By Harini Bupathi
Throughout 2025, Pharmacy Benefit Managers (PBMs) intensified their oversight, relying heavily on analytics to conduct audits, escalating audits into “investigations,” and requiring pharmacies to substantiate almost every aspect of their dispensing, billing, and purchasing of prescription medications. As the year draws to a close, pharmacies should review key audit takeaways to maintain discipline in their operations and mitigate exposure in PBM audits.
Data-driven targeting has become the norm, as PBMs flag pharmacies for sudden spikes in claim counts, particularly for high-dollar medications, unusual prescriber geography, and similar data patterns that PBMs assume are indicative of fraud, waste, or abuse. When outlier patterns emerge, PBMs often escalate audits into investigations or investigative audits, imposing short timelines and requesting extensive documentation.
Inventory reconciliations remain a typical process of an audit or investigation. Inventory shortages were a recurring issue for many pharmacies in 2025, as auditors compared purchase histories to billed quantities and challenged any gaps related to the timing of purchases, missing invoices, incorrect NDCs at claims submission, or sourcing from distributors that failed to meet contract requirements. Pharmacies faced particular scrutiny if they sourced their medications from other pharmacies on a regular basis, and without sufficient documentation.
Similarly, pharmacies were required to provide extensive documentation to demonstrate proof of collection of copayment from patients. In addition to register receipts, pharmacies were expected to provide additional documentation, including merchant processor reports, cash logs, bank deposits, and even copayment collection and financial hardship policies. These invasive requests for documentation also continued in the event of alleged patient or prescriber denials, where auditors contacted patients and prescribers to verify their authorization and receipt of prescriptions, which could have been filled over a year prior.
Furthermore, the use of third-party services introduced new risks, as some vendors who have been contracted to provide streamlined services may have had unfiltered access to pharmacy credentials, submitting test claims using such shared credentials or accessing reimbursement data without a prescription. PBMs viewed these tactics as unauthorized access and responded swiftly, often penalizing or terminating network participation.
Pharmacies also continued to see PBMs enforce mailing limitations, particularly for pharmacies contracted under a retail contract. Pharmacies that mailed in violation of their PBM provider agreements were subjected to recoupments, cease-and-desist notices, or even termination notices.
Pharmacies should approach audit readiness as a daily discipline, reviewing their PBM provider agreements and manuals, and ensuring that policies, workflows, and technology remain aligned with those requirements. In particular, conducting monthly internal reconciliations that match purchases, inventory, and claims by NDC and lot number, where applicable, helps identify discrepancies early. Further, pharmacies that make bulk purchases of medications should review their obligations to notify PBMs of such purchases to be considered in the event of an audit of investigation.
Pharmacies should also place significant emphasis on documentation. This can include maintaining sufficient documentation to demonstrate proof of copayment from a patient to confirming receipt of a valid prescription. Utilizing a thorough policy that outlines measures of confirming patient and prescriber authorizations, as well as capturing prescriber clarifications, refill approvals, therapy changes, prior authorization requests, etc. is essential to addressing audits. Pharmacies should not only create robust policies but also ensure all staff are trained on their practices to ensure compliance.
Contract compliance is critical. Pharmacies should review their practices to ensure they are consistent with PBM terms and conditions, particularly as it relates to the use of third-party vendors, prescription mailing, and prior authorization process.
Lastly, pharmacies should, at the very least, exhaust all administrative appeal and dispute rights. This includes calendaring appeal windows to ensure timely submissions of audit documentation, tracking all communications with the PBM throughout the course of the audit, and engaging legal counsel early to advise on legal and contractual rights. By implementing these strategies now, pharmacies can reduce chargebacks, minimize network risk, and navigate reviews with greater confidence as they approach the new year.
Harini Bupathi, Esq. is a partner practicing in Frier Levitt’s Life Sciences practice group. Harini’s practice focuses on counseling several different types of pharmacy providers on their relationships with Pharmacy Benefit Managers (PBMs) and other similar payors.
