New State Law on Generic Pricing Upsets PBMs

The law could restrict the use of less-expensive generics with the availability of newer, more-expensive drugs.

The pharmacy benefits industry is challenging a new state law, trying to protect a key management tool that insurers, employer groups and public payers have been relying on for cost stability.

The Pharmaceutical Care Management Association wants to overturn a new Iowa law regulating maximum allowable cost lists for generic drugs, arguing that any state involvement in the practice is preempted by the federal Employee Retirement Income Security Act’s national framework.

Enacted with the support of the National Community Pharmacists Association, Iowa’s law took effect in July, and joined similar laws on the books in 15 other states aimed at giving pharmacies greater bargaining power at the hands of maximum cost lists.

Iowa’s law gives the state insurance commissioner the ability to require pharmacy benefit managers to disclose their pricing methodologies to pharmacies. For drugs subject to the maximum reimbursement list, the law requires PBMs to inform pharmacies of their pricing data sources and let them comment, contest or appeal the maximum rates — and lets pharmacies claim payment retroactively for any inaccurate pricing in the past.

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Source: Healthcare Payer News