Legislation on PBM Regulation of MACs (SB1991/HB 1554) is expected to be voted on in both the full Senate and full House next week, as are many other bills that were postponed due to lack of time this week. Specific dates are not known at this point, however, updated Calendar information can be found HERE.
TAKE ACTION: It is urgent that all pharmacists contact their legislators NOW – both Senators and Representatives – and get their commitment to SUPPORT Senate Bill 1991 and House Bill 1554 as amended by amendment #015578, when they come before the full Senate and House next week. Also, if your Senator or Representative has signed on to the MAC bill as a sponsor (listed below), please THANK them for their important support. You can CLICK HERE to find out who your legislators are and how to contact them.
Information about the MAC legislation follows:
MAC LEGISLATION (SB 1991/HB 1554): SUPPORT as amended by amendment #015578!
REGULATION OF PBM’S USE OF MACs: SB 1991 Overbey, Haile, Bell, Yager/HB 1554 Shepard, Mike Turner, Gloria Johnson, Jernigan, Sexton, Odom, Sanderson, Watson, Goins, Powers, Ragan, Ramsey, Jones, Shaw, Fitzhugh, Swann, Alexander, Pitts, Weaver, Littleton, Lundberg, Doss– Regulates the use of maximum allowable cost lists by pharmacy benefits managers and covered entities. Amends TCA Title 56, Chapter 7, Part 31.
- PURPOSE: This bill amends the statute governing Pharmacy Benefit Managers (PBMs), (which was first passed by the Tennessee General Assembly in 2007 and then amended in 2011) to include regulation of maximum allowable cost (MAC) lists utilized by PBMs to determine the amount paid to a pharmacist for particular generic drugs dispensed by the pharmacist
- WHO SUPPORTS: All independent community pharmacies and most chain pharmacies that do not have PBMs.
- BACKGROUND: PBMs administer the pharmacy benefits portion of the coverage provided by health insurers. A PBM ultimately determines the amount paid to a pharmacist for a drug dispensed to a person enrolled in a particular health plan for which that PBM administers the pharmacy benefits. The current statute (T.C.A. §§ 56-7-3101 through 56-7-3105) regulates contracts between PBMs and health insurers and the audits of pharmacies conducted by PBMs.
- BILL SPECIFICS: The bill defines a “MAC list” as “a list of multi-source generic drugs, medical products and devices for which a maximum allowable cost has been established” by a PBM. The “maximum allowable cost” is the maximum amount a PBM will pay a pharmacy for a particular drug or device which has been dispensed to a patient.Many generic drugs and devices are placed on MAC lists by PBMs. Currently, pharmacists have no way of knowing what sources the PBM relied upon in establishing the MAC prices for these drugs and devices..
The purpose of establishing MAC prices is to force pharmacists to purchase generic drugs and medical devices from wholesalers that sell them at the lowest price. But if pharmacists do not know which wholesalers sell the drugs and devices for the amounts established by the PBM as the MAC prices, they are unable to buy the drugs and devices at these low prices.
In many cases, pharmacists are buying drugs and devices from a wholesaler at prices that are higher than the amount of reimbursement they receive from the PBM. So the pharmacist loses money on the drugs and devices dispensed to patients in those cases.
The purpose of this bill is to ensure that the MAC pricing system is fair to both pharmacists and PBMs. The bill contains the following specific provisions:
- The bill defines a “MAC list” as “a list of multi-source generic drugs, medical products and devices for which a maximum allowable cost has been established” by a PBM. The “maximum allowable cost” is the maximum amount a PBM will pay a pharmacy for a particular drug or device which has been dispensed to a patient.
- This bill requires a PBM to make available to each pharmacy with which the PBM has a contract:
- Each MAC price used by the PBM for patients served by that pharmacy;
- The sources used to determine the MAC prices for the drugs and devices on each MAC list; and
- Upon request, each MAC list used by the PBM for patients served by that pharmacy.
- Every PBM must update the MAC prices on each of its MAC lists on its secure website at least every three (3) business days and must use the prices on the updated lists to calculate payments to pharmacies.
- A PBM is prohibited from establishing any price on a MAC list in an amount which would result in reimbursement to a pharmacy that is below the price found for the product in any source used by the PBM to set the MAC price.
- Every PBM must establish a clearly defined appeal process allowing a pharmacist to contest the placement of a particular drug or device on the MAC list or the establishment of a price for a particular drug or device in violation of this bill. The pharmacy must file its appeal within 7 business days of filing its claim for payment. The PBM must resolve the appeal within 7 business days of its receipt of the appeal and must state the reason for the denial of the pharmacist’s appeal if it is denied.
- If the basis of a pharmacist’s appeal is determined to be valid, the MAC price for that drug or device shall be adjusted for the appealing pharmacy effective from the date the appeal was filed. The adjusted MAC price shall be effective for all similarly situated pharmacies from the date the appeal is determined to be valid.