2023 California Code › Business and Professions Code - BPC › DIVISION 2 - HEALING ARTS › CHAPTER 9.5 - Audits of Pharmacy Benefits › Section 4440.

4440. (a) A pharmacy benefit manager that reimburses a contracting pharmacy for a drug on a maximum allowable cost basis shall comply with this section.
(b) A pharmacy benefit manager shall include in a contract, initially entered into, or renewed on its scheduled renewal date, on or after January 1, 2016, with the contracting pharmacy information identifying any national drug pricing compendia or other data sources used to determine the maximum allowable cost for the drugs on a maximum allowable cost list.
(c) A pharmacy benefit manager shall make available to a contracting pharmacy, upon request, the most up-to-date maximum allowable cost list or lists used by the pharmacy benefit manager for patients served by that pharmacy in a readily accessible, secure, and usable Web-based format or other comparable format.
(d) A drug shall not be included on a maximum allowable cost list or reimbursed on a maximum allowable cost basis unless all of the following apply:
(1) The drug is listed as “A” or “B” rated in the most recent version of the federal Food and Drug Administration’s approved drug products with therapeutic equivalent evaluations, also known as the Orange Book, or has an “NA,” “NR,” or “Z” rating or a similar rating by a nationally recognized pricing reference, such as Medi-Span or First DataBank.
(2) The drug is generally available for purchase in the state from a national or regional wholesaler.
(3) The drug is not obsolete.
(e) For contracts initially entered into, or renewed on the scheduled renewal date, on or after January 1, 2016, a pharmacy benefit manager shall review and shall make necessary adjustments to the maximum allowable cost of each drug on a maximum allowable cost list using the most recent data sources available at least once every seven days.
(f) For contracts initially entered into, or renewed on the scheduled renewal date, on or after January 1, 2016, a pharmacy benefit manager shall have a clearly defined process for a contracting pharmacy to appeal the maximum allowable cost for a drug on a maximum allowable cost list that includes all of the following:
(1) A contracting pharmacy may base its appeal on either of the following:
(A) The maximum allowable cost for a drug is below the cost at which the drug is available for purchase by similarly situated pharmacies in the state from a national or regional wholesaler.
(B) The drug does not meet the requirements of subdivision (d).
(2) A contracting pharmacy shall be provided no less than 14 business days following receipt of payment for the claim upon which the appeal is based to file an appeal with a pharmacy benefit manager. The pharmacy benefit manager shall make a final determination regarding a contracting pharmacy’s appeal within seven business days of the pharmacy benefit manager’s receipt of the appeal.
(3) If an appeal is denied by a pharmacy benefit manager, the pharmacy benefit manager shall provide to the contracting pharmacy the reason for the denial and the national drug code (NDC) of an equivalent drug that may be purchased by a similarly situated pharmacy at the price that is equal to or less than the maximum allowable cost of the appealed drug.
(4) If an appeal is upheld by a pharmacy benefit manager, the pharmacy benefit manager shall adjust the maximum allowable cost of the appealed drug for the appealing contracting pharmacy and all similarly situated contracting pharmacies in the state within one calendar day of the date of determination. The pharmacy benefit manager shall permit the appealing pharmacy to reverse and resubmit the claim upon which the appeal was based in order to receive the corrected reimbursement.
(g) A contracting pharmacy shall not disclose to any third party the maximum allowable cost list and any related information it receives either directly from a pharmacy benefit manager or through a pharmacy services administrative organization or similar entity with which the contracting pharmacy has a contract to provide administrative services for that pharmacy.
(Added by Stats. 2015, Ch. 74, Sec. 3. (AB 627) Effective January 1, 2016.)