SB 895 Modifies provisions relating to pharmacy benefit managers
Sponsor: Sater
LR Number: 6046S.01I Fiscal Note available
Committee: Veterans' Affairs and Health
Last Action: 4/3/2014 - Hearing Conducted S Veterans' Affairs and Health Committee Journal Page:
Title: Calendar Position:
Effective Date: August 28, 2014

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Current Bill Summary


SB 895 - This act delineates the procedures to be used by pharmacy benefit managers (PBMs) as to practices used with contracted pharmacies participating in a PBM network. This act adds a definition of "maximum allowable cost list" or "MAC list" to mean a listing of drugs used by a pharmacy benefit manager setting the maximum allowable cost on which reimbursement to a pharmacy or pharmacist may be based.

This act provides that for every drug for which the PBM establishes a maximum allowable cost to determine the drug product reimbursement, the PBM shall:

- Include in the contract with the pharmacy, information identifying the national drug pricing compendia or sources used to obtain the drug price data and the methodology used in preparing the maximum allowable cost;

- Make available to a contracted pharmacy the drugs subject to maximum allowable cost and the actual maximum allowable cost for each drug;

- Provide a process for each pharmacy subject to MAC list to receive prompt notification of an update to the MAC list;

- Update its MAC list on a timely basis, but in no event longer than seven calendar days from a change in the methodology on which the MAC list is based or in the value of a variable involved in the methodology.

A PBM is also required to provide a reasonable administrative appeal procedure to allow pharmacies to challenge maximum allowable costs for a specific drug or drugs within three business days after the applicable fill date. The required process to appeal, investigate and resolve disputes is specified under the act, including that the appeal be investigated and resolved within 10 days.

The act also delineates the types of disclosures PBMs shall make to the plan sponsor such as the basis of methodology to establish a multi-source generic pricing, whether the PBM is using more than one multi-source generic drug list, and whether the PBM is reimbursing the pharmacies at a different rate than it is billing the plan sponsor.

Any PBM who fails to comply with the provisions of this act shall be liable to the plan sponsor or pharmacy as applicable in an amount equal to $100 for the first violation, $250 for the second violation, and $1,000 for the third and any subsequent violation.

ADRIANE CROUSE