Insurance, Health, Accident

Plain English Breakdown

The official source material does not provide specific details on how increased expenditures for local governments will be funded, leaving this aspect uncertain.

Pharmacy Benefits Manager Reimbursement Standards

This act sets new rules for how pharmacy benefits managers (PBMs) must reimburse pharmacies for prescription drugs and services.

What This Bill Does

• Sets a minimum reimbursement rate that PBMs must pay to pharmacies, which is the highest of several options including actual cost, national average drug acquisition cost plus five percent, wholesale acquisition cost, or what the PBM pays itself.
• Requires PBMs to establish an appeal process for pharmacies if they do not receive at least the required amount and allows pharmacies to file complaints with the Department of Commerce and Insurance if necessary.
• Imposes penalties on PBMs who fail to pay the required amounts within 14 days, requiring them to pay twice the owed amount.
• Adjusts reimbursement rates when a pharmacy cannot get drugs at a lower cost from wholesalers and requires PBMs to provide claim-level details for adjustments within seven business days.
• Prohibits PBMs from including professional dispensing fees in the calculation of actual costs.

Who It Names or Affects

• Pharmacy benefits managers (PBMs)
• Contracted pharmacies
• Patients receiving prescription drugs and services

Terms To Know

National Average Drug Acquisition Cost (NADAC)

The average cost of acquiring a drug as calculated by the Centers for Medicare and Medicaid Services.

Wholesale Acquisition Cost (WAC)

The price at which pharmaceutical manufacturers sell drugs to wholesalers, before markups or discounts.

Limits and Unknowns

• Applies only to policies, plans, and contracts entered into, renewed, amended, or modified on or after July 1, 2026.
• Does not specify how the state will fund increased expenditures for local governments.

Official Summary Text

Present law prohibits a pharmacy benefits manager (PBM) from reimbursing a contracted pharmacy for a prescription drug or device in an amount that is less than the actual cost to that pharmacy for the prescription drug or device. This bill prohibits a p
harmacy benefits manager from reimbursing a contracted pharmacy for a prescription drug or device in an amount that is less than the greatest of the following:



The actual cost to the pharmacy for the prescription drug or device or pharmacy service.



105% of the national average drug acquisition cost (NADC) as calculated by the centers for medicare and medicaid services and reflected in the most recently released public file for the prescription drug or device or pharmacy service at the time the drug was dispensed or service is rendered.



The wholesale acquisition cost (WAC) of the drug, if the NADC is not available at the time the drug is dispensed.



The amount the PBM reimburses itself or an affiliate for the same prescription drug or device or pharmacy service on a per-unit basis using the same generic product identifier or generic code number.

REIMBURSEMENT DISPUTES

Present law requires a PBM to establish a process for a pharmacy to appeal a reimbursement for failing to pay at least the actual cost to the pharmacy for the prescription drug or device. This bill also includes such a requirement. However, if a PBM fa
ils to pay at least the amount required above for the prescription drug or device or pharmacy service, then the pharmacy may file a complaint against the PBM with the department of commerce and insurance. A PBM must pay a pharmacy twice the amount owed i
f
the PBM fails to reimburse a pharmacy at least the amount required above for the prescription drug or device or pharmacy service.

This bill provides that a PBM violates its provisions if, after an appeal in which a pharmacy prevails, the PBM fails to reimburse the pharmacy at least the actual cost of the drug or device or pharmacy service within 14 days. If such payment is not mad
e, then the PBM must pay the pharmacy twice the amount owed.

Present law requires a PBM to provide information to an appealing pharmacy that loses such appeal if the product associated with the national drug code number or unique device identifier is available at a cost that is less than the challenged rate of rei
mbursement from a pharmaceutical wholesaler in this state. This bill requires a PBM to adjust the challenged rate of reimbursement to an amount equal to or greater than an appealing pharmacy's actual cost, if a pharmacy loses or is denied an appeal, and
th
e product associated with the national drug code number or unique device identifier is not available at a cost less than the challenged rate of reimbursement from the pharmaceutical wholesaler where the pharmacy purchases the majority of its prescription
drug products. Further, a PBM must remit all additional monies owed for these adjustments within seven business days of the appeal determination.

Present law exempts a PBM utilizing a reimbursement methodology provided for in the state plan for medical assistance approved by the federal centers for medicare and medicaid services from the appeal and reimbursement challenge requirements. This bill e
liminates that exemption.

Present law prohibits a PBM from including within the amount calculated to reimburse a pharmacy for actual cost the amount of any professional dispensing fee that is payable to the pharmacy. This bill clarifies that this prohibition also includes the ad
ditional reimbursement amounts as described above.

Present law requires a PBM to permit a pharmacy challenging a reimbursement to reverse and rebill a claim for an appeal in which a pharmacy prevails. This bill, instead, prohibits a PBM from requiring a challenging pharmacy to reverse and rebill the cla
im upon which the appeal is based. Further, the PBM must waive the cost of any transaction fee or other fees required to reverse and rebill the claim. This bill requires a PBM to pay all additional monies owed to a prevailing pharmacy and provide claim-
le
vel details for the transaction within seven business days. Further, a PBM must apply the findings from a successful appeal as to the rate of reimbursement and actual cost for the particular drug or medical product or device to all remaining refills on t
he issued prescription drug or medical product or device.

PROFESSIONAL DISPENSING FEES

Present law requires a PBM to pay a professional dispensing fee at a rate that is not less than the amount paid by the TennCare program to any pharmacy if certain conditions are met. This bill requires a PBM to pay a professional dispensing fee at a rat
e that is not less than the amount paid by the TennCare program to a pharmacy if the pharmacy dispenses a prescription drug or device pursuant to an agreement with the PBM. However, the PBM is prohibited from adding such a fee on to the patient's copayme
nt
cost share, deductible, or otherwise passing the payment on to the patient through an out-of-pocket payment.

APPLICABILITY

This bill applies to policies, plans, and contracts entered into, renewed, amended, or modified on or after July 1, 2026.

Current Bill Text

HOUSE BILL 2332
By Butler

SENATE BILL 2576
By Harshbarger
SB2576
012480
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AN ACT to amend Tennessee Code Annotated, Title 8,
Chapter 27; Title 56, Chapter 7 and Title 71,
Chapter 5, relative to pharmacy benefits
managers.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 56-7-3206(c)(1), is amended by
deleting the subdivision and substituting:
(1) Notwithstanding another law to the contrary, a pharmacy benefits manager
shall not reimburse a contracted pharmacy for a prescription drug or device or a
pharmacy service in an amount that is less than the greatest of:
(A) The actual cost to the pharmacy for the prescription drug or device or
pharmacy service;
(B) One hundred five percent (105%) of the national average drug
acquisition cost (NADAC) as calculated by the centers for medicare and
medicaid services and reflected in the most recently released public file for the
prescription drug or device or pharmacy service at the time the drug or device is
administered or dispensed or service is rendered;
(C) The wholesale acquisition cost (WAC) of the drug, as defined in 42
U.S.C. § 1395w-3a(c)(6)(B), if the national average drug acquisition cost is not
available at the time the drug is administered or dispensed; or
(D) The amount the pharmacy benefits manager reimburses the
pharmacy benefits manager's self or an affiliate for the same prescription drug or
device or pharmacy service on a per-unit basis using the same generic product
identifier or generic code number.

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SECTION 2. Tennessee Code Annotated, Section 56-7-3206(c)(2)(A), is amended by
deleting the subdivision and substituting:
(A)
(i) A pharmacy benefits manager shall establish a process for a
pharmacy to appeal a reimbursement for failing to pay at least the actual cost to
the pharmacy for the prescription drug or device or pharmacy service.
(ii) If a pharmacy benefits manager fails to pay at least the amount
required by subdivision (c)(1)(B), (C), and (D) for the prescription drug or device
or pharmacy service, then the pharmacy may file a complaint against the
pharmacy benefits manager with the department of commerce and insurance.
(iii) It is a violation of this subsection (c) if a pharmacy benefits manager
or covered entity fails to reimburse the pharmacy at least the amount required by
subdivision (c)(1)(B), (C), and (D) for the prescription drug or device or pharmacy
service.
(iv) A pharmacy benefits manager or covered entity who fails to
reimburse a pharmacy at least the amount required by subdivision (c)(1)(B), (C),
and (D) for the prescription drug or device or pharmacy service shall pay the
pharmacy twice the amount owed to the pharmacy.
SECTION 3. Tennessee Code Annotated, Section 56-7-3206(c)(3)(B), is amended by
deleting the subdivision and substituting:
(B)
(i) It is a violation of this subsection (c) if, after an appeal in which a
pharmacy or agent acting on behalf of a pharmacy prevails, a pharmacy benefits
manager or covered entity fails to reimburse the pharmacy, at a minimum, the
actual cost within fourteen (14) days.

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(ii) A pharmacy benefits manager or covered entity who fails to reimburse
a pharmacy, as described in subdivision (c)(3)(B)(i), shall pay the pharmacy
twice the amount owed to the pharmacy.
SECTION 4. Tennessee Code Annotated, Section 56-7-3206(c)(4)(B), is amended by
deleting the subdivision and substituting:
(B)
(i) If the product associated with the national drug code number or unique
device identifier is not available at a cost that is less than the challenged rate of
reimbursement from the pharmaceutical wholesaler from whom the pharmacy
purchases the majority of prescription pharmaceutical products for resale, then
the pharmacy benefits manager shall adjust the challenged rate of
reimbursement to an amount equal to or greater than the appealing pharmacy's
actual cost for each claim affected by the inability to procure the pharmaceutical
product at a cost that is equal to or less than the previously challenged rate of
reimbursement. The pharmacy benefits manager shall pay or waive the cost of
any transaction fee required to reverse and rebill the claim.
(ii) A pharmacy benefits manager shall remit all additional monies owed
and provide claim-level details for the adjustments to the pharmacy and its
pharmacy services administrative organization within seven (7) business days of
the appeal determination.
SECTION 5. Tennessee Code Annotated, Section 56-7-3206(d), is amended by
deleting the subsection.
SECTION 6. Tennessee Code Annotated, Section 56-7-3206(e), is amended by
deleting the subsection and substituting:

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(e) A pharmacy benefits manager shall not include within the amount calculated
to reimburse a pharmacy pursuant to subdivision (c)(1) the amount of any professional
dispensing fee that is payable to the pharmacy.
SECTION 7. Tennessee Code Annotated, Section 56-7-3206(c)(3)(A)(iii), is amended
by deleting the subdivision and substituting:
(iii) Not require the challenging pharmacy to reverse and rebill the claim upon
which the appeal is based and waive or not require the challenging pharmacy to pay the
cost of any transaction fee or other fees required to reverse and rebill the claim;
SECTION 8. Tennessee Code Annotated, Section 56-7-3206(c)(3)(A)(iv), is amended
by deleting the subdivision and substituting:
(iv) Pay all additional monies owed to the pharmacy and provide claim-level
details for the payment to the pharmacy and its pharmacy services administrative
organization within seven (7) business days;
SECTION 9. Tennessee Code Annotated, Section 56-7-3206(c)(3)(A), is amended by
adding the following as a new subdivision:
(vii) Apply the findings from the appeal as to the rate of the reimbursement and
actual cost for the particular drug or medical product or device to all remaining refills on
the issued prescription drug or medical product or device.
SECTION 10. Tennessee Code Annotated, Section 56-7-3206(f), is amended by
deleting the subsection and substituting:
(f) A pharmacy benefits manager shall pay a professional dispensing fee at a
rate that is not less than the amount paid by the TennCare program to a pharmacy if the
pharmacy dispenses a prescription drug or device pursuant to an agreement with the
pharmacy benefits manager or a covered entity. This professional dispensing fee must

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not be added on to the patient's copayment cost share, deductible, or otherwise passed
to the patient through any other out-of-pocket payment by the beneficiary.
SECTION 11. This act takes effect July 1, 2026, the public welfare requiring it, and
applies to policies, plans, and contracts entered into, renewed, amended, or modified on or after
that date.