PBM Auditing Increases as Rx Costs Rise, but Critics Allege PBMs Are Foiling Audits, Drug Benefit News Reports
Atlantic Information Services, Inc. (AIS) - September 16, 2008 - Washington, DC

Faced with rapidly rising pharmaceutical costs, health plans and employers increasingly are turning to audits to ensure that their PBMs are delivering on contractual promises. While some PBMs willingly open their books, industry critics allege that the auditing process is stymied by PBM gamesmanship, and that clients are losing money as a result, AIS's Drug Benefit News (DBN) reports.

If PBMs would allow better access to their documents, one veteran PBM auditor tells DBN, pharmaceutical payers could save up to 10% on their drug spend in some cases. Go to www.aishealth.com/pdf/dbn090508.pdf for the full DBN article.

For their part, PBMs say they recognize the importance of audits and point to an auditing provision that was included by URAC in last year’s PBM accreditation standards. And one PBM observer contends to DBN that the sheer complexity of the PBM business — with its multiple rebates, fees, discounts and varying pricing formulas — can raise red flags with Rx payers, even when no wrongdoing exists.

But others involved in the PBM auditing process tell DBN they see a pernicious attempt by many PBMs to ensure that full sunshine does not fall on their books. PBMs, they assert, place undue restrictions on the auditing process that skews the audit in favor of the PBM, and can block recoveries of funds due a client. Such practices are enabled by poorly drafted PBM/client contracts and include the following requirements:

  • The PBM has a right to "mutually approve" any auditor selected by a client, and can veto any auditor that the PBM doesn’t find satisfactory;
  • The auditor must sign a PBM-drafted “confidentiality agreement” that limits the type of data the auditor may audit, and requires the auditor to provide a draft audit report to the PBM before providing it to the client;
  • The auditor cannot disclose certain PBM “proprietary” information to the client, such as types of drug manufacturer rebates and amounts of individual rebates;
  • The auditor cannot copy any confidential information in the PBM offices, and may take notes only on broad findings rather than on detailed underlying data; and
  • The auditor must pledge not to be involved in any litigation against the PBM, should there be any, nor talk to any news reporters.

This is an excerpt from AIS’s Drug Benefit News. To read the story in its entirety, visit www.aishealth.com/pdf/dbn090508.pdf.

About Drug Benefit News Published biweekly, this newsletter provides timely news and data on the business of pharmaceuticals ... and practical cost management strategies from experts throughout the industry. Issues include data on high-cost drug categories, an insider look at what HMOs and PBMs are doing, and information that will help its readers benchmark results and experiences. Click here for publication details.

ABOUT AIS For more than 20 years, Atlantic Information Services, Inc. (AIS) has been serving the business of regulatory information needs of tens of thousands of health plan managers, hospital executives and other business leaders in health care. AIS publishes industry-leading business newsletters, books and reports, directories and databases, looseleafs and Web subscription services … and dozens of audioconferences and live conferences each year. Visit http://www.aishealth.com for more information.

Contact: Neal Learner Managing Editor, Drug Benefit News Atlantic Information Services, Inc. 202-775-9008, ext. 3056

nlearner@aispub.com

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