Effective September 29, 2015, Ohio Revised Code (ORC) Chapter 3959 establishes licensing, contractual and disclosure requirements for Pharmacy Benefit Managers (PBMs). Below is a general overview of those requirements and the Ohio Department of Insurance’s (ODI) oversight procedures.
TPA License RequiredOhio statute requires PBMs to maintain an active Third Party Administrator (TPA) license from ODI. License application procedures remain the same as current TPA licensing processes. Those PBMs already holding a TPA license are not required to renew until the regular license renewal date of June 30, 2016. Current license holders must, however, be in compliance with the statutory requirements upon the law’s effective date of September 29, 2015.
PBMs Must Provide Pharmacies Current Pricing Information
Statute requires all PBM contracts with pharmacies to include a means by which pharmacies can promptly utilize current information on Maximum Allowable Cost (MAC) pricing. The MAC pricing lists must be updated every seven (7) days, and sources used to determine MAC pricing must be made available within ten (10) days of any contracted pharmacy’s request. Additionally, PBMs are required to follow statutorily defined conditions when placing drugs on a MAC list and maintain a written procedure to remove drugs subject to MAC pricing in a timely manner.
PBMs Must Provide Pharmacies Access to and Timely Resolution of Appeals
Statute also requires PBMs to establish a written appeals process for pharmacies to access in the event of pricing disputes. The PBM must also provide a phone number where a pharmacy can contact the PBM to speak to a person responsible for handling the appeal. Appeals must be filed within 21 days of a claim, and then resolved within 21 days after the appeal.
If an appeal is denied, the PBM must provide a reason for the denial, as well as the National Drug Code (NDC) that shows availability of the drug in Ohio at or below the PBM’s benchmarked price. If an appeal is approved, the price adjustment must occur within one day after the determination, and be retroactive to the date of the appeal.
PBMs Must Disclose to Plan Sponsors if Using Multiple MAC Pricing Lists
In the event a PBM uses multiple MAC pricing lists—a price list for reimbursing pharmacies that differs from the price list used for plan costs—the PBM is required to disclose to the plan sponsor any differences in pricing. Statute requires this disclosure within ten (10) days of signing a contract with a plan sponsor or within ten (10) days of any applicable update to a MAC list.
ODI Oversight of PBM Contract and Disclosure Compliance
ODI is authorized to license PBMs and investigate compliance with pharmacy contract and plan sponsor disclosure requirements. The Department may take enforcement action, including license suspension or revocation, in the event of non-compliance with the requirements of ORC 3959.111.
Statute does not require the PBMs to file copies of pharmacy contracts with ODI or obtain review or approval prior to use of those contracts. The Department will monitor compliance by review or investigation of inquiries or concerns from pharmacies or plan sponsors. The Consumer Services Division at ODI is the primary point of contact for pharmacies or plan sponsors to raise concerns. Complaints can be filed on the ODI website or by calling 1-800-686-1526.
Q: My Company is licensed as a TPA already. Do we need to apply for a new license to specifically identify as a PBM?
A: No. The statute requires PBMs to license as TPAs rather than creating an additional license type. Any PBM with a current TPA license meets the licensing requirement. When you renew, the revised application will include a place to identify as a PBM. However, this information is primarily for ODI purposes and does not impact your license compliance.
Q: What reports must a PBM provide to ODI to show compliance?
A: The PBM does not need to file a report with ODI to show compliance. Rather, the PBM must obtain a TPA license from ODI if it has not already done so. In addition, the PBM is responsible for making certain that the necessary internal mechanisms are in place to ensure compliance with the pharmacy contract and plan sponsor pricing disclosure requirements. The PBM is not required to file pharmacy contracts prior to use.
Q: What do I do if I think a PBM is not complying?
A: The Department’s Consumer Services Division will review complaints or inquiries, and ODI will initiate compliance investigations when necessary. If pharmacies, or plan sponsors, experience compliance issues, they should file a complaint either online at ODI’s website or by telephone at 1-800-686-1526 or
click here for the PBM Complaint Form
Q: Is there a Department Rule for PBM regulation, and if so, when will it be effective?
A; Yes. Since statute requires PBMs to be licensed as TPAs, the rule regulating TPAs (Ohio Administrative Code 3901-8-05) will also regulate PBMs. The Department is in the process of amending the rule to clarify that PBMs are now included in the rule. We anticipate a rule draft later this fall, with ample time for stakeholders to review and submit formal comments.
The rule amendments will not be effective for several weeks, probably late in the year. However, since statute specifically defines the requirements PBMs must follow the timeline for amendments to the rule does not impact compliance implementation.
Q: My pharmacy needs assistance in getting access to current price lists or information on my appeal from a PBM. Where do I go for help?
A: Contact the ODI Consumer Services Division at 1-800-686-1526. Our representatives will gather information from you and the PBM to help resolve your concern. Contact the ODI Consumer Services Division at 1-800-686-1526. Our representatives will gather information from you and the PBM to help resolve your concern.
Q: My pharmacy is trying to go into contract with a PBM, and the PBM does not seem to be including required information in the contract. Who can I contact?
A: Contact the ODI Consumer Services Division at 1-800-686-1526. Please have any specific information you know on hand when you call. ODI will work with you and the PBM to assist in resolving the issue.
For a printable version of the
Pharmacy Benefit Managers TPA Requirements document click here
For a printable version of the Pharmacy Benefit Managers Frequently Asked Questions document click here