Tennessee Pharmacists Association

Representatives from the Tennessee Pharmacists Association (TPA) recently participated in a meeting with members of the Tennessee Department of Commerce and Insurance, along with Senator Ferrell Haile, Representative David Shepard, and representatives from Southern Pharmacy Cooperative, to discuss the compliance of Pharmacy Benefits Managers (PBMs) with the recently enacted state Maximum Allowable Cost (MAC) law. Here is a link to the state MAC law which went into effect on January 1, 2015: http://1.usa.gov/1hTWEw4

As a result of this meeting, the Tennessee Department of Commerce and Insurance sent the following notice to all PBMs operating in the state of Tennessee regarding their compliance with the law: http://1.usa.gov/1LUcpj1

In this letter to PBMs, the Department noted that PBMs must comply with all of the provisions of this law, and specifically emphasized PBM compliance with the following provisions:

(a) A pharmacy benefits manager or covered entity shall make available to each pharmacy with which the pharmacy benefits manager or covered entity has a contract and to each pharmacy included in a network of pharmacies served by a pharmacy services administrative organization with which the pharmacy benefits manager or covered entity has a contract, at the beginning of the terms of a contract and upon renewal of a contract:
(1) The sources used to determine the maximum allowable cost for the drugs and medical products and devices on each maximum allowable cost list
(b) A pharmacy benefits manager or covered entity shall:
(1) Update each maximum allowable cost list every three (3) business days, as required by Tennessee Code Annotated 56-7-3104 (b)
(3) Utilize the updated maximum allowable costs to calculate the payments made to the contracted pharmacies within five (5) business days

In addition, the Department further clarified that:

  • A PBM must provide an appeal process for a pharmacist to contest the PBMs’ listed maximum allowable costs.
  • The pharmacy must file its appeal within seven (7) business days of submission of its initial claim for reimbursement.
  • The PBM has seven (7) days to make a final determination which must include, if denied, a reason for the denial and the NDC of an equivalent drug generally available for purchase by pharmacies in this state from national or regional wholesalers at a price which is equal to or less than the maximum allowable cost for that drug.

The Department also emphasized that “any violations of this statute will be strictly enforced by the Department and penalties will be pursued under the authority of Tennessee Code Annotated 56-2-305.”

TPA will continue to work with our elected legislators, colleagues, and state officials, to ensure state-wide PBM compliance with the provisions in this law. If you have additional questions about this law or have specific examples of non-compliance with any of the provisions contained in this law, please contact the Tennessee Pharmacists Association at tpa@localhost or 615-256-3023.