Pharmacies are navigating an increasingly complex and challenging landscape as more spotlight and regulations are finally placed upon the Pharmacy Benefit Managers (PBMs). With PBMs sharpening their focus on audits and contract enforcement, pharmacies must be prepared for changes ahead. This article provides a comprehensive look at what pharmacies can expect from PBMs in 2025, drawing on key trends from recent years. It also highlights strategies for addressing these challenges and outlines the legal tools and rights pharmacies can use to protect themselves and their businesses.
The Growing Intensity of PBM Audits
PBM audits have become a fact of life for pharmacies, but their scope and frequency are escalating. Pharmacies dispensing high-cost medications, such as specialty drugs or GLP-1 medications, are particularly vulnerable. PBMs increasingly rely on sophisticated data analytics to flag potential “red flags,” including unusual billing patterns, discrepancies in claims data, high volumes of certain medications, or high volumes of reversals, especially after an audit was initiated. These audits often result in financial recoupments, penalties, or even network termination, regardless of the severity of the findings.
To mitigate these risks, pharmacies must take a proactive approach. Regular self-audits are essential for identifying vulnerabilities, such as discrepancies in claims or gaps in documentation. Pharmacies should also invest in reliable pharmacy management software to ensure accurate claims submissions and maintain detailed records for high-cost drugs, including purchase invoices, prior authorizations, and any communications with prescribers.
Increased Scrutiny of Compounding Pharmacies
Compounding pharmacies are expected to face intensified scrutiny in 2025, not only from PBMs but also from state Boards of Pharmacy and manufacturers. The recent announcement by the FDA that tirzepatide is no longer on the drug shortage list has triggered heightened oversight of compounding practices. This development has emboldened manufacturers and regulatory bodies to increase their focus on pharmacies that prepare compounded versions of drugs like tirzepatide, semaglutide, and other high-demand medications.
To navigate this landscape, compounding pharmacies must adopt a proactive approach to compliance. First and foremost, pharmacies should stay informed about regulatory updates from the FDA and their state Board of Pharmacy. Understanding the specific requirements for compounding and ensuring adherence to these rules is essential.
Additionally, in response to increasing scrutiny from manufacturers, pharmacies must be prepared to defend their practices. Any communication from manufacturers, such as cease-and-desist letters, should be taken seriously and reviewed with legal counsel. Pharmacies should document their compliance with applicable regulations, including proof that their compounding activities are limited to patient-specific needs and do not infringe on intellectual property.
Cross-Network Terminations and Their Impacts
It should be no argument that PBMs are increasingly terminating contracts for all affiliated pharmacies under common ownership when a single location is found non-compliant during an audit. Even minor discrepancies can have devastating consequences for pharmacy owners who operate multiple locations.
To address this challenge, pharmacies should implement consistent compliance protocols across all locations. Training staff to follow PBM contract requirements and conducting regular compliance reviews are essential. If a termination occurs, pharmacies should seek legal counsel immediately to appeal the decision and explore options for reinstatement.
Tougher Recredentialing Standards
Recredentialing has become another tool PBMs use to limit network participation. Pharmacies are now required to provide extensive documentation, including financial records, compliance certifications, and operational details, as part of the recredentialing process. PBMs often deny recredentialing applications for reasons that appear arbitrary or overly burdensome.
Pharmacies can prepare for these challenges by organizing recredentialing documents well in advance and conducting mock credentialing reviews to identify gaps. Consulting with compliance professionals or legal advisors can also help ensure that submissions meet PBM standards and avoid unnecessary delays or denials.
Regulatory Changes: Opportunities and Challenges
State and federal efforts to regulate PBMs are gaining momentum, with a growing focus on improving transparency and curbing abusive practices. While these regulatory developments are a step in the right direction, they also introduce new compliance obligations for pharmacies. For example, recent state laws impose stricter requirements on PBMs during audits, while federal proposals aim to address rebate transparency and pricing practices.
To stay ahead of these changes, pharmacies must actively monitor legislative developments and align their operations with new compliance requirements. Engaging with pharmacy associations and participating in advocacy efforts can help pharmacies shape fairer policies. Legal counsel can also provide guidance on implementing necessary changes and addressing any compliance gaps.
Escalating Fraud, Waste, and Abuse (FWA) Investigations
PBMs are collaborating more closely with government programs like Medicaid and Medicare to combat FWA, leading to more frequent audits, onsite inspections, and demands for extensive documentation. Even small errors in claims submissions can result in significant penalties or network exclusion.
Pharmacies must take a proactive approach to mitigate these risks. Staff training is essential for identifying and addressing potential FWA issues, while regular reviews of claims submissions can help ensure accuracy and compliance. Maintaining thorough records of all transactions is critical for supporting billing practices and defending against FWA allegations.
Legal Rights and Tools Available to the Pharmacy
Despite the challenges posed by PBMs, pharmacies are not without recourse. Several legal protections and tools are available to help pharmacies push back against unfair practices:
State pharmacy fair audit laws provide critical safeguards for pharmacies during audits. These laws limit how far back PBMs can review claims, prohibit extrapolation audits, and require PBMs to provide detailed findings before demanding recoupments. Pharmacies should familiarize themselves with these laws and enforce their rights when PBMs violate them.
Prompt pay laws ensure that PBMs and payers reimburse pharmacies in a timely manner after clean claims are submitted. Pharmacies should monitor payment timelines closely and document any delays, notifying the PBM and filing complaints with state regulatory agencies if necessary.
In states with any willing provider laws, pharmacies cannot be excluded from PBM networks if they meet the same terms and conditions as other providers. Pharmacies should challenge any unjust exclusions by citing these laws and filing complaints with state agencies when appropriate.
PBM Provider Manuals often contain dispute resolution procedures and documentation standards that pharmacies can use to defend themselves during audits. By carefully reviewing these manuals and adhering to their guidelines, pharmacies can build stronger cases for contesting audit findings or network actions.
Looking Ahead: A Positive Future for Independent Pharmacies
While PBMs continue to present significant challenges, pharmacies have the tools, rights, and opportunities to protect themselves and thrive. By taking a proactive approach to compliance, leveraging legal protections, and staying informed about regulatory developments, pharmacies can navigate the complexities of 2025 with confidence.
The future is also bright in terms of legislative progress, as state and federal regulators are increasingly scrutinizing PBM practices and implementing new safeguards for pharmacies. Independent pharmacies that remain vigilant, prepared, and engaged in advocacy will not only survive but excel in the year ahead.
The Need for Experienced Counsel
At Buchanan Ingersoll & Rooney, we are committed to helping pharmacies address these challenges and seize new opportunities. Whether it’s contesting audit findings, navigating regulatory changes, or protecting your network participation, we are here to support your business and advocate for your success. For more information or to discuss your specific needs, please don’t hesitate to reach out to our Life Sciences attorneys.
Author(s): Dae Y. Lee