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Relating to the use of maximum allowable cost lists related to pharmacy benefits.
No significant fiscal implication to the State is anticipated.
SB 332 would amend Chapter 1369 of the Insurance Code by adding a new subchapter that deals with how pharmacy benefit managers (PBMs) must calculate the maximum allowable cost (MAC) price. Also, it would implement guidelines aimed at making the determination of MAC pricing transparent for pharmacies using PBMs.
Specifically, this bill would clarify the drugs a PBM must include in its calculation of MAC pricing. PBMs would only be able to determine the price of a drug based off the United States Food and Drug Administration’s Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book. From this book, PBMs would be required to adjust the MAC pricing once every seven days.
This legislation would require PBMs to disclose its sources for determining MAC pricing to a pharmacist or pharmacy it is about to enter into a contract with. Moreover, PBMs must establish a process to make MAC pricing information readily available for a pharmacist or pharmacy.
SB 332 would require PBMs to create an appeals process for a pharmacy or pharmacist to dispute MAC pricing. If the disputant wins the appeal, this bill requires the PBM to make the necessary corrections to their original MAC determination and it must rebill the party that won the appeal with the corrected MAC price.
No changes have been made to this bill in House committee.
First chamber recommendation:
Currently, the insurance industry is so overregulated that it shares few qualities with the free market. Although we believe transparency should be reserved mostly for government entities, the current state of the insurance industry requires certain transparency measures. Unfortunately, too much regulation has resulted in numerous distortions and SB 332 would only make a relatively minor fix when considering the whole flawed insurance system.
Health plans and pharmacies hire pharmacy benefit managers (PBMs) to administer pharmacy benefits for insured patients and process pharmacy claims. PBMs reimburse pharmacies for dispensing certain drugs. Each PBM determines which medications they will reimburse to a pharmacy or health plan based on a maximum allowable cost (MAC) formula; however, pharmacies and health plans have no way of knowing what drugs the PBMs will use and they do not know how much it will be until after the fact.
SB 332 would force PBMs to present their methods for determining MAC pricing for certain drugs.
We stand neutral on SB 332 because we do not believe it is particularly offensive to our liberty principles since it does not significantly expand regulations while implementing consumer protections for the pharmacies and health plans that use PBMs. To reiterate, these additional regulations are needed to correct distortions that are the byproduct of government intervention. If the free market were allowed to reign, the purpose of SB 332 would be moot.
House chamber sponsor: Hunter