On March 10, 2016, contracts between pharmacy benefit managers (PBMs) and pharmacies must include a mechanism for appeals of contract disputes related to generic drug pricing. Reimbursement schedules for brand-name drugs utilize published pricing benchmarks, such as the Wholesale Acquisition Cost (WAC) and Average Wholesale Price (AWP). For generics, however, PBMs utilize pricing benchmarks developed and managed by individual PBMs, these are known as Maximum Allowable Costs (MACs) and are unit prices for therapeutically equivalent “multisource” drugs. Historically, and due to PBM resistance, MAC pricing is not included in Pharmacy that are presented to pharmacies and since each policy may be governed by a different MAC list to which the pharmacist does not have access, a pharmacy typically will not know the reimbursement rate of a drug prior to filling a prescription. Under the new law, contracts between PBMs and pharmacies will be required to include a process by which a pharmacy can appeal a MAC price that is below its cost. New York Public Health Law § 28-a, among other things, will provide a pharmacy the right to appeal the MAC price within 30 days following the initial claim submission and upon a valid appeal, the PBM must adjust the MAC of the drug for all similarly situated pharmacies in its network in New York.
New York now joins 16 other states and Medicare Part D all of whom have enacted similar legislation on this front. The attorneys at Frier Levitt specialize in advising pharmacies on issues related to PBM appeals, terminations and general litigation. If you are a community pharmacy trying to navigate the complexities of your PBM provider contract and your State’s pharmacy laws and regulations, contact Frier Levitt today for assistance.
