‘You’ll never get that information’: Inside the brutal PBM exam process

As more states begin conducting market conduct examinations of pharmacy benefit managers, examiners describe a hostile response and a pattern of delays, obfuscations and persistent legal threats.

Representatives from four examination companies spoke Wednesday morning to the Pharmacy Benefit Management Working Group. The group met during the National Association of Insurance Commissioners’ summer meeting in Columbus, Ohio.

“Be mentally prepared that every exam is going to lawsuit. Go with that mindset,” said Dave Dillon of Lewis & Ellis, an actuarial and consulting firm. “You need to be prepared that they are going to bring the big guns.”

Examiners are “definitely seeing” spread pricing, or charging plans more than they do the pharmacy, Dillon said. Also, examiners are seeing rebate-related spreads and what he described as "consumer spread pricing" involving prescription discount cards. In one examination, he said, regulators found more than $5 million in charges to consumers related to discount card pricing.

Examinations have uncovered pricing differences between affiliated and independent pharmacies, as well as between large chain pharmacies and smaller independent pharmacies.

Most PBMs are responding to examiners with one tactic, Dillon said: “delay, delay, delay.” Requested documents are often heavily redacted, and, in some cases, the exact same language from state to state.

“One thing that I thought was fairly shocking. We had some outside counsel for a PBM manipulate the data that was provided to us,” Dillon recalled. “They changed the answers, and of course, that took a long time to figure it out.”

Regulators should expect PBM examinations to be lengthy and contentious, Dillon said.

"Think of the worst insurance examination you have ever participated in," Dillon said. "That will be better than your best PBM exam experience."

Ramping up exams

PBMs act as middlemen between drug makers, health plans and pharmacies. Critics say PBMs operate with opaque business practices, high market concentration and rebate mechanisms that inflate prescription drug prices and squeeze independent pharmacies. Federal and elected officials are targeting PBMs for reform.

While individual states historically audited parts of PBM operations via broader insurance carrier reviews, specific PBM examinations are a relatively new phenomenon made possible by the 2020 Rutledge v. PCMA Supreme Court decision and the NAIC’s subsequent model act one year later.

By late 2025, the practice expanded significantly, with at least 13 states actively engaged in some phase of formal PBM market conduct examinations or assessments.

Shelly Schuman, market regulation director at The INS Companies, said many PBMs appear unfamiliar with the regulatory examination process and often respond as though preparing for litigation rather than participating in a regulatory review.

“It has sometimes been perceived as we are just invasive and we are the enemy,” Schuman said. “With PBMs, it's been particularly challenging because we've gotten into things like citations of violations of their rights under the U.S. Constitution, and I'm like, ‘Okay, that doesn't normally come up during an exam.’”

Having a pharmacist on staff, or access to one, is a huge asset for regulators, the examiners said.

“When we first went out to one of the PBMs, they didn't realize we had a pharmacist at the table,” Schuman said. “We actually had one of them lean across and say, ‘You'll never get that information from me.’ … When they realized there was a pharmacist in the room, their tone changed a little bit.”

Few state insurance departments have pharmacy expertise on staff, said Joylynn Fix of West Virginia, chair of the PBM Working Group, hence the reliance on consultants.

Lack of consistency

Craig Moore, director of MLR and PBM compliance services at Examination Resources, said the lack of consistency among state PBM laws complicates examinations because each state has different statutory requirements and priorities.

Common examination findings include refusals to provide requested information, unreasonable delays, continued use of redactions despite handbook guidance prohibiting them, missing contract provisions, deficiencies in pharmacy audit documentation, untimely appeals handling, inaccurate required reports and failures to comply with state-specific reimbursement requirements, Moore said.

He recommended that the NAIC develop a model law or additional guidance to improve consistency across states, expanding examiner training and considering coordinated multistate PBM examinations similar to financial examinations.

Moore highlighted another challenge facing contract examiners: delayed reimbursement for examination work. He said one examination firm's work was suspended for nearly a year because invoices authorized by the state remained unpaid.

Rick Nelson is a vice president with Noble Consulting Services. Examinations continue to identify reimbursement disparities between affiliated and non-affiliated pharmacies, improper pharmacy audit practices, deficiencies in price appeal procedures and failures to comply with minimum reimbursement requirements, he said.

Spread-pricing prohibitions can be difficult to enforce because many state laws apply only to contracts executed, amended or renewed after a law's effective date.

Fix closed out the meeting by noting that the PBM exam issue needs to move on to the Market Actions Working Group.

© Entire contents copyright 2026 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.