Buttaci Leardi & Werner LLC Secures Landmark Arbitration Victory for Independent Community Pharmacy Against National PBM—Arbitrator Rebukes PBM Audit Practices

Buttaci Leardi & Werner LLC is proud to announce a significant victory on behalf of an independent community pharmacy client in binding arbitration against a major national pharmacy benefit manager (PBM). After a lengthy and highly contested proceeding, the arbitrator rendered an award fully vindicating our client’s position and providing a roadmap for other independent pharmacies facing similar PBM audit and recoupment actions involving how PBMs control “audits” of independent pharmacies.

The arbitrator found that the PBM wrongfully terminated our client’s network participation and improperly recouped more than $667,000 in previous payments for pre-authorized prescriptions filled and delivered to patients. The award directed that the pharmacy be immediately reinstated to the PBM’s network and awarded the full disputed amount, plus 10% annual interest from the date of breach.

Key Findings and Impact on Pharmacy-PBM Relations

This victory is notable not just for the financial recovery and reinstatement, but for the arbitrator’s substantive analysis of the PBM’s audit findings and demands for documentation. The award firmly rebuffs the PBM’s practice of disregarding substantial evidence submitted by independent pharmacies and attempting to impose documentation requirements after the fact.

• The arbitrator recognized that the PBM had relied on “survey responses” from pharmacy customers to question whether prescriptions were properly filled—but found that our client rebutted these assertions by providing detailed records memorializing the sale of the prescriptions, delivery dates, and its own notes from calls with the customers. In weighing the parties’ evidence, the arbitrator found the pharmacy’s documentation clearly more probative and described the PBM’s findings as not credible or supportable.
• Significantly, the arbitrator rejected the PBM’s argument that our client failed to provide adequate documentation for prescriptions filled using medication purchased through pharmacy-to-pharmacy exchanges due to inventory shortages. The PBM claimed that only purchases through an accredited wholesaler were properly documented, but the arbitrator noted that neither the provider manual nor the applicable federal regulatory guidance (including the Drug Supply Chain Security Act) defines the specific documentation required. The pharmacy had produced “volumes of documents” demonstrating that these purchases were tied to identified patient needs—a standard the arbitrator upheld as sufficient under the law and contract.
• The award expressly states that where PBMs draft network and provider agreements ambiguously or fail to specify the documentation required, those ambiguities will be construed against the PBM seeking to enforce them. The arbitrator concluded that the PBM’s attempt to demand certain documents after the fact is not reasonable or enforceable, emphasizing that independent pharmacies should not be subject to retrospective and shifting standards.

This case sets an important precedent for all independent community pharmacies that are subject to onerous and often arbitrary PBM audit practices. It clarifies that careful and thorough recordkeeping—documenting patient requests, prescription fulfillment, and legitimate medication procurement—is not only good business practice but also legally defensible, even when PBMs try to invent new standards during an audit or recoupment process. Crucial to the ultimate success of our client’s arbitration demand was early engagement of counsel. Our client retained Buttaci Leardi & Werner during the initial audit and we developed a full record, including the PBM’s refusal to provide the documents that allegedly supported recoupment and termination. Those documents turned out to be the patient “survey responses” that we requested on behalf of our client but were not provided until after we commenced the arbitration proceeding.

As discussed in our previous article, “Knowing When and How to Fight Back: Protecting Independent Community Pharmacies from Overbearing Pharmacy Benefit Managers,” this result demonstrates the power of experienced legal advocacy and a willingness to challenge PBM decisions through arbitration. Buttaci Leardi & Werner LLC continues to lead the way in representing independent pharmacies in disputes with PBMs nationwide.

For more information about the firm’s pharmacy law and PBM dispute practice, visit Pharmacy Law and PBM Disputes Practice Area.

To discuss how Buttaci Leardi & Werner LLC can assist your pharmacy, please contact John W. Leardi, Esq. at jwleardi@buttacilaw.com.

• Posted on: May 20 2025