Nationwide Pharmacy Audit Defense Attorneys Provide Comprehensive Representation Throughout the PBM Audit Process

As a small or independent pharmacy, dealing with pharmacy benefit managers (PBMs) is a part of doing business. PBM compliance is yet another regulatory aspect of operating a pharmacy. However, many pharmacies are unfamiliar with the PBM audit process and the rights they have, both to ensure fair audit procedures as well as in the event of an unfavorable audit. This can lead to recoupments and other sanctions, including contract termination.

If Novitas is your PBM and you face an upcoming PBM audit, it is imperative that you reach out to an experienced Novitas PBM audit attorney for assistance. The PBM audit process is complex, and you cannot count on Novitas auditors to inform pharmacies of their rights. Additionally, as a PBM, Novitas operates with little state or federal oversight, making it challenging for management teams who are unfamiliar with the process to effectively navigate an audit or challenge sanctions proposed by Novitas.

At Oberheiden, P.C., we’ve assembled a veteran team of pharmacy benefit manager audit defense attorneys to skillfully guide our pharmacy clients through PBM audits. Our lawyers have centuries of combined experience effectively representing pharmacies in regulatory and compliance matters. Given that many of our senior attorneys formerly held high-ranking positions within the federal government, including in the Drug Enforcement Administration (DEA) and the Health and Human Services Office of Inspector General (HHS-OIG), we command an unrivaled knowledge of the PBM audit process. From the moment you bring Oberheiden, P.C. onto your audit defense team, our lawyers will get to work identifying all risk areas and developing a coordinated defense strategy to ensure the best possible result. We also provide pharmacies with post-audit representation, including challenging any sanctions imposed by Novitas, either through negotiation or, if necessary, pursuing legal action.

The Role of a Pharmacy Benefit Manager

Pharmacy benefit managers are private companies that act as intermediaries between pharmacies and insurance companies. The insurance company pays the PBM to administer the prescription drug portion of a health plan and to ensure that all participating pharmacies accurately bill the insurance company for all prescriptions dispensed. Thus, Novitas’ primary concern is to identify any overbilling and, secondarily, to ensure that the pharmacy is in compliance with state and federal laws.

A few of the roles that a PBM fills include:

  • Developing and maintaining lists of covered medications on behalf of health insurers;
  • Using bulk purchasing power to negotiate rebates and discounts from drug manufacturers; and
  • Contracting directly with pharmacies to reimburse the pharmacy for medication dispensed to patients.

In carrying out this role, Novitas requires pharmacies to sign a PBM contract. The contract outlines the rights and responsibilities of Novitas and the individual pharmacy. The rights conferred to each party in the PBM contract dictate the parties’ relationship, and Novitas does not have any additional rights that are not included in the contract.

While the stated goal of a PBM is to manage drug prices, these companies also benefit significantly from occupying the role of the middleman. For example, according to a recent report, manufacturer rebates to PBMs increased from $39.7 billion in 2012 to over $89.5 billion in 2016. Of course, this partially offsets customer savings.

As a result, PBMs have come under scrutiny for profiting off of already high drug prices. Thus, Novitas and other PBMs take an aggressive approach to the audit process, hoping to justify their existence by identifying anything that even resembles a violation of the PBM contract. For example, some of the most common violations Novitas auditors look for when conducting an audit include:

  • Accepting prescriptions written by excluded providers
  • Billing for unapproved drugs
  • Compound drug issues
  • Failure to create or maintain records
  • Falsification of records
  • Filling illegitimate prescriptions
  • Intentional and unintentional billing and coding errors
  • Invoice shortages
  • Licensing violations
  • PBM contract fraud
  • Telemedicine violations

Unfortunately, given the lack of uniform regulation, the audit process is notorious for being less than transparent. For example, Novitas may notify a pharmacy after an audit that the company is retracting a significant sum of money based on violations of the PBM contract. However, often, Novitas fails to provide pharmacies with sufficient information to justify the recoupment of funds. This is especially the case when a pharmacy’s management team is unfamiliar with the PBM audit process and allows auditors to do their job without oversight.

How to Protect Yourself During a Novitas Audit

Most pharmacies will, at some point, be the subject of a PBM audit. Thus, it is essential pharmacies are proactive in learning about the PBM audit process and what they can do to protect themselves leading up to, during, and after the audit. Below are a few considerations that can help make for a smoother—and more successful—audit.

Keep Detailed and Organized Records

When Novitas auditors arrive at a pharmacy to conduct an audit, they will ask to review a wide range of prescription records. It is imperative that pharmacies are prepared for the auditors’ arrival and have all documentation the auditors may demand within reach. Doing so saves valuable time, which means the auditors will spend less time at the pharmacy. However, it also ensures a good first impression. The last thing you want is for it to appear as though you are unorganized, as poor recordkeeping may further raise auditors’ suspicions.

Additionally, while any prescription can draw an auditor’s attention, auditors often focus on reviewing high-cost prescriptions, as this is where a potential violation could allow Novitas to recoup the largest amount of money. Thus, when it comes to high-cost drugs, it is especially important to maintain accurate and detailed records.

Create and Implement Standard Operating Procedures Throughout the Pharmacy

The Novitas pharmacy audit team will be looking for any mistakes. And unless the lead pharmacist is the person filling prescriptions, the outcome of an audit can hinge on an employee’s work. Thus, it is essential to create and implement standard operating procedures to all important tasks are carried out in a uniform way. This avoids inconsistency and, more importantly, mistakes. If auditors notice inconsistency in how a pharmacy handles routine processes, it may raise a red flag which will almost certainly result in a more invasive audit.

Consult with a Novitas PBM Audit Defense Attorney

Running a pharmacy is a pharmacist’s specialty, but handling a Novitas audit is a different story. If you believe that your pharmacy may be out of compliance or you received word of an upcoming PBM audit, reach out to a PBM compliance attorney for help. At Oberheiden, P.C., our pharmacy audit defense attorneys also counsel and advise pharmacies on a wide range of compliance matters. We will review your existing protocols and determine if they are placing you at unnecessary risk of an audit. From there, we will work closely with you to develop a comprehensive compliance program that will decrease the likelihood of an audit and protect you in the event Novitas decides to audit your pharmacy.

What Does a PBM Audit Attorney Do to Help Pharmacies Through a Novitas Audit?

If you are like most pharmacy owners, you have little idea of what to expect from the audit process. Thankfully, this is not something you need to go through alone. At Oberheiden, P.C, we help independent pharmacies navigate the complexities of PBM audit. A few of the services we provide to pharmacies undergoing a Novitas PBM audit include:

Pre-Audit Evaluation

As soon as you bring Oberheiden, P.C. into your corner, we will immediately schedule a time to meet with you to go over all potential compliance risks. Doing so gives you a better idea of what to expect during the audit and what issues may arise. This enables us to work with you to develop a comprehensive plan for the day of the audit. We will also reach out to Novitas auditors to inform them that you have secured counsel and that we will be present during the audit. Often, the mere knowledge that a pharmacy is represented by an attorney will give auditors pause and may impact the nature of the audit.

On-Site Representation and Support

When you retain the services of the Novitas audit defense attorneys at Oberheiden, P.C., we send a team of lawyers to your pharmacy. Our attorneys will thoroughly review all documentation before auditors arrive. Thus, when a Novitas auditor makes a demand for documentation, we assess the validity of the request and, if necessary, explain to the auditor why their request falls outside the scope of the PBM contract. We will also ensure that auditors follow the appropriate processes and do not make any incorrect assumptions that may lead to a prolonged investigation or adverse findings.

Challenging Any Sanctions Proposed by Novitas

In the event of an unfavorable audit, it is essential to remember that Novitas is not a government agency, and the company’s word is not that of the law. Thus, any sanction imposed can be challenged. Of course, PBMs can pursue contractual enforcement in court; however, this comes at significant expense, and Novitas is often willing to negotiate any sanctions to avoid litigation. In many situations, our Novitas audit defense lawyers have successfully negotiated with the company to reduce or remove any recoupments or other sanctions.

Frequently Asked Questions:

Why don’t we call ourselves the “best Novitas pharmacy audit” lawyers?


Make no mistake, at Oberheiden, P.C., we consider ourselves some of the best pharmacy audit lawyers in the country. However, we choose not to label ourselves as such because we truly value our integrity and the relationships we foster with our clients. As healthcare defense attorneys, we deal with sophisticated clients, and merely labeling ourselves the best is not likely to persuade anyone. Additionally, we believe that the term “best” is subjective, and a trait that makes an attorney the best in one client’s eyes may not be as important to another client. In this way, using phrases like the “best pharmacy audit lawyer” is misleading. And, as lawyers, we have an ethical obligation to avoid making any potentially misleading statements. We take this responsibility seriously. Regardless, the bottom line is that we are confident that our track record speaks for itself.

What sanctions can Novitas impose in the event of an unfavorable audit?


Novitas audits are conducted to ensure that pharmacies are not improperly billing the insurance company. Thus, if substantial violations are uncovered during an audit, Novitas may demand a recoupment or could even terminate the contract with the pharmacy. However, if auditors discover anything that leads them to believe a pharmacy is operating in violation of the law, the company may refer the case to state or federal law enforcement agencies. This opens the door to much more severe consequences. As a result, any pharmacy subject to a Novitas audit should not delay in protecting their interests by reaching out to a knowledgeable PBM audit attorney.

Can a pharmacy challenge alleged contractual violations after an unfavorable Novitas audit?


Yes. However, doing so can be challenging. Primarily, this is because PBMs like Novitas are not subject to federal regulation. Thus, all regulation of PBMs comes from the state level. And while some states impose regulations on PBMs, many do not. Thus, these entities are used to operating according to their own terms; they make demands and expect pharmacies to fall in line. For example, if a pharmacy doesn’t agree with the result of an audit, Novitas may ignore their complaints, assuming that the pharmacy will not pursue legal action. Of course, pharmacies can attempt to negotiate with Novitas for the removal or reduction of sanctions. Pharmacies also have the right to challenge the outcome of the audit in court. However, Novitas and its team of lawyers regularly occupy this space and are familiar with the laws and regulations governing the industry. Thus, it is crucial that you also have lawyers working for you who are equally knowledgeable.

Schedule a Free and Confidential Consultation with A Novitas Audit Defense Lawyer at Oberheiden, P.C.

If you would like to learn more about Oberheiden, P.C and our pharmacy audit defense practice, please contact us to schedule a consultation with one of our senior attorneys or pharmacy compliance consultants. Our PBM audit defense team has centuries of experience helping pharmacies deal with the many issues that come up during a PBM audit. You can reach the firm by calling 888-680-1745 to schedule an appointment. You can also complete our online contact form, and one of our lawyers will reach out to you shortly.