Tennessee Amends and Clarifies Legislation Permitting Pharmacies to Appeal a PBM’s Below-Cost Reimbursement of Claims

With the start of 2023, an amendment to Tennessee Legislation requiring that Pharmacy Benefit Managers (“PBMs”) reimburse Tennessee Pharmacies at least the actual cost of the drug, or align with Tennessee Medicaid reimbursement rates, has taken effect. Under the previous version of Tenn. Code § 56-7-3206, pharmacies could appeal the reimbursement of claims that were below the pharmacy’s actual cost, but the appeals process was not well established by law. This recent amendment creates new obligations that a PBM must follow when a pharmacy appeals, or otherwise challenges, the PBM’s reimbursement. If successful, the PBM must provide pharmacies with the correct reimbursement. If the challenge is unsuccessful, the PBM must provide the pharmacy with information regarding where the challenged medication can readily be found at a lower cost. Additionally, the PBM is required to respond to the pharmacy within seven days. 

The law further establishes a minimum dispensing fee to be paid to any Tennessee pharmacy that qualifies as a “low volume” pharmacy, consistent with Tennessee Law. As of January 2023, a “low volume” pharmacy is defined as a pharmacy that dispenses less than 65,000 prescriptions per year. 

These amendments to § 56-7-3206 reflect the escalating responses by states around the Country to curb the power exercised by PBMs to the detriment of independent pharmacies. 

How Frier Levitt Can Help

Frier Levitt represents numerous pharmacies across the United States regarding various PBM practices including reimbursement issues, network access issues, as well DIR fees. Frier Levitt 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 protections afforded by the various state and federal laws governing PBMs.