Pharmacists seek fairness in generics reimbursement

May 31, 2016

PBMs have dodged state-mandated requirements for transparency in generics drug pricing, so many states are rewriting their laws.

Many states are revising their laws regulating transparency in generic prescription-drug pricing because, according to the National Community Pharmacists Association (NCPA), pharmacy benefit managers (PBMs) are circumventing the rules.

"Obviously, they are not following the intent of the law. It is very frustrating," said Matthew J. DiLoreto, senior director of state government affairs for NCPA. 

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While a majority of states now have laws in place to make maximum allowable cost (MAC) pricing for reimbursement fair for pharmacists, pharmacy organizations say the laws need to be reworded and reintroduced in various state legislatures because pharmacists are still not getting reimbursed properly for generics.

"The national trend is going to be states revisiting legislation across the board. Most states have enacted the legislation into law [and now have to revise them]," DiLoreto said. Pharmacy groups in Tennessee, Kentucky, and Washington are currently rewording generic transparency pricing through bills in their state legislatures.

Oklahoma boosts transparency

B. Douglas HoeyOklahoma was recently successful in revising its legislation to boost transparency in generic prescription drug pricing and reimbursement via S.B. 1150. Two years ago, the state legislature passed a bipartisan law (H.R. 2100) that provided reasonable transparency into how generic prescription drugs are priced, reported, and later reimbursed to pharmacies that dispense them to patients, according to NCPA CEO B. Douglas Hoey, RPh, MBA.

See also: Legislators call for transparency in generic drug pricing

"That law was enacted because of the lack of transparency and negotiating leverage available to locally owned pharmacies," Hoey said. "They were effectively forced to routinely dispense medications below their costs due to unreasonable reimbursement rates set by large, out-of-state corporate-drug-plan middlemen, entities referred to as PBM corporations."

However, in Oklahoma, many of the same problems with pharmacy reimbursement for generics still exist, because PBMs "have essentially ignored the law," Hoey continued. However, S.B. 1150 closes some existing loopholes and "takes needed steps to ensure a transparent and sustainable medication delivery system."

"Ultimately, Oklahomans will benefit from more transparency in healthcare and better access to community pharmacies, including the state's 464 locally owned pharmacies," he said.

"What Oklahoma did will be a model for other states," DiLoreto agreed. "Thirty states have these laws on the books and all are facing notable changes, with PBMs facing challenges with proper compliance with the law."

 

Language changes

The laws are being revised by moving away from the term "maximum allowable cost," and generalizing the drug reimbursement language to "encompass whatever pricing benchmark applies [in each state]," DiLoreto said.

See also: The PBM squeeze

For example, the Oklahoma bill added such language as "multisource drug product reimbursement," and reimbursement means "the total amount paid to a pharmacy inclusive of any reduction in payment to the pharmacy, excluding prescription dispense fees."

Other states are incorporating language such as "pharmacy services administration organization [PSAO]," to allow pharmacies' contracted representatives, such as PSAOs, which manage many of their appeals processes and contracting issues, to submit an appeal on a pharmacy's behalf.

While PBMs oppose the passage of generic transparency laws on the grounds that they will to increase healthcare costs, DiLoreto said, they have not been able to prove their contention, so it is likely that states will be able to pass bills with the revised language this year.

See also: Pharmacists victorious after PBM lawsuit dismissed