Pharmacy ALERT: Amending Rate Schedules in the Middle of a Contract Term

It has been widely reported that Express Scripts has recently issued rate amendments to its Pharmacy Provider Contracts. These purported rate amendments in many instances come on the heels of multiyear contracts that were executed just a few months ago, sometimes after strenuous back and forth negotiating between the pharmacy and the PBM. Moreover, these rates are set to become effective in the very near term, smack dab in the middle of the 2019 plan year.

This brazen action raises the question of whether such rate amendments are permitted or lawful. Express Scripts and other PBMs routinely claim the right to unilaterally amend contracts merely by providing notice to pharmacies, and not receiving an objection by the pharmacy (or in many instances, its agent, such as the PSAO). However, many state laws and legal precedents may be implicated by this unilateral action to “yank the rug out” from pharmacies that have developed long-term strategies and investments based on the multi-year contract signed just a few months ago. Moreover, federal and state Any Willing Provider Laws often require plans to offer contracts with reasonable terms and conditions, calling into question the reasonableness of this move or the lower rates being presented. Providers also have the right to contact Express Scripts about any proposed changes, particularly if the pharmacy has issues or objections with the amendment.

If your pharmacy has received notice of rate amendments and is concerned about your legal rights, contact Frier Levitt today to speak to an attorney.