Alexandria, Va. February 28, 2013 - The National Community Pharmacists Association (NCPA) applauds the Kentucky Senate for voting overwhelmingly to pass S.B. 107, a bill that would provide transparency regarding how pharmacy reimbursements are determined for multiple source generic drugs, and establish a fairer appeals process when a dispute arises over those payment levels. The reform measures are needed because pharmacy benefit managers (PBMs) exert one-sided control over the reimbursement process through their maximum allowable costs (MAC) lists that are maintained in secrecy, changed without proper notification, and are not updated frequently enough to reflect spikes in a drug's cost. NCPA urges the Kentucky House to pass similar legislation that NCPA has supported in previous legislative sessions.
"The Kentucky House should support the concepts laid out in S.B. 107," said NCPA CEO B. Douglas Hoey, RPh, MBA. "As we stated in our letter to the Kentucky Senate before it approved this common-sense reform, the MAC process is analogous to a carpenter contracting to build a house for a customer without knowing how much they will be paid, how much their materials will ultimately cost, or how or when those costs will change. Obviously that's no way to run a business, but that's the system PBMs force upon pharmacies, and that must change."
Hoey added, "We hope the Kentucky House keeps up the momentum for this legislative fix that creates a fairer reimbursement system for pharmacies, allowing these important health care providers to do what they do best—provide valuable prescription drug services to their patients."
Kentucky's 507 independent community pharmacies employ approximately 5,300 people, and are most affected by the current MAC process. These small business health care providers receive 90 percent of their revenue from prescription drugs, and 80 percent of that mix is generic, most of which are subject to the MAC lists.
The lack of transparency only benefits the PBMs, which often keep different MAC lists for the same prescription drug health plan—one for the health plan sponsor and one for the pharmacies. PBMs are able to use an aggressively low MAC price list to reimburse pharmacies and then bill health plan sponsors using a higher MAC price list. As a result PBMs can pocket the "spread" between the prices. S.B. 107 would create a set of standards with relation to categorizations and formularies for how PBMs craft their MAC lists, require more frequent updates, and streamline the process for pharmacy reimbursement appeals. By removing the veil of secrecy, health plan sponsors will understand what they are getting for the dollars they spend with PBMs and pharmacies can properly anticipate the true costs of their generic prescription drug inventory.
"We are grateful to have the leadership of Senator Julie Denton and other strong supporters in the Kentucky Legislature who understand the importance of this bill," said independent pharmacy owner and Government Affairs Chair Richard Slone, RPh, with the Kentucky Pharmacists Association. "We are sincerely grateful for the consideration, engagement, and strong expression of support by the Kentucky Senate as evidenced by its vote."
"Pharmacists made the business case in presenting their argument to the Senate for transparency in how MAC prices are set. Now, we will turn our efforts to the House, which also is very supportive of issues affecting community pharmacies, to get this legislation passed and enacted as quickly as possible", added Robert McFalls, executive director of the Kentucky Pharmacists Association.
The National Community Pharmacists Association (NCPA®) represents the interests of America's community pharmacists, including the owners of more than 23,000 independent community pharmacies. Together they represent an $88.5 billion health care marketplace, dispense nearly 40% of all retail prescriptions, and employ more than 300,000 individuals, including over 62,000 pharmacists. To learn more go to www.ncpanet.org or read NCPA's blog, The Dose, at http://ncpanet.wordpress.com/.
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