PBM Audits for Black-Market Diabetic Test Strips

 Posted on February 11, 2022 in Medical License Defense

In the healthcare industry, pharmacy benefit managers (PBMs) serve a pivotal role. In fact, a pharmacy would be unable to operate without having a contract with a PBM. The PBM serves as an intermediary between the pharmacy and the insurance company, negotiating rates and processing the majority of all prescriptions.

Under these contracts, the PBM also has the right to conduct an audit of the pharmacy to make sure that all terms of the contract and proper guidelines are being met. Any discrepancies found during the audit could result in not only the pharmacy being required to pay back funds they have received, but could also result in the PBM contract being terminated. One product PBMs have been laser focused on recently is the number of pharmacies purchasing diabetic testing strips from unauthorized sources.

Black Market Diabetic Testing Strips

There are currently more than 30 million patients diagnosed with diabetes in this country. Patients who have the condition are required to test their glucose levels each day. One of the most common ways to test is by using diabetic test strips. It is so common revenues from these test strips surpasses $8 billion a year.

Just about every PBM requires pharmacies to purchase diabetic test strips only from authorized suppliers. This authorization comes from the manufacturer of the strips and a list of qualified suppliers are usually listed right on the manufacturer’s website. Failure to adhere to this rule will result in any invoices the pharmacy submits to the PBM to be rejected.

However, due to how lucrative sales of test strips are, there is now a growing black market for the product. People who deal in black market testing strips purchase unused one from patients who have insurance and then resell the to uninsured patients.

But these black-market salespeople have found an even more profitable market – selling the returned strips to pharmacies who then turn around and sell the strips to patients who do have insurance. It is a cycle that both the test strip manufacturers and PBMs are determined to break.

Many manufacturers have retained the service of law firms who investigate pharmacies looking for any discrepancies in records of how much the of the product the pharmacy sold compared to how much they are showing as ordering from authorized suppliers. In situations where this type of evidence is found, a cease-and-desist letter is sent to the pharmacy demanding funds for the lost sales and threatening to report the pharmacy to PBMs and the state pharmacy board that issued the pharmacy’s license.

Contact an Illinois License Defense Attorney

If you are a pharmacy owner, it is critical to only purchase diabetic test strips from authorized suppliers or you could be facing major recoupments, termination of your PBM contract, and administrative action from the Illinois Board of Pharmacy. If you have been notified of any action by a manufacturer or you have been notified of a PBM audit, call The Law Offices of Joseph J. Bogdan, Inc. at 630-310-1267 right away to speak with one of our seasoned Illinois PBM audit attorneys.

Sources:

https://www.nytimes.com/2019/01/14/health/diabetes-test-strips-resale.html

https://www.biospace.com/article/test-strips-market-trends-2021-statistics-growth-forecasts-2025/