Audit Right Components
- Claims data: Access to complete claims data including pharmacy invoices
- Rebate calculations: Access to rebate calculations and manufacturer contracts
- Spread pricing: Access to the difference between pharmacy reimbursement and employer charge
- DIR fees: Access to DIR fee calculations and pharmacy reimbursement adjustments
- Network contracts: Access to pharmacy network contracts and reimbursement rates
- Audit frequency: Right to audit at least annually; more frequently if discrepancies are found
Audit Findings
PBM audits consistently find discrepancies — often 3–8% of total pharmacy spend. Common findings: (1) claims processed at incorrect rates; (2) rebates not passed to the employer as required; (3) spread pricing not disclosed; (4) DIR fees not passed to the employer; and (5) formulary management errors. A 5% discrepancy on a $2 million pharmacy spend is $100,000 in recoverable funds.
Negotiating Audit Rights
IQ Insight
Negotiating strong audit rights is essential for PBM contract transparency. PBMs often resist broad audit rights — which is itself a red flag. A PBM that is confident in its contract compliance will welcome audits. Require audit rights that include access to pharmacy invoices, rebate calculations, and spread pricing. Hire an independent pharmacy audit firm to conduct the audit — not the PBM's own audit team.