PBM Reimbursement(s) At NADAC Minimum Levels
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Advisory to Arkansas-licensed PBMs on proper application of NADAC and MAC minimum reimbursement requirements and on honoring preexisting commercial pharmacy compensation agreements, affecting PBM reimbursement practices with Arkansas pharmacies.
No material clinical or coverage changes in this revision.
PBM Reimbursement Expectations
PBM reimbursement requirements and expectations
Key policy positions and expectations for PBM conduct in Arkansas:
Statutory References and Reimbursement Floor
| Ark. Code Ann. § 23-92-506(b)(5)(A) | Statutory requirement that PBM reimbursements for ingredient drug product component not be less than NADAC (or WAC if NADAC unavailable). |
Required PBM Conduct and Enforcement
Reimbursement floor requirement
PBMs must reimburse the ingredient drug product component at or above the National Average Drug Acquisition Cost (NADAC); if NADAC is unavailable, reimbursement must be at or above Wholesale Acquisition Cost (WAC). This statutory reimbursement floor is required under Ark. Code Ann. § 23-92-506(b)(5)(A).
Do not reduce agreed compensation to NADAC
PBMs shall not remove or reduce previously agreed-to dispensing fees or other contracted compensation in order to equalize payments down to NADAC minimums; the statutory language does not permit reducing preexisting contracted payments unrelated to ingredient drug costs.
- AID received complaints where PBMs reversed payments to reduce or remove dispensing fees to equalize payment to NADAC minimum pricing.
- The statute ‘‘does not permit for the removal or the reduction of previously agreed to payments … of compensation agreements related to dispensing fees, unrelated to the ingredient costs of the drug, if such were already permitted to be paid by contract.”
Treat NADAC/MAC as minimum safety nets only
NADAC and Maximum Allowable Cost (MAC) minimums are intended only as reimbursement floors or safety nets and were not meant to replace, void, or supersede commercially negotiated rates that result in pharmacy compensation above those minimums.
- PBMs are urged that NADAC and MAC were ‘‘never intended to replace the commercially agreed to rates other than to provide a reimbursement floor or safety net below which such commercial rates may not go below.”
- PBMs are advised to improve compensation rates above strict NADAC minimums to help ensure continued operation of pharmacy networks.
Potential Commissioner review of PBM compensation
The Commissioner may review PBM compensation programs under Ark. Code Ann. § 23-92-506(a)(1) to determine whether they are fair and reasonable to provide an adequate pharmacy network, and the Commissioner has indicated concern that NADAC-only compensation may not meet that standard.
- PBMs that treat NADAC/MAC as replacing previously agreed rates risk prompting Commissioner review of pharmacy and PBM compensation agreements.
- The Commissioner has stated doubt that compensation at NADAC minimums satisfies the ‘‘adequate network’’ standard.
Key Terms
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