Pharmacy Alert: Growing Trend in Invoice Reconciliation Audits

As part of an invoice reconciliation audit, Pharmacy Benefit Managers (“PBMs”) routinely request pharmacies to provide documents pertaining to pharmacy-to-pharmacy drug transfers.  These documents include invoices and/or purchase summaries from the wholesalers as well as pharmacy-to-pharmacy transfer inventory reports.  However, in the recent past, Frier Levitt has encountered instances where PBMs declined to accept the aforementioned documents and, instead, demanded additional documents from the pharmacies.  Certainly, this is an alarming trend that may allow PBMs to impose monetary sanctions (i.e., reimbursement chargebacks) and other penalties including, but not limited to, network termination or suspension.  
   
During a routine invoice reconciliation audit, PBMs review and compare the amount of prescription claims billed by a pharmacy and compare it with the pharmacy’s purchasing records.  To demonstrate that the pharmacy did in fact have sufficient inventory of the drug products, the pharmacy provides a host of documents including, without limitation, invoices and/or purchase summaries from the wholesalers and inventory report of pharmacy-to-pharmacy transfers.  However, as noted above, PBMs have been demanding additional records when the pharmacy purchased drugs through pharmacy-to-pharmacy transfers.  For example, one of the major PBMs requested proof of payments from a pharmacy for drugs purchased through pharmacy-to-pharmacy transfer.  The pharmacy provided bank statements, which included transaction history of payments made to the “transferor” pharmacy.  However, the PBM continued to allege that the bank statements were insufficient proof of payment.  The PBM further demanded that the pharmacy provide additional records including front and back of the checks for each payment transaction made to the transferor pharmacy, which included check payments from several years ago.  In addition to the foregoing, as we reported here, PBMs have been requesting pharmacies to provide documentation in compliance with Drug Supply Chain and Security Act.  
   
If a pharmacy is unable to produce this information with required information, the PBMs may take back the full reimbursement for the prescriptions alleging insufficient inventory.  Even when the prescriptions were dispensed, pursuant to applicable Federal and State laws, and where the patient did, in fact, receive his or her medications.  
   
How Frier Levitt Can Help
 
It is important that pharmacies know their rights when combating PBM audits. If your pharmacy is facing an audit and/or subsequent recoupment from PBMs, contact us today to speak to an attorney. Our Life Sciences team has the tools and experience to assist pharmacies in their audit disputes and to advise clients on proactive measures to prevent audit recoveries.
   
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