Wyoming Joins Nationwide Effort to Fight Abusive PBM Practices with New Bill
Pending before Wyoming’s Joint Judiciary Committee is new legislation (HB 191) targeting the abusive practices of pharmacy benefit managers (“PBMs”) and granting pharmacies a private right of action to seek redress for damages caused by certain PBM activities. Specifically, HB 191 adds to the Insurance Code new sections regulating the conduct of pharmacy benefit managers, eliminating spread pricing, banning post-point-of-sale fees, and providing pharmacies with a private right of action to seek redress for injuries caused by PBMs. The three (3) operative sections in HB 191 are as follows:
Section 1 of HB 191 prohibits PBMs from imposing post-point-of-sale fees or other retroactive fees on pharmacies, including direct and indirect remuneration fees (“DIR fees”). As previously reported by Frier Levitt, DIR fees are often collected many months after the pharmacy dispenses the medication at issue and may result in pharmacies filling prescriptions for less than the acquisition cost for the medication. The unreasonably low net reimbursement that DIR fees produce violates federal law requiring “reasonable and relevant” terms and conditions of pharmacy participation.
In an effort to provide pharmacies with much needed relief from these abusive PBM practices, Section 1 provides pharmacies with a private right of action to seek damages or injunctive relief for any injury caused by a PBM’s violation of Section 1. In addition, if a pharmacy exercises this private right of action, PBMs are prohibited from retaliating against that pharmacy. Retaliation includes terminating the pharmacy from its networks, refusing to renew a contract with the pharmacy, subjecting the pharmacy to increased audits, and failing to promptly pay the pharmacy for services provided. However, the anti-retaliation provision does not apply if the PBM acts in response to a credible allegation of fraud against the pharmacy.
Section 2 concerns the level of reimbursement PBMs must pay contracted pharmacies. Specifically, under Section 2, contracted pharmacies are entitled to reimbursement that is not less than the national average drug acquisition cost (“NADAC”). To the extent NADAC is not available at the time of reimbursement, the minimum reimbursement for pharmacy services is the wholesale acquisition cost of the drug plus the dispense fee.
The final section of HB 191 enhances existing legislation governing PBM audits by:
- Reducing the maximum allowable audit period from two (2) years to six (6) months from the date that an audited claim was adjudicated;
- Requiring PBMs to provide audited pharmacies with the preliminary audit report within sixty (60) days from conclusion of the audit; and
- Requiring PBMs to provide audited pharmacies with a final audit report within ninety (90) days after the preliminary audit report is delivered.
Finally, HB 191 levels the playing field by banning spread pricing, which is defined in the Bill to mean “any amount charged or claims by the [PBM] in excess of the amount paid to the pharmacy”. HB 191 also prohibits PBMs from reimbursing pharmacies less than the amount that a PBM pays its wholly owned or affiliated pharmacies.
While the new legislation promises robust protections for pharmacies, its future is uncertain given the pending appeal before the Tenth Circuit in Pharmaceutical Care Management Association v. Mulready, where the issue is whether Medicare Part D and ERISA preempt a similar Oklahoma law governing PBM activities. While PCMA’s ERISA preemption arguments have been effectively neutralized in light of the Supreme Court’s decision in Rutledge v. Pharmaceutical Care Management Association and the Eighth Circuit’s decision in Pharmaceutical Care Management Associated v. Wehbi, it is clear from Mulready that Part D preemption still presents an obstacle for states seeking to regulate PBM conduct. The Tenth Circuit is scheduled to hear oral argument on this issue on March 21, 2023.
How Frier Levitt Can Help
Frier Levitt has extensive knowledge regarding PBM contracts, activities and policies. Frier Levitt attorneys regularly litigate and arbitrate disputes against PBMs on behalf of pharmacies and other providers to curb abusive PBM practices, including patient steering, gag clauses, spread pricing, pharmacy audits and network access/termination issues. Frier Levitt also has experience drafting letters to lawmakers to effectuate change at both the state and federal levels. Contact us for more information.