PBM Audits Target Pharmacies for Compliance, Revenue Recovery

For many independent and community pharmacies, a pharmacy benefit manager (PBM) audit can feel like it comes out of nowhere. Understanding what triggers one and what to expect when it arrives, however, can make all the difference between a manageable review and a devastating financial consequence.

“It’s really important that all pharmacies really understand what a PBM audit is. It’s essentially a review on network pharmacies to ensure that they’re meeting their terms and conditions under the provider agreements and their provider manuals,” Harini Bupathi, Esq, partner practicing in Frier Levitt’s Life Sciences practice group, told Drug Topics®. “They’re intended really for purposes of preventing noncompliance; fraud, waste, and abuse; etc; but they’re really used for the purposes of generating revenue for PBMs and then, of course, a disproportionate basis to justify network termination.”

In part 1 of our interview, Bupathi breaks down exactly what PBM audits are, how they work, and why pharmacies need to take them seriously. Although audits are framed by PBMs as tools for preventing fraud, waste, and abuse, the reality is more complicated. As Bupathi explains, audits are frequently used as revenue-generating mechanisms for PBMs, and in some cases, as a precursor to network termination.

Audits can take many forms, ranging from routine desktop reviews and prescription validation checks to full-scale fraud, waste, and abuse investigations. The consequences are equally varied, running from monetary recoveries with added audit fees to regulatory escalation and permanent network termination.

Perhaps most valuable for pharmacists are the audit triggers Harini outlines. These red flags can put a pharmacy squarely in a PBM’s crosshairs. For any pharmacy owner or operator looking to stay ahead of compliance risk and away from network termination, this conversation is paramount.

READ MORE: The Prodigious PBM Pivot: How Supply Chain Entities Will Move Forward After CAA 2026