Congratulations to the Arkansas Pharmacists Association (APA) and all Arkansas pharmacists on enactment of S.B. 1138, legislation to bring transparency, among other reforms, to generic drug reimbursement limits known as maximum allowable costs (MACs). The bill was signed into law April 12 by Governor Mike Beebe (D).
Arkansas joins Kentucky and North Dakota as the first three states to enact legislation addressing MAC issues. APA and Arkansas pharmacists did the heavy lifting and hard work on S.B. 1138. NCPA lent its support for the legislation in a March 2013 letter to state lawmakers.
NCPA’s letter recapped a number of problems associated with pharmacy benefit managers’ (PBMs) use of MACs. For example, PBMs maintain multiple MAC lists. Usually unbeknownst to the plan sponsor, the PBMs can then reimburse pharmacies using a low MAC and charge the health plan at a higher MAC – pocketing the difference or “spread.”
Generic drugs account for nearly 80 percent of prescriptions, but a community pharmacist has virtually no idea how PBMs determine MAC rates for these medications. S.B. 1138 should give pharmacists more transparency into how PBMs calculate MACs so that they can better evaluate whether a specific contract would allow the pharmacy to remain viable.
In addition, S.B. 1138 would offer pharmacists an appeals process when disputes over MACs arise and will hopefully lead to more timely adjustments of MACs by PBMs to reflect rising drug costs.
APA officials credit State Sen. Ron Caldwell, the bill’s sponsor, for his efforts. They noted that, after some compromising, the final bill was agreed to by the PBM industry. S.B. 1138 (now Act 1194 of the 89th General Assembly) will go into effect 90 days after the official end of the legislative session.