PBMs Continue to Wrongly Exclude Specialty Pharmacies From Networks, Often in Violation of Federal and State Law

Pharmacy Benefit Managers (PBMs) own their own Specialty Pharmacies (SPs) and convince Plan Sponsors to allow the PBMs to become the exclusive provider of expensive specialty drugs.  PBMs have recently enjoyed significant revenue expansion and resultant stock growth, largely derived from PBM tactics involving specialty drug dispensing and aggressive pharmacy network terminations. A look at recent PBM quarterly earnings announcements reveals this clear trend. The PBMs’ motive to exclude independent pharmacies is accelerating, to the detriment of independent SPs. But, in many instances, SPs have a legal remedy, which is too often ignored to the detriment of SPs. Proper knowledge of the “Rule of Law” can help level the playing field and allow independent SPs to compete unfettered. 

Federal laws require plan sponsors and PBMs to permit “the participation of any pharmacy that meets the terms and conditions” of any Medicare Part D network. Additionally, many states have similar laws that allow pharmacies to be admitted in commercial plans if they meet the network’s terms and conditions. These “Any Willing Provider” (AWP) laws are powerful, and applicable to specialty pharmacy networks. However, too often SPs do not assert their rights and permit “prescription leakage.” The federal government has even taken note.

Recently, the Centers for Medicare & Medicaid Services (CMS) weighed in on the issue of improper network exclusion by PBMs after receiving complaints by independent SPs. Specifically, CMS concluded that it was necessary for PBMs and Plan Sponsors to receive guidance on AWP laws. Not only did CMS clarify that AWP laws require contracting with pharmacies that meet the Terms and Conditions (“T&C”), but CMS further concluded that the T&C must be reasonable and relevant. 

By law, plan sponsors must provide a requesting pharmacy the T&C for each Part D plan within two business days of the request. Previous to CMS’s clarification, PBMs were unwilling to even provide the T&C to independent pharmacies, largely as another unfair tool of network exclusion. Further, the offered T&C must include language that obligates the plan sponsor to include the pharmacy upon the pharmacy’s acceptance of the T&C. These are powerful tools available to independent SPs. Use them.

Notwithstanding the applicable federal requirements, independently owned pharmacies are routinely denied access to Medicare Part D, as well as commercial specialty pharmacy networks. Frier Levitt works on behalf of specialty pharmacies to ensure proper access to SP networks. Contact us today to learn more.

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