Tennessee: HB 1697 to go before Full House on 3/10/2016

Posted on Mar 09, 2016

HB 1697 will go before the Full House in Tennessee’s General Assembly on Thursday, March 10.  It is critical that you contact your State Representative today and encourage him or her to SUPPORT HB 1697. 
In 2014, the General Assembly passed a law to regulate a technique used by Pharmacy Benefits Managers (PBMs) to limit the sums paid to pharmacies which dispense generic drugs to their patients.  The technique involves the establishment of a maximum allowable cost (MAC) for each drug.  The MAC price is the amount paid by a PBM to a pharmacy which dispenses the generic drug.
Before a PBM can establish a MAC price for a particular drug, the PBM must find that the drug is generally available for purchase by pharmacies at or below that price from a national or regional wholesaler.  A pharmacy which believes that a PBM has incorrectly established a MAC price because the drug cannot be purchased at the MAC price is allowed to appeal the determination on that drug through an appeal process established by the PBM.
The current statute (§56-7-3108) states that “a pharmacy may contest the listed maximum allowable cost for a particular drug.”  Pharmacies often utilize an agent to handle all their administrative matters, including MAC appeals.  These organizations are called pharmacy services administrative organizations (PSAOs).
Why Do We Need to Pass HB 1697?
House Bill 1697 adds to the statute a definition of “pharmacy services administrative organization” and provides that a pharmacy has a right to designate a PSAO or other agent to file and handle its appeal of a MAC price established by a PBM for a particular drug.