February 2018 |
  • Blog

Fighting Onerous PBM Audits

Jay Adzema runs Adzema Pharmacy in McCandless, Arizona. It is a one-store pharmacy that processed 20,000 prescriptions over the past two years. 90% of those scripts cost less than $50 a piece.

Recently, Express Scripts, a leading Pharmacy Benefits Manager (PBM) audited Adzema Pharmacy. The PBM was only interested in 19 of the 20,000 prescriptions.

These 19 prescriptions cost between $500-$3,700 each. The total value of the scripts was $55,402.47. Not an insignificant sum for a single-store pharmacy like Adzema.

That was why it was devastating when Express Scripts denied the claims on these 19 prescriptions due to minor clerical errors.

Unfortunately, pharmacies like Adzema face hurdles like this far too often. PBM’s regularly cite minor administrative errors to deny claims. Elliott Sauter wants to help independent pharmacies like Adzema fight back against oppressive PBM audits.

History of PBM’s

To understand the problem, we need to look back to how PBM’s started. 30 years ago, Pharmacy Benefits Managers were paper pushers matching prescriptions to corresponding insurance documents.

When drug costs increased, a few PBM’s had an ingenious idea to combine various insurance companies prescriptions programs. This plan would increase the purchasing power of insurance companies, so they could lower the cost of drugs.

The 1,100% increase in drug prices over the last few decades proves this was a failed experiment. However, PBM’s did not go away. Instead, they became a gateway for drug pricing in the United States.

Currently, the three largest PBM’s, Express Scripts, CVS Caremark, and Catamaran/ORX, control 75-80% of the market. Approximately 180 million prescription drug customers are at the mercy of these three companies.

PBM’s now wield so much power they threaten independent pharmacies’ existence.

pbm audits

Three Challenges with PBM Audits

#1. PBM’S Focus on Minor Errors to Cancel Contracts

PBM audits initially were set up to prevent large-scale fraud, waste, and abuse. Yet, PBM’s often find minor administrative typographical errors, like in the case against Adzema Pharmacy, to deny claims.  

To stop the abusive PBM practices, we need regulations to restrict their actions. PBM’s should have just cause to rescind a contract or recoup all medication and dispensing fees. Until pharmacies have this protection, Elliott Sauter (Healthcare Criminal Defense Attorneys) will guide you through your PBM audit(s).

#2. PBM’S Utilize Invoice Audits to Shut Down Pharmacies

Cedra Pharmacy Houston expanded into Texas and California after running pharmacies in New York.

According to a federal antitrust lawsuit filed against UnitedHealth Group ( who owns Catamaran/ORX) by Cedra, the moment Cedra expanded into Texas, Catamaran/ORX blocked their claims. Cedra claims Catamaran/ORX engaged in a bogus “invoice reconciliation audit” which resulted in Catamaran/ORX denying their contract.  The federal lawsuit is still pending.

PBM’s are issuing requests to pharmacies for inventory and wholesale records.  They are utilizing these requests to attempt to prove shortages on the part of the pharmacy.

If the PBM finds any type of shortage, they move to immediately cancel the pharmacies contract.  PBM’s only accept wholesale records from the wholesale companies.  

Often, wholesalers fail to send the records to the PBM’s in a timely manner and the PBM’s use that as an excuse to prematurely cancel the pharmacy’s contracts.  It is important to push back on these types of audits to ensure that your pharmacy does not lose its contract over an error as simple as wholesalers not responding timely.

#3. PBM’s Have A Conflict of Interest

The ultimate problem with companies like Cedra is not that they did something wrong. It is they tried to get a piece of a larger pie. Companies like United Healthcare, Catamaran/ORX, and Express Scripts want to control the $100 Billion specialty drug market.  These PBM’s have a conflict of interest with small pharmacies. Large PBM’s have a motive to cancel independent pharmacy contracts and push them out of the market.  The more pharmacies they push out, the more patients they have access to.

pbm pharmacy audit

Final Thought

PBM’s have too much power over independent pharmacies in this country. If you were mistreated in an audit or are facing an audit, let us know. We offer a free initial consultation to review how we can defend your company against PBM audits. Call us today at 469-758-4150.


Elliott Sauter, PLLC

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