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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.
5/21/2015 update:
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