PUTT Blog Guest Post | Litigation Against PBMs: The Pillar Pharmacies Are Afraid to Use

By Allyson Snow, Esq., Founding Partner

Boesen & Snow Law

Of the “Three Pillars” of pharmacy survival, litigation is the pillar most pharmacy owners would rather not think about. It sounds expensive, slow, and combative, and the opposite of how most of you got into this profession. So, when a PBM sends a clawback notice, an audit demand, or a unilateral contract amendment that quietly rewrites your reimbursement, the temptation is to absorb the loss, sign the document, and move on. We get it. But math, the law, and our experience all point in the other direction.

This article is our attempt to dispel some of the confusion around PBM litigation:  (1) what it actually is, (2) why pharmacies win more often than people realize, and (3) why the fear of “making it worse” is, in nearly every case we’ve seen, misplaced.

Most PBM “Litigation” Isn’t Litigation at All

When pharmacists hear “lawsuit,” they picture a courtroom, a jury, and years of public proceedings. The reality of PBM disputes is very different. Nearly every PBM provider agreement contains a mandatory arbitration clause that is purposefully combined with confidentiality provisions that keep the proceeding and the outcome out of public view.  This is why you never hear about the “wins.”

That confidentiality cuts both ways. PBMs prefer it because it prevents pharmacies from learning what others have won, what arguments have worked, and how often PBMs actually lose. But it also means that when a pharmacy wins a meaningful award -- and they do, regularly -- there’s no headline, no public docket, and no precedent that helps the next pharmacy. The result is an information imbalance that benefits the PBMs and leaves independent pharmacies feeling like they’re the only one fighting.

You’re not. Pharmacies win at arbitration. Sometimes substantially.

The PBM’s “Big Stick” and Why It Works

PBMs rely on a simple calculation: the cost, time, and emotional energy required to dispute a recoupment, or audit finding will exceed what the pharmacy stands to recover. Combined with vague network manuals, opaque MAC pricing, and the omnipresent threat of network termination, the math is designed to make you stand down.

It often works enough that PBMs continue what they are doing. It does not work when a pharmacy has counsel who understands the contract, the regulatory backdrop (state PBM laws, ERISA preemption issues, any-willing-provider statutes, and the growing list of state DIR and reimbursement protection statutes), and the arbitration process itself.

“But Won’t It Just Make Things Worse?”

This is the question we hear most often, and it deserves a direct answer. In our experience: no. In fact, the opposite tends to be true.

Pharmacies that demonstrate they are willing and, most importantly prepared, to enforce their contracts become less attractive targets for the petty, recurring audit issues that consume so much administrative time. PBMs maintain internal classifications of pharmacies. Pharmacies that fight, document well, and win, move into a different category. They get fewer nuisance recoupments, fewer arbitrary discrepancy findings, and more measured responses when real issues arise.

What does get “worse” is rare and usually overstated. Network termination is governed by contract and, increasingly, by state law. Retaliation for asserting contractual rights is not a free move for a PBM, particularly in states with strong pharmacy protection statutes. And the alternative, which is silently absorbing improper recoupments year after year, is its own kind of slow harm, waste, and abuse of you, the pharmacy provider.

Budgeting for the Real World

Surviving and thriving as a pharmacy today requires accepting that PBM friction is a core and permanent part of the operating environment, not a temporary problem. That means budgeting for it the way you budget for inventory, insurance, or staffing. Two line items belong on every independent pharmacy’s annual budget:

1. Proactive audit defense. Bring in a law firm at least once a year to conduct a structured review of your audit risk, prescription compliance, patient payment compliance, invoice evidence, compounding documentation (if applicable), dispensing workflows, PBM contract terms, and credentialing posture. At Boesen & Snow, this is exactly what our PharmaFortify® program is built to do.  PharmaFortify® is a proprietary annual review that surfaces issues before a PBM auditor does, hardens your documentation, and gives you a defensible record if a dispute arises later. The cost of an annual review is a fraction of a single avoidable clawback.

2. A litigation defense fund. Set aside a modest amount each month.  Most pharmacies will use it once in a decade, if ever. But having that reserve transforms the calculus when a PBM sends a $40,000 or a $400,000 recoupment letter or a network termination notice. Instead of asking “can we afford to fight this?” you ask, “is this fight worth it?” That’s the right question, and it’s only available to pharmacies that have prepared.

The Bottom Line

Litigation is a pillar precisely because the other two: (1) proactive compliance and (2) contract literacy only gets you so far when a counterparty has both the contract and the leverage. Arbitration, used selectively and well, is how independent pharmacies push back against an imbalanced and abusive system. Pharmacies that prepare to fight rarely must. Pharmacies that fight when it matters usually win and always come out stronger.

You are not powerless. You are not alone. And the worst outcome is not losing an arbitration, it is never filing one.