During the last two years, we’ve seen a sweep of MAC transparency laws across the nation. The intent of these laws is to provide pharmacies with a look into how PBMs determine generic drug reimbursement. When entering into a PBM contract, many independent pharmacies do not receive a clear definition of Maximum Allowable Cost (MAC) prices and how they are determined. To remedy this, many states have enacted MAC laws containing some basic requirements that PBM must:

  • Identify the pricing sources used to determine MAC prices in their pharmacy network contract.

  • Provide a reasonable appeal process for pharmacies to contest a MAC price with a resolution within 7-10 business days (PBM must provide a specific reason for denying appeal).

  • Update MAC lists, and make MAC updates available to contracted pharmacies on a timely basis, at least every 7-14 calendar days.

Iowa enacted its own PBM transparency law when 75 independent pharmacies closed in 2013 due to unregulated PBM business practices. The law provided for state authority to audit PBMs and to require PBMs to submit information on their methodology for calculating MACs, and requiring inclusion in contracts with network pharmacies information about which sources were used in calculating MAC prices, and provisions which allow pharmacies to comment on, contest, or appeal the MAC rates. The Pharmaceutical Care Management Association (PCMA), a PBM trade group, challenged these law as being preempted by ERISA. The trial court disagreed but was overturned by the 8th Circuit court on appeal. PCMA v. Gerhart et al., No. 15-3292, 8th Cir., 2017. This precedent serves as non-binding authority for other states to follow and we are likely to see more challenges to state PBM transparency laws across the nation.