Failure to adhere to Anti-Clawback Law and Failure to Lawfully adjust pricing in Compliance with MAC and NADAC Law

Hugh McDonald

SECRETARY OF COMMERCE

AID

IMUILUNICIE

[...I141011

*

*

BULLETIN NO: 18-2023

Alan McClain

COMMISSIONER,

ARKANSAS INSURANCE

DEPARTMENT

TO:

PHARMACY BENEFITS MANAGERS, HEALTH INSURERS, HEALTH

MAINTENANCE ORGANIZATIONS, HOSPITAL PUBLIC SERVICE

CORPORATIONS, HEALTHCARE PAYORS, AND OTHER

INTERESTED PARTIES

FROM:

ARKANSAS INSURANCE DEPARTMENT

SUBJECT:

FAILURE TO ADHERE TO ANTI-CLAWBACK LAW AND FAILURE

TO LAWFULLY ADJUST PRICING IN COMPLIANCE WITH MAC

AND NADAC LAWS

The Arkansas Insurance Commissioner issues this Bulletin to all licensed

pharmacy benefits managers ("PBMs") transacting business in this state and any other

PBMs transacting business in this state subject to Arkansas' Maximum Allowable Cost

("MAC") Law Ark. Code Ann. § 17-92-507, the Department has received several

complaints relating to prohibited practices by PBMs.

Failure to Comply with Prohibition Against Clawbacks

The "Patient Rights Regarding Payment for Pharmacists Service Act," codified at

Ark. Code Ann. § 4-88-1001 et seq., prohibits PBMs from engaging in a practice known

as "clawback." A clawback occurs when a PBM charges an insured a higher copay or

coinsurance amount than what the PBM will ultimately pay to the pharmacy filling the

prescription. Although the pharmacy collects the higher copay or coinsurance charged

by the PBM, the PBM will reduce future payments to the pharmacy to take back the

difference in price from the pharmacy.

Pursuant to Ark. Code Ann. § 4-88-1004, "[air' individual shall not be required to

make a payment for pharmacists services in an amount greater than the pharmacist or

pharmacy providing the pharmacists services may retain from all payment sources."

Lately, the Department has seen many examples of an insured's copay exceeding

the total reimbursement a pharmacy filling the prescription is allowed to keep. PBMs are

advised this practice was prohibited by Arkansas law in 2015, remains illegal today, and

is subject to enforcement by the Department

pharmacist or

pharmacy providing the pharmacists services may retain from all payment sources."

Lately, the Department has seen many examples of an insured's copay exceeding

the total reimbursement a pharmacy filling the prescription is allowed to keep. PBMs are

advised this practice was prohibited by Arkansas law in 2015, remains illegal today, and

is subject to enforcement by the Department.

Arkansas Department of Commerce

Arkansas Insurance Department

1 Commerce Way, Suite 102 • Little Rock, AR 72202

INSURANCE.ARKANSAS.GOV

Pricing Adjustments by PBMs that Effectively Create Negative Remits in Violation of

MAC and NADAC Law

Several pharmacists have complained to the Department about PBM

reimbursement processes that fail to comply with Arkansas law. The Department does

not consider a PBM to be in compliance with Arkansas's Maximum Allowable Cost

("MAC") Law, Ark. Code Ann. § 17-92-507, or National Average Drug Acquisition Cost

("NADAC") Law, Ark. Code Ann. § 23-92-506(b)(5), when a pharmacy successfully

appeals a MAC or NADAC price, and the pharmacy is told that it will need to collect the

difference in price from an insured.

The Department understands that when some PBMs adjust claims following a

successful drug pricing appeal by a pharmacy, the software used by the PBM is set to

increase an insured's share of the drug price, resulting in a higher amount of coinsurance

that the PBM tells the pharmacy to obtain from the insured to make up for the difference

in the paid price and the successfully appealed price.

Regardless of the agreements between, or plan design approved by an insurer or

payor and PBM, a PBM cannot avoid its duty to properly reimburse a pharmacy by

requiring the pharmacy to collect funds from an insured. It is the PBM's responsibility

to make sure that its processes are compliant with Arkansas law, and when such

processes fail to comply, it is equally important that the PBM's processes do not place

additional burdens upon the pharmacy

pproved by an insurer or

payor and PBM, a PBM cannot avoid its duty to properly reimburse a pharmacy by

requiring the pharmacy to collect funds from an insured. It is the PBM's responsibility

to make sure that its processes are compliant with Arkansas law, and when such

processes fail to comply, it is equally important that the PBM's processes do not place

additional burdens upon the pharmacy.

The Department does not consider a PBM that responds to an adjusted claim by

instructing a pharmacy to collect additional funds from an insured to be compliant with

Arkansas MAC or NADAC Laws. The Department also considers this process to result

in failure to provide a reasonable MAC appeal process.

Finally, the Commissioner advises all PBMs servicing plans within the

Department's jurisdiction of new penalties for violation of MAC and NADAC Laws that

became effective August 1, 2023.

If you have any questions or concerns, please feel free to email the following

aid.pbmlicensing@arkansas.gov.

c.U......

J 1-1 -1.--z

ALAN MCCLAIN

DATE

ARKANSAS INSURANCE COMMISSIONER

2