Transparency in contracting has become an important topic for pharmacies and pharmacy benefit managers (PBMs). The intent of PBM transparency laws is to provide pharmacists with a look into how PBMs determine generic drug reimbursement. The National Community Pharmacists Association (NCPA) calls for greater PBM transparency since smaller, community pharmacies are often negatively affected by lower reimbursement rates. When entering into a payer contract, many independent pharmacies do not receive a clear definition of Maximum Allowable Cost (MAC) prices and how they are determined. In order to address this issue, five states have passed laws requiring PBMs to disclose information to pharmacies regarding MAC reimbursement methodologies. Six additional states have pending legislation or are in the process of introducing MAC legislation.

States that have passed legislation in 2013 include Kentucky, North Dakota, Arkansas, Texas, and Oregon. Although each state varies in specific details of their law, all contain the same basic requirements of PBMs, including:

• Identify the pricing sources used to determine MAC prices in their pharmacy network contract.
• Provide a reasonable appeals process for the pharmacy to contest a MAC price with a resolution required from the PBM within 7-10 business days. The PBM must provide a specific reason for denied appeals.
• Update MAC lists and make MAC updates available to contracted pharmacies on a timely basis, at least every 7-14 calendar days.
• In order to place a product on the MAC list, the drug must be:
  • “A” or “B” rated in the Orange Book or Green Book, or have an “NR” (not rated) or “NA” (not available) rating or a similar rating by a nationally recognized reference.
  • Products which do not require FDA approval are identified in Medi-Span as “NR” (not rated).
  • Available for purchase by all pharmacies in the state.

PHSI believes that more states will pass MAC transparency laws requiring PBMs to disclose their MAC methodology. The impact of these laws on pharmacy reimbursement remains to be seen.

To learn more about how PHSI helps MCOs and PBMs manage their MAC programs, please see our Generic MAC File Services description.