, and future credentialing challenges across PBM networks.
Understanding Your Legal Tools
Pharmacies have more options than they often realize. Provider manuals typically include dispute resolution provisions that allow pharmacies to challenge final audit results or network terminations. Prompt pay laws may be invoked when PBMs withhold payments beyond permitted limits. New Jersey also maintains Any Willing Provider requirements that can be leveraged when pharmacies meet applicable participation standards.
Although these tools do not eliminate the need for strong operations and documentation, they form an important layer of protection, particularly when PBMs escalate matters quickly or assert broad accusations of fraud, waste, or abuse.
Conclusion
The PBM landscape remains complex and continues to evolve at a rapid pace. The most effective way for pharmacies to protect their networks and avoid significant operational disruptions is to pair diligent day-to-day recordkeeping with a proactive compliance strategy. Understanding common audit triggers, anticipating areas of PBM scrutiny, and enforcing strong internal policies can greatly reduce exposure and support long-term network stability. As audit and network oversight trends continue to shift in 2026, Frier Levitt will closely monitor developments and remains committed to helping pharmacies navigate these challenges with clarity and confidence.
Watch the on-demand recording here: https://www.frierlevitt.com/webinars/pbm-audits-network-compliance-nj-pharmacies-2026/
How Frier Levitt Can Help
Frier Levitt’s Life Sciences team has deep experience guiding pharmacies through audits, investigations, terminations, and reimbursement disputes. We help pharmacies evaluate their operational risks, strengthen documentation practices, prepare for anticipated audit trends, and defend their rights when payors exceed their contractual or legal authority.
Our attorneys, many of whom are also licensed pharmacists, understand both the clinical and legal realities that shape PBM relationships. We assist with policy development, staff training, audit response strategy, dispute resolution, and litigation or arbitration when necessary. For pharmacies looking to enter 2026 with a stronger compliance posture, early planning is essential. If you have any questions or need help fighting abusive PBM conduct, contact us to speak to an attorney.
