Governor Bill Lee Signs Enforceable PBM Reform Bill into Law

With multiple co-prime sponsors in the Senate and the House, the bill passed as amended with an 82-9 vote in the House. Hours later in the Senate, the companion bill passed on a 32-0 vote. With a letter from TPA cosigned by national organization partners, the Governor signed the bill despite pushback by the PBM industry. In order to promulgate rules by the TDCI, the law will take effect immediately. For all other purposes, the law will take effect on January 1, 2023.

Much of this law offers clean-up language to 2021’s Public Chapter 569, yet TPA advocated for key provisions to ensure all provisions can be properly enforced by the TDCI, which align with Arkansas’ law that was defended by the U.S. Supreme Court in Rutledge v. PCMA.

Summary points of the law include:

• Medication Product Reimbursement
  • Following the proper appeals process, PBMs shall reimburse contracted pharmacies no less than the actual cost for a prescription drug or device.
  • The reimbursement appeals process of a PBM must be approved by the TDCI.
  • If a pharmacy wins an appeal, the PBM must reimburse the proper rate within 7 days and the PBM must pay or waive the cost of any transaction fee to reverse and rebill the claim.
  • If a pharmacy loses an appeal, the PBM must demonstrate where a pharmacy can obtain the product currently in stock at a price that is less than the challenged rate within 7 days. If the PBM cannot produce this information, they must reimburse at the actual cost of the pharmacy.
  • This does not apply to TennCare.
• Professional Dispensing Fee
  • PBMs shall pay a professional dispensing fee at a rate not less than the current TennCare dispensing fee IF…the pharmacy would qualify for an enhanced dispensing fee for low-volume pharmacies (currently at $11.98), which is currently defined by TennCare standards as less than 65,000 prescriptions per year.
  • The TDCI is authorized to promulgate rules to properly enact this provision. TPA has already been in communication with various third-party payers to determine a proper verification for an enhanced dispensing fee to a pharmacy, which is a question already raised by PBMs.
• Patient Access to Pharmacy of Choice & Anti-Steerage Provisions
  • PBMs cannot interfere with the right of a patient to choose a contracted pharmacy, nor offer financial or other incentives to utilize a pharmacy owned by or financially beneficial to the PBM or covered entity.
  • PBMs must allow pharmacies the opportunity to be in-network if they are licensed in the state AND are willing to accept the same terms and conditions for at least one of their networks in the state.
  • PBMs cannot prevent a pharmacy from participating in a preferred or non-preferred network of pharmacies.
  • PBMs cannot charge patients different co-payments or provide any inducement or financial incentives for using any pharmacy within a given network.
• Definitions
  • Clarification for ‘covered entity’ – includes plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), while excluding Medicare Part D plans.
• Role of the TDCI
  • The TDCI will institute an external appeals process for any appeal denied by a PBM.
  • There is clear determination that this law applies to ERISA plans.
  • Any violations of this law can be clearly enforced by the department.

Over the next several months, TPA will advocate for timely promulgation of rules by the TDCI. In addition, TPA will stay in communication with key stakeholders to ensure that proper implementation and enforcement of the law occur, while offering education across many practice areas to showcase the importance of this law.

Legislative victories do not happen without hard work and determination as well as your financial support. TPA needs your support of the PharmPAC or the General Advocacy Fund. The PharmPAC has a primary purpose of providing financial assistance to those candidates for public office who are supportive of the profession of pharmacy and recognize the value of quality care and services. The General Advocacy Fund allows for contributions to TPA’s overall advocacy strategy and activities, including our Pharmacy Day on the Hill programming, contract lobbyists, and marketing and advocacy tools. Visit bit.ly/AdvocacySupport to contribute today!

About the Tennessee Pharmacists Association
The Tennessee Pharmacists Association represents the profession of pharmacy across the state, united for the purpose of promoting safe and effective medication use to improve the health of patients. Since 1886, the Tennessee Pharmacists Association has preserved and advanced the interests of the profession and has served the professional needs of all pharmacists, student pharmacists, and pharmacy technicians. For more information, please visit www.tnpharm.org.