New York’s fair audit law requires that, when conducting audits, PBMs:

● Provide 15 days’ advance written notice of audits, including the list of specific prescription numbers to be included in the audit;

● Limit the audit period to twenty-four months after the date a claim is submitted

● Allow the pharmacy to use the written and verifiable records of a hospital, physician or other authorized practitioner (regardless of how transmitted) to validate the pharmacy records in accordance with state and federal law;

● Limit the number of prescriptions audited to no more than one hundred randomly selected in a twelve-month period;

● In the case of invoice audits, accept as validation invoices from any wholesaler registered with the department of education from which the pharmacy has purchased prescription drugs or, in the case of durable medical equipment or sickroom supplies, invoices from an authorized distributor other than a wholesaler; and

● Remit payment on any claim that was retroactively denied for a clerical error, typographical error, scrivener’s error or computer error if the prescription was properly and correctly dispensed.

In addition, PBMs must provide the pharmacy with an appeals process, including written preliminary and final audit reports.

These requirements may not apply to audits in which suspected fraudulent activity is “evidenced” by a physical review, review of claims data or statements, or other investigative methods.

Link to Existing Law: NY PUB HEALTH § 280-c

This is a fairly comprehensive fair audit law, especially in its treatment of inventory audits and the heightened “fraud exception” standard, requiring that suspected fraud be “evidenced” by investigative reviews. Notably, this language was enacted in the spring of 2018 and it may take up to 2 years to see the full effects of this law.