Rebates

Rebate Audits

Audits should include:

1. Reviewing SAS-70 report from PBM to ensure an accounting firms has audited their rebate calculations, receipts and payments to clients.
2. Reviewing client contract for questionable provisions, including:
   1. No client right to modify the formulary
   2. Classification of drug company payments as other than rebates
      1. For example, administrative fees that amount to a % (e.g., 3.5%) of the total drug cost; this can account for >25% of drug company payments
   3. Keep in mind that most PBMs retain ~50% of drug company payments by classifying them as other than rebates
3. For top drug categories, determine where utilization of high AWP drugs exceeds the national average (e.g., using IMS Health statistics)
   1. Request rebate returns for that category to determine if this higher utilization actually saves you money
4. Compare overall rebate returns (e.g., %) against other client average returns; evaluate this in respect to whether your overall drug costs seem higher or lower than these client peers