26-52-104. Maximum allowable cost; offering information and alternatives.

(a) To place a drug on a maximum allowable cost list, a pharmacy benefit manager shall ensure that the drug is:

(i) Rated "A" or "B" in the most recent version of the United States Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book), or rated "NR" or "NA," or has a similar rating, by a nationally recognized reference;

(ii) Generally available for purchase by retail pharmacies in the state from national or regional wholesalers;

(iii) Not obsolete or temporarily unavailable.

(b) In formulating the maximum allowable cost price for a drug, an insurer or pharmacy benefit manager shall consider only the price of that drug and any drug listed as therapeutically equivalent to that drug in the most recent version of the United States Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book).

(c) Notwithstanding subsection (b) of this section, if a therapeutically equivalent generic drug is unavailable or has limited market presence, an insurer or pharmacy benefit manager may place on a maximum allowable cost list a drug that has:

(i) A "B" rating in the most recent version of the United States Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book); or

(ii) An "NR" or "NA" rating, or a similar rating, by a nationally recognized reference.

(d) A pharmacy benefit manager shall:

(i) Make available to each network provider at the beginning of the term of the network provider's contract, and upon renewal of the contract, the sources utilized to determine the maximum allowable cost pricing;

(ii) Provide a telephone number at which a network pharmacy may contact an employee of a pharmacy benefit manager to discuss the pharmacy's appeal;

(iii) Provide a process for network providers to readily access the maximum allowable cost applicable to that provider;

(iv) Review and update applicable maximum allowable cost price information at least once every seven (7) business days to reflect any modification of maximum allowable cost pricing; and

(v) Ensure that dispensing fees are not included in the calculation of maximum allowable cost.

(e) A pharmacy benefit manager shall establish a process by which a contracted pharmacy, or the pharmacy's designee who holds a contract with the pharmacy benefit manager, can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing. A contracted pharmacy, or the pharmacy's designee who holds a contract with the pharmacy benefit manager, shall have up to ten (10) business days after dispensing a drug subject to a maximum allowable cost in which to appeal the amount of the maximum allowable cost. A pharmacy benefit manager shall respond to the appeal within ten (10) business days after the contracted pharmacy makes the appeal.

(f) If a maximum allowable cost appeal is denied, the pharmacy benefit manager shall provide to the appealing pharmacy, or the pharmacy's designee who holds a contract with the pharmacy benefit manager, the reason for the denial and the national drug code number for the drug that is available for purchase by pharmacies in the state from national or regional wholesalers at a price at or below the maximum allowable cost.

(g) If an appeal is upheld, the pharmacy benefit manager shall make an adjustment to the applicable maximum allowable cost no later than one (1) day after the date of the determination and make the adjustment applicable to all similarly situated network pharmacy providers, as determined by the insurer or pharmacy benefit manager. The pharmacy benefit manager shall allow the appealing pharmacy to reverse and rebill the claim which was the subject of the appeal.

(h) This section shall apply to a contracted pharmacy, or the pharmacy's designee who holds a contract with a pharmacy benefit manager, entered into, renewed or extended on or after July 1, 2016, and to contracts on and after July 1, 2017.

(j) A pharmacy benefit manager may not, by contract or otherwise, prohibit or penalize a pharmacy or pharmacist for:

(i) Disclosing information to a covered individual regarding any cost differential that the covered individual must pay for a particular prescription under the individual's prescription drug benefit or outside of the individual's prescription drug benefit;

(ii) Offering to a covered individual a more affordable alternative if one is available.