Iowa Gov. Terry Branstad (R.) is being urged by the National Community Pharmacists Association to sign into law a bill that would give community pharmacies more transparency into a pharmacy benefit manager's pricing for multiple-source generic drugs, as well as the ability to challenge it.


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NCPA backs state bill for more Rx cost transparency

March 12th, 2014

ALEXANDRIA, Va. – Iowa Gov. Terry Branstad (R.) is being urged by the National Community Pharmacists Association to sign into law a bill that would give community pharmacies more transparency into a pharmacy benefit manager's pricing for multiple-source generic drugs, as well as the ability to challenge it.

NCPA said Wednesday that the legislation, H.F. 2297, could offer the state's small-business pharmacies some relief from being reimbursed at a financial loss amid a recent surge in pharmacy acquisition costs for many generic drugs, which have jumped as much as 600%, 1,000% or more.

Independent pharmacies currently must evaluate "take-it-or-leave-it" contract offers from PBMs on behalf of health insurance plans, and the "black box" of pharmacy reimbursement is a PBM's maximum allowable cost (MAC), according to NCPA. The association said pharmacists are "left in the dark" about how MACs are determined for many common generics, which account for about 80% of drugs pharmacies dispense.

H.F. 2297 would require PBMs to submit information to Iowa's insurance commissioner related to the their pricing methodology for "maximum reimbursement amount," which is defined as the maximum reimbursement amount for a therapeutically and pharmaceutically equivalent multiple-source prescription drug listed in the Food and Drug Administration's "orange book" on approved drug products with therapeutic equivalence evaluations.

"For those prescription drugs to which maximum reimbursement amount pricing applies, a pharmacy benefits manager must include information in a contract with a pharmacy showing how maximum reimbursement amount pricing is calculated and allowing the pharmacy the opportunity to comment on, contest or appeal the maximum reimbursement amount rates and list," the bill states. "The contract must also allow for retroactive payment if it is determined that maximum reimbursement amount pricing has been applied incorrectly."

In a letter to Branstad this week, NCPA noted that H.F. 2297 would require PBMs to provide clarity on the way they determine and update MAC pricing. The association said that in the past year, six states — Kentucky, North Dakota, Oregon, Texas, Arkansas and New Mexico — have moved to enact legislation on MAC transparency, and more than a dozen states are considering such legislation.

Iowa is home to more than 300 independent pharmacies, which employ an estimated 3,400 residents full-time, NCPA added.

"H.F. 2297 would give independent community pharmacists some basic insights into their reimbursement from PBMs for common generic drugs, as well as set forth an appeals process to hopefully resolve differences that may emerge if PBMs continue to reimburse community pharmacies at lower, outdated rates when in fact drug acquisition costs increase significantly for pharmacies," NCPA chief executive officer B. Douglas Hoey said in a statement. "We encourage Gov. Branstad to sign this legislation into law."

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