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Pharmacy audit bill should be approved

California’s 5,000-plus community-based pharmacies dispense billions of dollars worth of prescription drugs each year, so it is important to know that these drugs are being dispensed for legitimate health-care needs. Audits of pharmacy records help determine whether fraud is occurring.

Unfortunately, pharmacy audits have become less about uncovering and punishing fraud and more about making money for pharmacy benefit managers who are hired by health insurance plans to administer prescription drug benefits and perform pharmacy audits.

Too often, the benefit managers penalize community pharmacies by denying legitimate claims. Among the reasons auditors deny claims: minor clerical errors and omissions.

If they deny a claim, the pharmacy is on the hook to pay full price for the prescription and the benefit manager pockets most of the “recovered” funds. Thus there is a strong profit motive for them to deny as many claims as possible.


The benefit managers often hire outside auditing firms on a contingency fee basis, which gives them and the auditors an incentive to deny claims.

The California Senate recently passed a bill sponsored by Senator Curren Price, SB 1195, that would take the financial incentive out of audit process. Under the legislation, pharmacy benefit managers would be prohibited from paying auditing firms on a contingency basis. They would also be prohibited from invalidating claims on the basis of minor typographical and clerical errors.

The bill would also standardize audit procedures to make it easier for pharmacists to comply, and would require benefit managers to set up an appeals process for disputed claims.

The state Assembly should follow the Senate’s lead and pass SB 1195.


Steve Mazlin

Editor’s note: The writer is a clinical pharmacist at AMC Pharmacy in Burbank.