CA Gov Jerry Brown Praised by National Long Term Care (LTC) Pharmacy Group for Signing MAC Transparency Bill Into Law

DATE: July 15, 2015

State Efforts to Reform Secretive, Opaque Pharmacy Benefit Manager (PBM) Pricing Policies Gain Momentum as Brown Follows Last Week’s Bill Signing by OH Gov John Kasich

Washington, DC – Saying there is growing bipartisan momentum at the state level to reform the longstanding secretive and opaque Pharmacy Benefit Manager (PBM) drug pricing policies antithetical to the interests of patients and taxpayers, the Senior Care Pharmacy Coalition (SCPC) today praised California Governor Jerry Brown (D-CA) for signing into law AB 627, which brings badly-needed reforms to abusive Pharmacy Benefit Manager (PBM) pricing and reimbursement practices. Last week, GOP Governor John Kasich signed into law a similar bill, which cracks down on unaccountable PBM pricing activities.

“California Governor Jerry Brown, like Ohio Governor John Kasich, deserves praise for signing into law legislation to finally reform heretofore unaccountable PBM pricing and reimbursement policies that, for too long, have left taxpayers and patients in the dark,” stated Alan G. Rosenbloom, President and CEO of SCPC. “These back to back PBM pricing reform victories in Ohio and California represent bipartisan momentum for pulling back the curtain on PBMs, and similar federal efforts are warranted to bring about more accountability and less secrecy.”

Specifically, AB 627 requires PBMs to update their Maximum Allowable Cost (MAC) lists weekly; requires PBMs to provide in-network pharmacies with the current MAC list upon request and disclose the sources used in establishing MAC lists; and establishes much-needed standards for appeals filed by pharmacies for MAC list prices that appear to be out of date. “The issue of rapidly escalating generic prices coupled with slow adjustments to MAC price lists led to the need for this bill,” according to a new California Pharmacists Association legislative alert.

According to an analysis by the Ohio Pharmacists Association (OPA), the Kasich PBM reforms “are intended to rein in dramatic underpayments to pharmacies by insurers and PBMs. Specifically, the bill would require PBMs to update their MAC price lists at a minimum of every seven days; give pharmacies some basic MAC price appeal rights; would require PBMs to supply pharmacies with a current list of the sources used to determine MAC prices; would require drugs appearing on a MAC price list to be commercially available for purchase by pharmacies in Ohio; would require PBMs to disclose any discrepancy in MAC reimbursements to pharmacies versus what is charged to plan sponsors; and would require PBMs to be licensed as third party administrators (TPAs) by the Ohio Department of Insurance.”

Rosenbloom noted that PBMs use MAC pricing and other practices under Medicare Part D, which is by far the most significant payer for prescription medications in LTC settings like skilled nursing facilities and assisted living facilities. Similar to the situation in California and Ohio, he said, this pricing methodology and related practices under Part D result in dramatic underpayments to pharmacies, especially LTC pharmacies – which are significantly different than retail pharmacies, and have more stringent federal regulatory requirements and concomitantly higher costs.

“Independent LTC pharmacies and patients under their care require adequate protection against Medicare Part D pricing policies that afford no recourse to address practices that inappropriately shift dollars from providers to intermediaries such as PBMs in ways that undermine LTC pharmacies’ ability to provide key consultative services to patients,” continued Rosenbloom. “These unwarranted policies and practices threaten quality patient care and negatively affect taxpayers, as they ultimately add unnecessary costs to the Medicare program.”

The SCPC represents companies that own and operate independent long-term care (LTC) pharmacies in more than 40 states, including California and Ohio, and serve over 350,000 patients in skilled nursing facilities (SNFs) and assisted living facilities (ALFs) nationally, every day.