Indiana Law Prohibiting PBM Post Point of Sale Fees, Reforming MAC Protections and other Protections for Independent Pharmacies Now in Effect
A new Indiana law, codified as Act No. 241 (the “Act”) came into effect on July 1, 2020, providing substantial protections for independent pharmacies operating in the State against various Post Point of Sale (“PPOS”) fees, like Direct and Indirect Remuneration (“DIR”) Fees and Generic and Brand Effective Rates (“GER” and “BER”), thus providing legal leverage for pharmacies to challenge such fees. The Act provides other limitations on PBMs and some additional rights for independent pharmacies, including a yearly right for a pharmacy to audit a PBM.
Regarding DIR, GER and other Post-Point of Sale fees, under the Act a PBM may not reduce, directly or indirectly, payment to a pharmacy for pharmacist services to an effective rate of reimbursement, including permitting an insurer or plan sponsor to make such a reduction. “Effective rate of reimbursement” is defined to include DIR, GER and BER. The inclusion of plan sponsors or insurers in this prohibition serves to avoid certain loopholes in other, similar legislation.
Among the Act’s provisions is a new “Any Willing Provider” (AWP) law that expressly applies to PBM networks and states, “A pharmacy benefit manager shall provide equal access and incentives to all pharmacies within the pharmacy benefit network,” and “‘equal access and incentives’ means that a pharmacy benefit manager allows any willing pharmacy provider to participate as part of any of the pharmacy benefit manager’s networks as long as the pharmacy provider agrees to the terms and conditions of the relevant contract applicable to any other pharmacy provider within that network.” The AWP law works in tandem with another provision of the Act preventing the PBM from reimbursing PBM-affiliated pharmacies at a higher rate than independent pharmacies. Pharmacies contracting with PBMs may conduct annual audits of the PBMs, as part of which the PBM must disclose to the pharmacy the actual amounts paid by the PBM to any pharmacy. This provision is designed to ensure compliance with the Act.
Additionally, the Act prevents a PBM from conditioning participation in any network on accreditation, credentialing, or licensing of a pharmacy provider other than a license or permit required by the Indiana board of pharmacy or other state or federal regulatory authority for the services provided by the pharmacy. This provision in the Act appears targeted toward PBM practices of creating narrow networks (e.g., specialty networks) with unreasonable barriers to entry that non-affiliated pharmacies are likely unable to meet.
Indiana’s new PBM law also contains a strong Maximum Allowable Cost or “MAC” provision. Specifically, Indiana’s law requires PBMs to provide detailed information regarding the establishment of MAC prices, a comprehensive list of drugs subject to MAC, the corresponding MAC for each drug, and appeal rights for pharmacies. As to the latter, if a pharmacy is successful on a MAC appeal, the PBM must change the MAC of the drug for the pharmacy, adjust the MAC of the drug appealed for all other contracted pharmacies in the same network, and make retroactive price adjustments in the next payment cycle.
How Frier Levitt Can Help
In all, the Act is designed to ensure parity between independents and pharmacies owned by or affiliated with a PBM. If the new Act is to achieve its intended result, Indiana pharmacies must not only know their rights under the new law, but also immediately begin to assert those rights against PBMs that fail to comply with the Act. Frier Levitt can help. Our experienced pharmacy attorneys understand these and other state laws and have successfully fought for the rights of pharmacies under a variety of state and federal laws targeted at regulating PBM conduct. Contact Frier Levitt today to find out how your pharmacy can benefit from Indiana’s Act, or the laws of your state.