SB 1165
Initials IG Page 1 House Engrossed
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
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rd
Read DPA 27-0-3-0
House: RA DP 6-0-0-1
SB 1165: pharmacy audit; procedures; prohibition
Sponsor: Senator Shamp, LD 29
House Engrossed
Overview
Outlines specified provisions that an auditing entity must comply with when conducting a
wholesale invoice audit. Prohibits an auditing entity from retroactively reducing the amount
of a claim payment unless specified criteria apply.
History
Statute outlines the procedures for in-person and desktop audits performed by an auditing
entity working on behalf of an insurer or Pharmacy Benefits Manager (PBM) for the purposes
of auditing drug claims adjudicated by pharmacies. The auditing entity must deliver a
preliminary audit report to the pharmacy within 60 days after the conclusion of the audit. A
pharmacy is allowed at least 30 days after receipt of the preliminary audit to provide
documentation to address any discrepancy found in the audit. Unless otherwise required by
state or federal law, audit information may not be shared with any entity other than the
insurer on whose behalf the audit was conducted (A.R.S. § 20-3322, 20-3323).
The Department of Insurance and Financial Institutions (DIFI) regulates and monitors
insurance companies and professionals operating in Arizona to protect the public and help
ensure that these entities follow Arizona and federal laws (Ariz. Const. § 15-5). Beginning
January 1, 2025, PBMs must apply and pay a fee to DIFI for a valid certificate of authority
to operate as a PBM who performs services for a health plan subject to state jurisdiction
(A.R.S. § 20-3333). A PBM is a person, business or entity that manages the prescription drug
coverage provided by a contracted insurer or other third-party payor. Responsibilities include
the processing and payment of claims for prescription drugs, the performance of drug
utilization review, the processing of drug prior authorization requests, the adjudication of
appeals related to prescription drug coverage, contracting with network pharmacies and
controlling the cost of covered prescription drugs (A.R.S. § 20-3321).
Provisions
1. Prohibits an auditing entity from conducting an audit on the pharmacy claims of another
auditing entity when conducting a wholesale invoice audit. (Sec. 1)
2. Instructs an auditing entity to comply with the following provisions when conducting a
wholesale invoice audit:
a) reverse a finding of discrepancy if the pharmacist or pharmacy dispensed the correct
quantity of a drug according to the prescription and either of the specified
circumstances apply;
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Initials IG Page 2 House Engrossed
b) accept any of the specified documentation as a presumption of validity to support the
pharmacy's claim related to the purchase of a dispensed drug; and
c) provide any supporting documentation that the pharmacy supplier provided to the
auditing entity no later than 10 business days after receiving the pharmacy's request.
(Sec. 1)
3. States that an auditing entity cannot, directly or indirectly, retroactively reduce the
amount of a claim payment to a pharmacist or a pharmacy after adjudication of the claim
for a prescription drug unless any of the specified circumstances apply. (Sec. 1)
4. Clarifies that an auditing entity, insurer or PBM is not prohibited from increasing the
amount of a claim payment after adjudication of the claim. (Sec. 1)
5. Makes technical changes. (Sec. 1)