House Bill 4276, sponsored by Rep. Alabas Farhat, D-District 3, passed out of the Michigan House of Representatives on Wednesday, Oct. 25, by a vote of 105-4. HB 4276 would require that Medicaid-managed care organizations (MCO) utilizing a pharmacy benefit manager (PBM) reimburse pharmacies with seven or fewer retail outlets for drug products at the lesser of:

• the National Average Drug Acquisition Cost (NADAC) plus a professional dispensing fee;
• the Wholesale Acquisition Cost (WAC) plus a professional dispensing;
• or the pharmacy’s usual and customary fee.

The bill also mandates that the MCO move to a transparent pass-through pricing model and that the PBM disclose its administrative fee as a percentage of the professional dispensing costs to the Michigan Department of Health and Human Services (MDHHS). Additionally, the bill prohibits a PBM from implementing new administration fees as well as the ability of an MCO to terminate a pharmacy from their network on the basis of having to reimburse a pharmacy at the designated rate.

By increasing transparency, the bill is expected to lower overall pharmacy reimbursement costs and save the state between $5-12 million. The bill was supported by Michigan Pharmacists Association, Independent Pharmacy Cooperative, National Community Pharmacists Association, Michigan Nurses Association, Arab American Pharmacist Association, and the Michigan Health and Hospital Association. MDHHS was neutral on the bill.