BILL ANALYSIS Ó
AB 627
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CONCURRENCE IN SENATE AMENDMENTS
AB
627 (Gomez)
As Amended June 16, 2015
Majority vote
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|ASSEMBLY: | 77-0 | (May 7, 2015) |SENATE: | 37-0 | (June 22, 2015) |
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Original Committee Reference: HEALTH
SUMMARY: Requires a pharmacy benefit manager (PBM) that
reimburses a contracting pharmacy for a drug on a maximum
allowable cost basis to: 1) include in a contract, renewed on
or after January 1, 2016, information identifying the data
sources used to determine the maximum allowable cost (MAC) for
the drugs on a MAC list, and 2) provide for an appeal process
for the contracting pharmacy, make available to a contracting
pharmacy, upon request, the most up-to-date MAC lists used by
the PBM for patients served by the pharmacy. This bill also
prohibits a drug from being included on a MAC list or from being
reimbursed on a MAC basis unless certain requirements are met.
Specifically, this bill:
1)Requires a PBM to make available to a contracting pharmacy,
upon request, the most up-to-date MAC list or lists used by
the PBM for patients served by that pharmacy in a readily
accessible, secure, and usable Web-based format or other
comparable format.
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2)States that a drug shall not be included on a MAC list or
reimbursed on a MAC basis unless the drug meets specified
criteria
3)Requires contracts entered into or renewed on or after January
1, 2016, to state that a PBM shall review and shall make
necessary adjustments to the maximum allowable cost of each
drug on a MAC list using the most recent data sources
available at least once every seven days.
4)Requires contracts entered into or renewed on or after January
1, 2016, to state that a PBM shall have a clearly defined
process for a contracting pharmacy to appeal the MAC for a
drug on a MAC list.
The Senate amendments state that the provisions of this bill do
not apply to certain contracts governing the medicines and
medical supplies that are required to be provided to injured
employees in workers' compensation cases. Make other technical
changes.
FISCAL EFFECT: None
COMMENTS: This bill is sponsored by the California Pharmacists
Association. According to the author, "[This bill] will bring
fair standards and transparency to [MAC] pharmacy
reimbursements. The bill requires MAC lists to be transparent,
accessible, and updated weekly to the current market price for
pharmacies. It also establishes standards for appeals of MAC
prices, ensuring that these appeals are resolved quickly. This
will both enable pharmacists to spend more time helping their
patients and help thousands of independent pharmacies across
California."
Background. PBMs engage in many activities to manage their
clients' prescription drug insurance coverage. PBMs assemble
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networks of retail pharmacies so that a plan sponsor's members
can fill prescriptions easily and in multiple locations by just
paying a copayment amount. PBMs consult with plan sponsors to
decide for which drugs a plan sponsor will provide insurance
coverage to treat each medical condition (e.g., hypertension,
high cholesterol, etc.). The PBM manages this list of preferred
drug products (the formulary) for each of its plan sponsor
clients.
Consumers with insurance coverage are then provided incentives,
such as low copayments, to use formulary drugs. Because
formulary listing will affect a drug's sales, pharmaceutical
manufacturers compete to ensure that their products are included
on these formularies. They do so by paying PBMs "formulary
payments" to obtain formulary status and "market-share payments"
to encourage PBMs to dispense their drugs. The payments are
based on the quantity of drugs dispensed under the plans
administered by the PBM.
Drug Pricing and Mac Lists. According to the author,
"Pharmacies generally purchase prescription drugs and pay for
them up front. When a patient with health coverage is
prescribed a covered drug that is dispensed by a contracted
pharmacy, the health plan or insurer (or a contracted PBM)
reimburses the pharmacy for 1) the cost of the drug dispensed
and 2) a preset professional dispensing fee. Most health plans
and PBMs reimburse pharmacies for name brand drugs based on
national pricing lists (i.e., Average Wholesale Price) and for
generic drugs based on proprietary MAC lists. PBMs establish
these MAC lists based on national and regional drug pricing data
in an attempt to reimburse pharmacies as close as possible to
the current market rate for drugs. "
Other States. At this time, 17 other states have passed similar
legislation. There are also 15 other states with pending
legislation.
Support. The California Pharmacist Association (sponsor) writes
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in support, "AB 627 brings reasonable standards to the pharmacy
reimbursement model known as Maximum Allowable Cost (MAC).
Under MAC-based reimbursement, pharmacies receive payment for
generic medications they dispense to patients based on
proprietary price lists managed by health plans and pharmacy
benefit managers. These price lists need frequent updates to
ensure they reflect the current market prices that pharmacies
pay to acquire medications. When the price lists are not
appropriately updated, pharmacies lose money by dispensing
medications to patients. Pharmacies also need a defined process
for appealing MAC list prices that are below the current market
price."
Opposition. None on file.
Analysis Prepared by:
Dharia McGrew / HEALTH / (916) 319-2097 FN:
0001059