cbi 4th annual pharmacy benefit oversight & compliance ... · cbi 4th annual pharmacy benefit...
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CBI 4TH ANNUAL PHARMACY BENEFIT OVERSIGHT &
COMPLIANCE CONFERENCE:
STATE MAXIMUM ALLOWABLE COST (MAC) LEGISLATION
SAMANTHA BROWN, ESQ.
LAUREL WALA, ESQ.
MAC Laws
Set requirements and limitations related to MAC lists:
What drugs can/cannot be on a MAC list
Required disclosures
Disclosure of pricing
Disclosure of sources
Other required disclosures
Pricing restrictions
Required updates
Notice of changes
Appeal requirements/timeframes
Pharmacy contract requirements
Current MAC Laws
Medicare Part D*
Arkansas
California*
Colorado
Florida
Georgia*
Hawaii
Iowa
Kansas
Kentucky
Louisiana
Maryland
Minnesota
Montana
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Tennessee
Texas*
Utah
Vermont
Virginia*
Washington
MAC – Drugs Eligible For MAC List
Medicare Part D: No requirements specified
Majority of the States Require:
“A” or “B” rated (typically Orange Book) or NR or NA (MediSpan)
Available for purchase by pharmacies in the state from national or regional
wholesalers operating in the state
Not obsolete
Outliers:
Iowa: Requires 2 or more “A” rated (not “B”) with a significant cost
difference
MAC – Pricing Disclosures
Medicare Part D
Individual drug prices must be disclosed to pharmacies
Changes must be disclosed to pharmacies in advance of reimbursement
Majority of the States:
Must provide access to the MAC list and notice of changes
Timing / Frequency of notice of changes varies by state
Some states require MAC list to be “readily accessible” and “useable”
California and Hawaii require web-based or other comparable format
MAC – Disclosure of Sources
Medicare Part D: No requirement
Most states require disclosure of sources used to establish MAC list
and pricing
Type and amount of disclosure varies by state
Means of disclosure varies by state
MAC – Other Disclosures
Some “Outlier” states have other/additional disclosures:
Iowa: Commissioner of Insurance may require PBM to submit information to the Commissioner related to the PBM’s pricing methodology for MAC pricing
Ohio: Requires PBMs to disclose to plan sponsors whether or not the PBM uses the same MAC cost list when billing a plan sponsor as it does when reimbursing a pharmacy
If a PBM uses multiple MAC lists, PBM must disclose to a plan sponsor the differences between the amount paid to a pharmacy and the amount charged to the plan
Disclosure above must be made within 10 days of a PBM and plan sponsor signing a contract or within 10 days of any applicable update to a MAC list(s)
MAC – Pricing Restrictions
Medicare Part D: No restrictions/requirements
Most states do not specifically impose pricing
requirements/restrictions; however, may allow pharmacies to appeal if
MAC price is below acquisition cost
Notable Outlier - Arkansas
Pharmacy can appeal if MAC price is lower than acquisition cost
Pharmacy can decline to provide service to patient
Cannot reimburse pharmacy less than the amount that the PBM reimburses
an affiliate
MAC – Required Updates
Medicare Part D
Must update MAC – January 1 and not less than once every 7 days
Most States Require MAC List Updates:
Frequency of minimum required updates varies by state
Examples: 3 business days, 5 business days, 7 calendar days
Notable Outliers:
Arkansas: No longer than 7 days from an increase of 10% or more in pharmacy
acquisition cost from 60% or more wholesalers doing business in the state
Iowa: Must update MAC list consistent with price increase within 3 business
days of the price increase notification by a manufacturer or supplier
MAC – Appeal Requirements/Timeframes
Medicare Part D: No appeal requirements specified
Majority of the States:
Require an appeal process - Timeframes vary by state (7 business days, 14 days, 14 business days, 15 days, 21 days)
Require pharmacy get paid on MAC appeals upheld and for it to apply to similarly situated pharmacies
Some of the States:
Require pharmacy be allowed to appeal if MAC price is below acquisition cost (e.g., Arkansas, California, Louisiana, Utah)
Require appeal denials to include NDC and wholesaler information (e.g., Arkansas)
Require a dedicated phone number and email address or website for MAC appeals (e.g., Arkansas)
MAC – Pharmacy Contract Requirements
Some states require that the pharmacy contract include certain information regarding the MAC.
Examples:
California and Kentucky require pharmacy contracts to include information identifying any national drug pricing compendia or other data sources used to determine the MAC
Colorado requires each contract provide the pharmacy with the right to obtain the list of sources used to determine MAC pricing within 10 days of request
Florida requires contract specifically state that the MAC pricing will be updated at least every 7 calendar days and that PBM will maintain a process for eliminating drugs from the MAC and modifying MAC pricing consistent with changes in pricing data used in formulating the MAC prices
Georgia, Iowa, and Kentucky require inclusion of appeal process (with specified requirements)
Maryland and Montana require contracts to provide a phone number at which pharmacy can contact PBM to speak to an individual responsible for processing appeals
MAC - Challenges
Tracking drug “eligibility” for MAC list
Nationwide MAC compliance
Requirements tied to pharmacy acquisition cost
Managing pricing commitments
MAC LITIGATION
Pharmaceutical Care Management Association v. Gerhart et al
U.S. District Court for the Southern District of Iowa
Filed September 2, 2014
Pharmaceutical Care Management Association v. Rutledge
U.S. District Court for the Eastern District of Arkansas
Filed August 13, 2015
Iowa House File 2297 (Iowa Code § 510B.8)1. The commissioner may require a PBM to submit information to the commissioner related to the PBM’s pricing
methodology for maximum reimbursement amount.
2. For purposes of the disclosure of pricing methodology, maximum reimbursement amounts shall be
implemented as follows:
a. Established for multiple source prescription drugs prescribed after the expiration of any generic exclusivity
period.
b. Established for any prescription drug with at least two or more A-rated therapeutically equivalent, multiple
source prescription drugs with a significant cost difference.
c. Determined using comparable prescription drug prices obtained from multiple nationally recognized
comprehensive data sources including wholesalers, prescription drug file vendors, and pharmaceutical
manufacturers for prescription drugs that are nationally available and available for purchase locally by
multiple pharmacies in the state.
3. For those prescription drugs to which maximum reimbursement amount pricing applies, a PBM shall include
in a contract with a pharmacy information regarding which of the national compendia is used to obtain pricing
data used in the calculation of the maximum reimbursement amount pricing and shall provide a process to
allow a pharmacy to comment on, contest, or appeal the maximum reimbursement amount rates or maximum
reimbursement amount list. The right to comment on, contest, or appeal the maximum reimbursement amount
rates or maximum reimbursement amount list shall be limited in duration and allow for retroactive payment in
the event that it is determined that maximum reimbursement amount pricing has been applied incorrectly.
PCMA v. Gerhart
PCMA argued that Section 510B.8:
Is preempted by ERISA because it relates to employee benefit plans
Court Dismissed
Violates the Takings Clauses of both the US Constitution and the Iowa Constitution because it destroys the value of PBM trade secrets
Court ruled that PCMA did not have standing
Violates the dormant Commerce Clause of the US Constitution by imposing an excessive burden on interstate commerce
Court Dismissed
Violates the Due Process Clause of the 14th Amendment to the US Constitution because it is overly vague.
Court Dismissed
Iowa House File 2297 (Iowa Code § 510B.8)
For those prescription drugs to which maximum reimbursement amount pricing applies, a PBM shall include in a contract with a pharmacy information regarding which of the national compendia is used to obtain pricing data used in the calculation of the maximum reimbursement amount pricing and shall provide a process to allow a pharmacy to comment on, contest, or appeal the maximum reimbursement amount rates or maximum reimbursement amount list. The right to comment on, contest, or appeal the maximum reimbursement amount rates or maximum reimbursement amount list shall be limited in duration and allow for retroactive payment in the event that it is determined that maximum reimbursement amount pricing has been applied incorrectly.
Iowa House File 2297 (Iowa Code § 510B.8)
1. The commissioner may require a PBM to submit information to the commissioner related to
the PBM’s pricing methodology for maximum reimbursement amount.
2. For purposes of the disclosure of pricing methodology, maximum reimbursement amounts
shall be implemented as follows:
a. Established for multiple source prescription drugs prescribed after the expiration of any
generic exclusivity period.
b. Established for any prescription drug with at least two or more A-rated therapeutically
equivalent, multiple source prescription drugs with a significant cost difference.
c. Determined using comparable prescription drug prices obtained from multiple nationally
recognized comprehensive data sources including wholesalers, prescription drug file
vendors, and pharmaceutical manufacturers for prescription drugs that are nationally
available and available for purchase locally by multiple pharmacies in the state.
PCMA v. Gerhart
PCMA is Appealing
During Appeal:
PBMs must disclose information related to MAC pricing methodology to
Iowa Insurance Commissioner.
Only restriction on application of MAC pricing is that MAC pricing must
be determined using comparable prescription drug prices obtained from
multiple nationally recognized comprehensive data sources.
PBM contracts with pharmacies must provide for a process to allow
pharmacies to comment on, contest, or appeal MAC rates.
Arkansas SB 688 (Act 900)
A PBM shall:
1. Provide access to its MAC List to each pharmacy subject to the MAC List;
2. Update its MAC List on a timely basis, but in no event longer than 7 calendar days from an increase of 10% or more in the pharmacy acquisition cost from 60% or more of the pharmaceutical wholesaler doing business in the state or a change in the methodology on which the MAC List is based or in the value of a variable involved in the methodology;
3. Provide a process for each pharmacy subject to the MAC List to receive prompt notification of an update to the MAC List; and
4. Provide a reasonable administrative appeal procedure to allow pharmacies to challenge maximum allowable costs and reimbursements made under a maximum allowable cost for a specific drug or drugs as:
a. Not meeting the requirements of this section; or
b. Being below the pharmacy acquisition cost.
Arkansas SB 688 (Act 900)
1. If the appeal is upheld, the PBM must:
a. Make the change in the MAC;
b. Permit the challenging pharmacy or pharmacist to reverse and rebill the
claim in question;
c. Provide the NDC number that the increase or change is based on to the
pharmacy or pharmacist; and
d. Make the change in MAC effective for each similarly situated pharmacy
as defined by the payor subject to the MAC List
Arkansas SB 688 (Act 900)
1. If the appeal is denied, the PBM must provide the challenging pharmacy or pharmacist the NDC number and the name of the national or regional pharmaceutical wholesalers operating in Arkansas that have the drug currently in stock at a price below the MAC List; or
2. If the NDC number provided by the PBM is not available below the pharmacy acquisition cost from the pharmaceutical wholesaler from whom the pharmacy or pharmacist purchases the majority of prescription drugs for resale, then the PBM shall adjust the MAC List above the challenging pharmacy’s pharmacy acquisition cost and permit the pharmacy to reverse and rebill each claim affected by the inability to procure the drug at a cost that is equal to or less than the previously challenged MAC.
PCMA v. Rutledge
PCMA arguing that Act 900:
Violates the dormant Commerce Clause of the US Constitution by imposing an excessive burden on interstate commerce
Violates the Contracts Clause of the US Constitution because it substantially impairs PBM customer contracts and pharmacy contracts
Violates the Due Process Clause of the 14th Amendment to the US Constitution because PBMs will not have knowledge necessary to fulfill a legal obligation created by Act.
Is preempted by ERISA because it relates to employee benefit plans
Is preempted by the Medicare Prescription Drug, Improvement, and Modernization Act because it applies to Medicare beneficiaries enrolled in Medicare Part D