New Kentucky law offers greater PBM transparency

March 28, 2013

Community pharmacies in Kentucky can now breathe a sigh of relief with the passage of S.B. 107 that requires greater transparency from pharmacy benefit managers (PBMs), according to the National Community Pharmacy Association (NCPA).

Governor Steve Beshear signed the bill into law on March 22, following overwhelming support in the Kentucky Senate with a vote of 96-0. The law requires that PBMs include in their contracts with pharmacies their methodology to calculate drug reimbursements to pharmacies for all drugs under the health benefit plan.

In addition, PBMs must include national drug pricing compendia or source used to obtain the drug price data and the methodology to calculate the maximum allowable costs (MACs). Also, the MACs for all drugs must be reviewed and adjusted weekly and a list supplied to the contracted pharmacies. An appeals process was also established to address any reimbursement level disputes.

“This transparency legislation will simply let pharmacists know how individual health plans will calculate a pharmacy’s reimbursement, and require timely updates to those rates to reflect market prices,” said B. Douglas Hoey, RPh, MBA, NCPA’s CEO. “With that information, a small business community pharmacy owner can better evaluate contract proposals and determine whether they make business sense to accept.”

NCPA credits State Senator Julie Denton (R) for her support of this legislation and her fellow state legislators in the Kentucky Senate and House, as well as Kentucky Pharmacists Association Executive Director Robert McFalls.

“We hope Kentucky’s common-sense MAC reform serves as a model for the nation as similar legislation is being considered across the country,” said Hoey in a statement on the NCPA website, www.ncpa.net.