Kentucky Governor Signs Ground-Breaking Pharmacy Transparency Legislation into Law
Alexandria, Va. March 25, 2013 - Kentucky has become the first state to enact legislation that provides pharmacists with transparency into how health plans determine pharmacy reimbursements for generic drugs, and establishes an appeals process when a dispute arises over those payment levels. Kentucky Governor Steve Beshear (D) has signed S.B. 107 into law, which passed the Kentucky Senate and House overwhelmingly.
In response, B. Douglas Hoey, RPh, MBA, National Community Pharmacists Association (NCPA) CEO, issued the following statement:
"Large corporate health plans or their agents, such as pharmacy benefit managers (PBMs), typically present independent community pharmacists with take-it-or-leave-it contracts that leave the pharmacist in the dark as to what the reimbursement will be for generic drugs, which account for about 80 percent of drugs dispensed. This is analogous to a contractor being forced into building a house without knowing their compensation or if it will be adjusted should the cost of building materials increase. Moreover, these payment levels, or maximum allowable costs (MACs), are set in secret and are not updated frequently enough to reflect spikes in a generic drug's cost.
"This transparency legislation will simply let pharmacists know how individual health plans will calculate a pharmacy's reimbursement, and require timely updates to those rates to reflect market prices. With that information a small business community pharmacy owner can better evaluate contract proposals and determine whether they make business sense to accept. That, in turn, will benefit Kentucky patients and the state's economy.
"There are more than 500 independent community pharmacies in Kentucky. Patients have credited these pharmacies with superior customer service and patient care, according to national surveys. And these pharmacies employ approximately 5,300 people and contribute greatly to local commerce and government revenue.
"While NCPA provided assistance, the lion's share of the credit goes to State Senator Julie Denton (R) for her strong leadership getting this legislative process going; her fellow state legislators in the Kentucky Senate and House for their votes; and the tireless efforts of the Kentucky Pharmacists Association and its Executive Director Robert McFalls in achieving this legislative victory. KPhA worked collaboratively with a number of partners to get this bill passed, and was joined by APSC, APCI, EPIC and KIPA in this endeavor.
"We hope Kentucky's common-sense MAC reform serves as a model for the nation as similar legislation is being considered across the country."