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State Rx law cut down on appeal; benefits manager group prevails in federal panel ruling

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A federal appeals court unanimously ruled Friday in favor of a pharmacy trade association’s challenge to an Arkansas law governing how pharmacists are reimbursed for generic drugs.

At issue is Act 900 of 2015, a law that regulates pharmacy benefits managers, the entities that verify benefits and handle transactions among pharmacies, insurers and patients. CVS Caremark and Express Scripts are two of the largest benefits managers.

Pharmacies acquire drugs from wholesalers. Then, the patient buys the drug from the pharmacy, often at a lower cost because health plans cover part of the price. Benefits managers, the intermediary group, are responsible for reimbursing the costs of those generic drugs. They create a “maximum allowable cost” list that sets those rates.

Tyrone’s Commentary:

Why do we continue to spin our wheels looking to legislation to fix the problem? In the PBM space, applied knowledge or learning that is used in various situations and contexts is faster and more cost-effective!

Act 900 prevents benefit managers from paying affiliated drugstores more than they pay other pharmacies for the same prescription. It also bans them from paying pharmacies a lower price than the wholesale cost of a drug, if the pharmacy takes measures to appeal that discrepancy.

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Tyrone Squires, MBA, CPBS

I am the proud founder and managing director of TransparentRx, a fiduciary-model PBM based in Las Vegas, Nevada. We help health plan sponsors reduce pharmacy spend, by as much as 50%, without cutting benefits or shifting costs to employees.

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