Record High Fraud, Waste and Abuse Investigations and Associated Recoupments

As we reported here, Pharmacy Benefit Managers (“PBMs”) have been conducting series of audits on prescription claims that were submitted by pharmacies during the novel coronavirus (“COVID-19”) pandemic.  The same trend has been observed in Fraud, Waste and Abuse (“FWA”) investigation settings.  Indeed, OptumRx, one of the three largest PBMs, reported that it recovered $300 million in FWA spend in 2020 and identified a record-breaking increase in fraudulent claims.[1]  Optum also reported that, due to the FWA findings, 112 pharmacies, many of which are independent pharmacies, have been terminated from its network.[2]  This trend in FWA investigations is a growing concern for independent pharmacies for reasons detailed below.

First, while the overall appeal procedure is similar to audits, pharmacies are subject to shorter appeal periods in FWA investigations.  More specifically, PBMs generally allow a pharmacy to submit an appeal response within 30 – 45 days of audit findings.  However, in FWA investigations, the pharmacy is only given 10 – 14 days to submit its appeal response along with the supporting documents.  This is an extra hurdle for independent pharmacies because, compared to PBM-owned or affiliated pharmacies, most (if not all) independent pharmacies have limited resources.  The shortened appeal period makes it extremely difficult for independent pharmacies to submit supporting documents within the FWA appeal deadline.  More troubling, PBMs will likely consider the FWA investigation “closed” and issue its final investigative findings when a pharmacy fails to submit the appeal documents on or before the appeal deadline. 

Second, PBMs often impose additional sanctions, ranging from payment suspension to network termination, upon independent pharmacies before the pharmacies having exhausted dispute resolution procedure warranted under the PBMs’ Provider Manual.  In many instances, PBMs do not provide any details when issuing additional sanctions against pharmacies and they do not rescind the sanctions until the underlying FWA investigation is completed.  Needless to say, any interruption in services is devastating for independent pharmacies.  In fact, majority of the independent pharmacies participate in the three largest PBMs’ networks, i.e., CVS Caremark, Express Scripts, and OptumRx.  In 2020, these three PBMs “processed about 77% of all equivalent prescription claims.”[3]

Lastly, certain legal tools available for pharmacies are not applicable in FWA investigations.  For example, many states have “Fair Audit Laws” that regulate PBMs’ audit practices including, without limitation, the number of prescriptions that the PBM may review, how long a PBM can take before issuing initial and final audit results, and even recoveries on minor, clerical issues.  However, certain “Fair Audit Laws” include FWA exceptions and PBMs are not required to follow “Fair Audit Laws” in FWA investigations. 

How Frier Levitt Can Help

Given the potential issues that may arise out of FWA investigations, it is wise for independent pharmacies to consult with legal counsel.  Frier Levitt has a deep bench of experienced healthcare attorneys, including several pharmacist- and clinician-attorneys, who have been assisting pharmacies throughout the country on a variety of legal issues including, but not limited to, disputing FWA investigative findings, payment suspension, adjudication suspension, and network termination.  Contact Frier Levitt today to speak with an experienced Pharmacy Attorney today.


[1] OptumRx analysts see more pharmacy fraud activity amid COVID-19, FierceHealthcare, available at:

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[3] The Top Pharmacy Benefit Mangers of 2020: Vertical Integration Drives Consolidation, Drug Channels, available at:,of%20all%20equivalent%20prescription%20claims