PROCEDURES FOR CONTRACTS BETWEEN PHARMACY BENEFIT MANAGERS AND CONTRACTED PHARMACIES: The Department of Health and Human Services states this bill establishes requirements for contracts between pharmacy benefit managers (PBM) and contracted pharmacies including sources used by the PBM to calculate drug reimbursement, an appeal process for disputes on drug pricing, and a process for retroactive reimbursement. PBMs that establish maximum allowable costs are required to include in contracts the source for the price, drugs subject to the maximum price, weekly updates on drugs subject to the maximum limits, and a provision to adjust the maximum cost every 14 days. The Department assumes this bill would not apply to fee for service Medicaid prescription drugs since the PBM administering the pharmacy benefit does not contract with pharmacies. In order to participate in the Medicaid program, pharmacies sign a provider agreement with the Department. The agreement does not specify the reimbursement amount, but requires pharmacies accept as payment in full, the amount paid by the Medicaid program. Under Medicaid Care Management the Managed Care Organizations (MCOs) are permitted to contract with subcontractors to administer the benefit. The Department states both of the MCOs have contracted with PBMs and these PBMs contract with individual pharmacies. The Department assumes some of the contract requirements would be administratively burdensome and would result in an increase in the captitated rate paid to the Medicaid MCOs. The Department cannot determine what the impact would be because it is not involved in the contracts between the MCOs and PBMs or the contracts between the PBMs and the pharmacies.

The Department of Administrative Services states this bill would establish and make available an appeals process to pharmacies relative to their contracts with pharmacy benefit managers and the maximum allowable cost of a prescription drug. The Department indicates, although the bill could result in higher prices for prescription drugs, the Department has no way of determining the potential cost to the State’s Health Benefit plan.