In The News | 12 pharmacy benefit managers found in violation of reimbursement rule

Northwest Arkansas Gazette

Reporter: Nathan Ansell

Twelve pharmacy benefit managers have been found in violation of a rule requiring adequate reimbursements to pharmacies, an attorney with the Arkansas Insurance Department told state lawmakers Friday.

Rule 128, passed on a temporary basis in September and permanently in December, requires pharmacy benefit management companies, which administer prescription drug plans on behalf of health plans, to reimburse pharmacies at "fair and reasonable" rates.

Daniel Holland, general counsel for the Insurance Department's Pharmacy Benefit Managers Division, said the department is assessing two rounds of data reported under the rule, one of which was submitted in January and the other July 31.

He said the first round of reporting found 654 "deficient plans" (among 3,347 total data reports from health plans and pharmacy benefit managers) that self-reported average annual pharmacy reimbursement below the national average drug acquisition cost, a violation of the rule.

Holland said the department had issued notices to cure to "roughly half" of those plans, requiring a submitted corrective action plan detailing "how the filer will bring their reimbursements into compliance with current Arkansas law." The department is auditing and verifying statistics for the other half, who claimed they experienced "data issues" and "some confusion on the report," he said.

According to a status report by the department in June, the 654 plans collectively cover an estimated 340,000 Arkansans.

The rule also says pharmacy benefit managers "may be required to include a fair and reasonable" dispensing fee to pharmacies in addition to what they pay for the drugs, but Holland said the department had so far only issued fines relating to national average drug acquisition cost levels.

"Until we define 'fair and reasonable,' we're somewhat limited to NADAC," he said. "A PBM's going to say, 'We have a dispensing fee in our contract; it's 30 cents, it's 50 cents. We think that's very reasonable.'"

Clarifying that the Insurance Department would be issuing penalties regardless of intentionality, Holland told lawmakers, "there's not a ton of leeway when it comes to below-NADAC reimbursement."

In response to a question from state Sen. Kim Hammer, R-Benton, on why one particular violation did not incur the maximum $5,000 penalty, Holland said the department's intention was to start at lower amounts and move upwards as it identified a pattern with a pharmacy benefit manager.

"I'd like the agency to quit pussyfooting around with (pharmacy benefit managers)," Hammer said. "Don't start at the bottom and work up, start at the top and don't move from the top, because if they can spend the millions of dollars they're spending fighting this legislative body and our governor, then we don't need to cut them any slack."... CONTINUE READING