With the new year here, so come new challenges for independent pharmacies. But in addition to new challenges, there is also good reason for independent pharmacies to be optimistic about opportunities ahead and solutions to some of the challenges they are facing. Many of the challenges facing independent pharmacies arise from continued unfair tactics employed by pharmacy benefit managers (PBMs). However, among the reasons for optimism is a favorable bill moving its way through the Michigan Legislature. As previously discussed by Frier Levitt, Michigan House Bill 4348 (“Bill”), if passed by the Senate and enacted into law, will benefit independent pharmacies approximately one year from now on January 1, 2023. Since Frier Levitt first wrote about the Bill, it was passed by Michigan’s House of Representatives in a vote of 97-10. Currently, the Bill is in Michigan’s Senate Health Policy and Human Services Committee, but a date for the Senate to vote on the Bill has not yet been scheduled. The Bill clearly defines the term “Maximum Allowable Cost” (MAC) and also limits the ability of PBMs to continue to assert that MAC lists are confidential and cannot be publicly disclosed. These are significant developments in the Michigan law because the proposed Bill limits the ability of PBMs to include brand drugs and single source generic drugs on their MAC lists thereby minimizing PBMs’ ability to under-reimburse for such drugs. In addition to favorable MAC language, the Bill provides several other provisions that are beneficial to independent pharmacies.
Most notably, HB 4348 would benefit independent pharmacies by
- requiring a PBM to communicate the final reimbursement amount at the point of sale,
- prohibit PBMs from reimbursing a non-affiliated pharmacy an amount less than an affiliated pharmacy for the same service, and
- establish a reasonable appeals process for pharmacies to challenge PBM conduct.
HB 4348 requires that PBMs communicate the final reimbursement amount which would then prohibit a PBM from retroactively charging a network pharmacy, “any fee, charge, or other amount, whether based on performance metrics or otherwise, after communication of the final reimbursement amount at the time of adjudication at the point of sale.” If passed, Michigan pharmacies would only pay a retroactive fee if it was the result of a valid recoupment claim that was discovered after the PBM properly audited a pharmacy.
Furthermore, the ability of a PBM to provide preferential treatment toward affiliated pharmacies would be limited. Based on the language of the Bill limiting preferential treatment, this law would be a significant improvement because if there is evidence that an affiliated pharmacy is being reimbursed more than an unaffiliated pharmacy, this provision could be used to challenge such improper reimbursement and to pursue monetary damages stemming from such practices.
In sum, this Bill is a substantial improvement and would provide independent pharmacies with several new tools to combat improper practices by PBM. Thus, independent pharmacies in Michigan should encourage their legislators to support this Bill and take the steps necessary to see that it is enacted.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and has extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including state PBM laws in effect in numerous states, including Michigan, in addition to important federal laws which regulate PBM conduct.
