2023 South Carolina Code of Laws › Title 38 - Insurance › Chapter 71 - Accident And Health Insurance › Section 38-71-2240. Placement of drug on Maximum Allowable Cost List.

Section effective January 1, 2024. See, also, Section 38-71-2240 effective until January 1, 2024.
(A) Before a pharmacy benefits manager places or continues to place a particular drug on a Maximum Allowable Cost List, the drug must:
(1) be listed as "A" or "B" rated in the most recent version of the Food and Drug Administration's Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book, or has an "NR" or "NA" rating, or a similar rating, by a nationally recognized reference;
(2) be available for purchase in the State from national or regional wholesalers operating in this State; and
(3) not be obsolete.
(B) A pharmacy benefits manager shall:
(1) provide a process for network pharmacy providers to readily access the maximum allowable cost specific to that provider;
(2) update its Maximum Allowable Cost List at least once every seven calendar days;
(3) provide a process for each pharmacy subject to the Maximum Allowable Cost List to access any updates to the Maximum Allowable Cost List;
(4) ensure that dispensing fees are not included in the calculation of maximum allowable cost;
(5) establish a reasonable internal appeal procedure by which a contracted pharmacy can appeal the provider's reimbursement for a drug subject to maximum allowable cost pricing if the reimbursement for the drug is less than the net amount that the network provider paid to the suppliers of the drug. The reasonable internal appeal procedure must include:
(a) a dedicated telephone number and email address or website for the purpose of submitting internal appeals; and
(b) the ability to submit an internal appeal directly to the pharmacy benefits manager regarding the pharmacy benefits plan or program or through a pharmacy service administrative organization if the pharmacy service administrative organization has a contract with the pharmacy benefits manager that allows for the submission of such appeals;
(6) participate in a reasonable external review procedure by which a contracted pharmacy can request an external review of a pharmacy benefits manager's denial of an internal appeal by an independent review organization in accordance with the procedures promulgated by the director in subsection (F) of this section; and
(7) permit an unaffiliated retail pharmacy to participate in programs that reconcile payments with actual cost on the same basis as retail pharmacy benefits manager affiliates.
(C) A pharmacy must be allowed no less than ten calendar days after the applicable fill date to file an internal appeal or request for an external review of a denied internal appeal.
(D) If an internal appeal is initiated, the pharmacy benefits manager shall within ten calendar days after receipt of notice of the appeal either:
(1) if the internal appeal is upheld:
(a) notify the pharmacy or pharmacist or his designee of the decision;
(b) make the change in the maximum allowable cost effective as of the date the internal appeal is resolved;
(c) permit the appealing pharmacy or pharmacist to reverse and rebill the claim in question; and
(d) make the change effective for each similarly situated pharmacy as defined by the payor subject to the Maximum Allowable Cost List effective as of the date the internal appeal is resolved; or
(2) if the internal appeal is denied:
(a) provide the appealing pharmacy or pharmacist the reason for the denial, the National Drug Code number, and the name of the national or regional pharmaceutical wholesalers operating in this State; and
(b) notify the pharmacy or pharmacist in writing of the right to request an external review of the internal appeal and include clear and concise documents describing the external review process.
(E) A pharmacy may request an external review of a denied internal appeal if the pharmacy believes the pharmacy benefits manager erred in denying an internal appeal which resulted in a reimbursement amount inconsistent with the provisions of this section.
(F)(1) The director must promulgate regulations to establish an external review process to facilitate the review of a denied internal appeal. The external review process must be consistent with the Health Carrier External Review Act pursuant to Article 19 of this chapter, to the degree possible, given the unique operations of a pharmacy benefits manager, the prescription drug industry, and the provisions of this section. At a minimum, the director must promulgate regulations regarding the following:
(a) the appropriate time frames for all parties to the external review to submit documentation and respond accordingly;
(b) the qualifications and selection of independent review organizations; and
(c) the time frame for an independent review organization to render its decision.
(2) If the independent review organization determines the pharmacy benefits manager reimbursed a pharmacy or pharmacist in an amount inconsistent with the provisions of this section, the pharmacy benefits manager must:
(a) make the change in the maximum allowable cost effective as of the date the external review is resolved;
(b) permit the appealing pharmacy or pharmacist to reverse and rebill the claim in question; and
(c) make the change effective for each similarly situated pharmacy as defined by the payor subject to the Maximum Allowable Cost List effective as of the date the external review is resolved.
(3) An external review decision is binding on the pharmacy benefits manager and the appealing pharmacy or pharmacist. An appealing pharmacy or pharmacist may not file a subsequent request for an external review involving the same type of prescription drug unless there is an update to the Maximum Allowable Cost List that would change the circumstances of the pharmacy's or pharmacist's reimbursement.
(4) The pharmacy benefits manager must pay for all costs related to the external review. The director must establish a reasonable filing fee associated with a pharmacist's request for an external review, which is to be retained by the department for administration of this chapter. The director may require a pharmacy or pharmacist to pay for costs related to the external review if the director determines the pharmacy or pharmacist has abused the external review process.
(5) The information or data acquired during an appeal pursuant to this section is considered proprietary and confidential and is not subject to the South Carolina Freedom of Information Act.
(G) The provisions of this section:
(1) do not apply to the Maximum Allowable Cost List maintained by the State Medicaid Program, the Medicaid-managed care organizations under contract with the South Carolina Department of Health and Human Services or the South Carolina Public Employee Benefit Authority; and
(2) apply to the pharmacy benefits manager employed by the South Carolina Public Employee Benefit Authority if, at any time, the South Carolina Public Employee Benefit Authority engages the services of a pharmacy benefits manager to maintain the Maximum Allowable Cost List.
HISTORY: 2019 Act No. 48 (S.359), Section 1, eff January 1, 2021; 2023 Act No. 30 (S.520), Section 2, eff January 1, 2024.
Editor's Note
2023 Act No. 30, Section 7, provides as follows:
"SECTION 7. This act takes effect January 1, 2024, but the recurring examinations by the Department of Insurance provided for in Sections 38-71-2250(B)(1) and 38-71-2340(B)(1) must not begin before January 1, 2025."
Effect of Amendment
2023 Act No. 30, Section 2, rewrote the section.