Pharmacy audits are a common and increasingly frequent part of operating a pharmacy in Illinois. They involve a comprehensive review of a pharmacy’s records, practices and procedures to determine compliance with relevant laws and regulations and to identify potential areas of risk.
Government agencies, private insurers, pharmacy benefit managers (PBMs) and third-party auditors can conduct audits. Examiners review prescription records, billing records, dispensing records and inventory records. They may inspect your facilities and procedures directly.
If an audit identifies compliance issues or fraudulent activity, your pharmacy may face fines, license revocation by the Illinois Department of Financial and Professional Regulation (IDFPR) or exclusion from government programs.
[Related: Defending Against Prescription Fraud Charges in Illinois]
What Triggers a Pharmacy Audit?
Audits are not always random. Common triggers include the following:
- Sudden increase in claims volume
- Billing of high-cost medications
- Dispensing prescriptions written by non-local prescribers
- Referrals from government agencies
PBM audits in particular have grown more aggressive in recent years. PBM audits rose by as much as 29% in 2023, and many pharmacists who failed them cite audits as a primary reason they couldn’t stay in business.
Most findings stem from routine documentation or billing discrepancies rather than intentional fraud, including National Drug Code (NDC) reporting mismatches that transpire even when the pharmacy dispensed the correct medication.
Because audits rarely come with advance notice, preparation is not optional: It is ongoing.
[Related: Overprescribing Opioids and Your Illinois Medical License]
What Auditors Look for in Medication Dispensing Records
One of the primary purposes of a pharmacy audit is to ensure your pharmacy dispenses medications in accordance with federal and state laws and regulations under the Illinois Pharmacy Practice Act.
Auditors will verify the following:
- That your pharmacy is properly licensed
- That it dispenses only FDA-approved drugs
- That you fill prescriptions accurately within dosage and quantity limits
- That you maintain appropriate documentation
Documentation gaps are among the most common findings in dispensing audits, even when the pharmacy’s actual practices are fully compliant.
[Related: Drug Diversion Risks for Pharmacists and Doctors]
What Auditors Look for in Pharmacy Billing Records
Auditors review billing records to detect fraudulent activity, including overbilling, upcoding and other forms of financial abuse.
They will verify that your pharmacy is submitting claims accurately and that you are not overcharging for medications or services. Auditors also review dispensing records to confirm that your pharmacy fills prescriptions properly and that no prescription fraud or diversion has occurred.
Billing discrepancies can result in thousands of dollars in adjustments, regardless of whether the underlying prescription was legitimate. Something as simple as an undocumented refill can trigger a significant clawback.
[Related: Illinois Laws for Prescribing Cannabis for Medicinal Purposes]
How To Prepare for a Pharmacy Audit and Avoid Issues
To minimize the risk of noncompliance findings, pharmacies should take the following steps:
- Maintain accurate and detailed records at all times.
- Implement effective compliance policies and procedures.
- Stay current with relevant regulations and industry best practices.
- Keep all records and documentation organized and readily accessible.
- Designate a staff member responsible for audit readiness.
The last point matters more than most pharmacies realize.
A designated compliance point of contact, someone who knows where every record lives and understands your documentation protocols, can meaningfully reduce disruption when an auditor arrives unannounced.
[Related: Substance Abuse Among Illinois Physicians and Nurses: What You Need To Know]
Contact Williams & Nickl for Pharmacy Audit Defense
Pharmacy audits play a critical role in ensuring the integrity of the healthcare system. However, they can put compliant pharmacies at risk when findings are inaccurate or overstated.
At Williams & Nickl, our attorneys can help you prepare for an audit, respond to findings or defend your pharmacy’s license if disciplinary action follows.
Contact us online or call 312-335-9470 for a free, confidential 1-hour consultation.
Browse our case results and testimonials to see how we’ve helped Illinois pharmacies and pharmacists defend their licenses before the IDFPR.