What is a PBM audit and why should employers do one?

A PBM audit is a systematic review of your PBM contract terms, claims data, and pharmacy invoices to identify hidden costs, billing errors, and contract compliance issues. Employers should conduct a PBM audit every 2–3 years or before contract renewal. Audits typically uncover 3–8% of pharmacy spend in recoverable overcharges and provide the data needed to negotiate better contract terms.

What does a PBM audit look for?

A PBM audit examines spread pricing (difference between what the PBM billed vs. paid pharmacies), rebate retention (rebates collected vs. passed through), MAC pricing compliance, generic dispensing rate accuracy, specialty drug billing, and administrative fee calculations. Auditors compare actual pharmacy invoices against claims data to identify discrepancies.

How do I conduct a PBM audit?

Start by requesting 12–24 months of claims data in a standard format, along with rebate reconciliation reports and pharmacy network invoices. Engage an independent pharmacy benefit auditor or consultant — not one affiliated with your PBM or broker. The auditor will compare billed amounts against actual pharmacy payments, verify rebate pass-through, and review contract compliance. Budget $15,000–$50,000 for a comprehensive independent audit.

What is a PBM contract audit right and why does it matter?

A contract audit right gives employers the ability to independently verify that the PBM is complying with contract terms — including pricing, rebates, and administrative fees. Without strong audit rights, employers have no way to verify PBM claims. Demand audit rights that include access to actual pharmacy invoices (not just claims data), the ability to use an independent auditor, and a requirement that the PBM cooperate fully.

What should I do if a PBM audit finds overcharges?

If an audit finds overcharges, the PBM is typically required to reimburse the employer for the difference. Document all findings with supporting data from the audit. Most PBM contracts include a reconciliation process for audit findings. If the PBM disputes findings or refuses to reimburse, consult legal counsel. Use audit findings as leverage in contract renegotiation or as justification to issue a PBM RFP.

Audit

PBM Audit Guide

A PBM audit compares what your PBM charges you against what it actually pays pharmacies and receives from manufacturers. Most audits uncover significant discrepancies — often enough to fund the audit cost many times over.

What a PBM audit looks for

Spread pricing — difference between what PBM charges employer and pays pharmacy

Retained rebates — rebates received from manufacturers but not passed to employer

MAC pricing errors — generic drugs priced above the maximum allowable cost

Duplicate claims — same claim billed multiple times

Formulary compliance — drugs covered that should require prior authorization

Network compliance — claims paid to out-of-network pharmacies at in-network rates

Dispensing fee accuracy — fees charged vs. contracted rates

How to exercise your audit rights

Most PBM contracts include audit rights, but they're often buried in the contract and subject to restrictions (advance notice, limited scope, frequency limits). Work with a pharmacy analytics firm that specializes in PBM audits — they know how to navigate the restrictions and maximize what they can recover.

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