Tennessee Governor Bill Lee Signs into Law Legislation Regulating PBMs and Protecting Independent Pharmacies

A piece of legislation aimed at regulating pharmacy benefit managers (PBMs) and protecting Independent Pharmacies in the State of Tennessee recently passed through the State’s House and Senate and was subsequently signed into law by Governor Bill Lee. Specifically, Tennessee’s new PBM legislation (SB1617/HB1398) seeks to protect patients and Independent Pharmacies from certain improper practices by PBMs operating in Tennessee including by addressing PBM conflicts of interest, curbing the practice of “spread pricing,” and also adding protections for pharmacies participating in the federal 340B drug program. The bill is set to take effect on July 1, 2021.

Tennessee’s Bill is an important piece of legislation which reflects a recognition by the Tennessee legislature of the various challenges and issues facing the patients and Independent Pharmacies of Tennessee. Among the various components of this legislation, a PBM cannot (1) exclude 340B entities from PBM networks based on criteria that is not applied to non-340B entities; (2) interfere with patients’ right to choose a contracted pharmacy or contracted provider of choice; and (3) reimburse a contracted pharmacy an amount that is less than the actual cost to a pharmacy for the prescription drug or device.

SB1617/HB1398 is an important piece of legislation and reflects the growing concerns surrounding PBM conduct at the state level, but also an ever-increasing response to these concerns by state legislatures throughout the United States. Tennessee joins several other states that have recently enacted new legislation aimed at reasonable regulation of PBMs.

How Frier Levitt Can Help

Frier Levitt represents numerous pharmacies across the United States in challenging PBM audits, network access, reimbursement practices and has extensive knowledge on all aspects of the pharmacy-PBM relationship. Contact us today to speak with an attorney about how your pharmacy can leverage the various laws and protections afforded to pharmacies, including relevant federal and state laws governing PBMs.