{"data":{"id":"us-ky/krs-304.17a-162","jurisdiction":"us-ky","citation":"KRS 304.17A-162","heading":"Identification of sources used to calculate drug product","body":"reimbursement -- Process to appeal disputes over maximum allowable cost\npricing -- Adjustment of maximum allowable cost and drug product\nreimbursement -- Duties of pharmacy benefit manager.\n(1) A pharmacy benefit manager shall:\n(a) Identify to contracted pharmacies the sources used by the pharmacy benefit\nmanager to calculate the drug product reimbursement paid for covered drugs\navailable under the pharmacy health benefit plan administered by the\npharmacy benefit manager; and\n(b) Establish a process for contracted pharmacies, pharmacy services\nadministration organizations, or group purchasing organizations to appeal and\nresolve disputes regarding the maximum allowable cost pricing. The proce ss\nshall include the following provisions:\n1. The right to appeal shall be limited to sixty (60) days following the\ninitial claim;\n2. The appeal shall be investigated and resolved by the pharmacy benefit\nmanager within ten (10) calendar days;\n3. The pharmacy benefit manager shall respond to all appeals in a manner\napproved by the department;\n4. If the appeal is denied, the pharmacy benefit manager shall provide the\nreason for the denial and identify the national drug code of a drug\nproduct and source where it may be purchased from a licensed\nwholesaler by contracted pharmacies at a price at or below the maximum\nallowable cost; and\n5. If an appeal is granted, the provisions of subsection (2) of this section\nshall apply.\n(2) If a price update is warranted as a result of an appeal granted under subsection (1) of\nthis section, the pharmacy benefit manager shall:\n(a) Make the change in the maximum allowable cost to the initial date of service\nthe appealed drug was dispensed;\n(b) Adjust the maximum allowable cost o f the drug for the appealing pharmacy\nand for all other contracted pharmacies in the network of that pharmacy\nbenefit manager that filled a prescription for patients covered under the same\nhealth benefit plan to the initial date of service the appealed dru g was\ndispensed;\n(c) Individually notify all other contracted pharmacies in the network of that\npharmacy benefit manager that a retroactive maximum allowable cost\nadjustment has been made as a result of a granted appeal effective to the initial\ndate of service the appealed drug was dispensed;\n(d) Adjust the drug product reimbursement for contracted pharmacies that\nresubmit claims to reflect the adjusted maximum allowable cost if applicable\nto their contract;\n(e) Allow the appealing pharmacy and all other contracted pharmacies in the\nnetwork that filled prescriptions for patients covered under the same health\nbenefit plan to reverse and resubmit claims and receive payment based on the\nadjusted maximum allowable cost from the initial date of service the appealed\ndrug was dispensed; and\n(f) Make retroactive price adjustments in the next payment cycle.\n(3) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug p roduct reimbursement, the pharmacy benefit\nmanager shall make available to all contracted pharmacies information identifying\nthe national drug pricing compendia or sources used to obtain the drug price data in\na manner established by administrative regulations promulgated by the department.\n(4) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall make available to all contracted pharmacies i n a manner established\nby administrative regulations promulgated by the department the comprehensive list\nof drugs subject to maximum allowable cost and the actual maximum allowable\ncost for each drug.\n(5) For every drug for which the pharmacy benefit mana ger establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall make available to the department, upon request, information that is\nneeded to resolve an appeal. If the department is unable to obtain information from\nthe pharmacy benefit manager that is necessary to resolve the appeal, the appeal\nshall be granted to the appealing pharmacy.\n(6) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the dr ug product reimbursement, the pharmacy benefit\nmanager shall review and make necessary adjustments to the maximum allowable\ncost for every drug at least every seven (7) calendar days and shall immediately\nutilize the updated maximum allowable cost in calculating the payments made to all\ncontracted pharmacies.\n(7) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall make available to all cont racted pharmacies in a manner established\nby administrative regulations promulgated by the department weekly updates to the\nlist of drugs subject to maximum allowable cost and the actual maximum allowable\ncost for each drug.\n(8) For every drug for which th e pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that drugs subject to maximum allowable costs are:\n(a) Generally available for purchase by pharmacists an d pharmacies in Kentucky\nfrom a national or regional wholesaler licensed in Kentucky by the Kentucky\nBoard of Pharmacy;\n(b) Not obsolete, temporarily unavailable, or listed on a drug shortage list; and\n(c) 1. Drugs that have an \"A\" or \"B\" rating in the mos t recent version of the\nUnited States Food and Drug Administration's Approved Drug Products\nwith Therapeutic Equivalence Evaluations, also known as the Orange\nBook; or\n2. Drugs rated \"NR\" or \"NA\" or have a similar rating by a nationally\nrecognized reference.\n(9) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that reimbursement for a drug subject to maximum allowable\ncost is based solely on that drug and drugs that are therapeutically equivalent if the\ntherapeutically equivalent drugs are listed in the most recent version of the United\nStates Food and Drug Administration Approved Drug Products with Therapeutic\nEquivalence Evaluations, also known as the Orange Book.\n(10) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that reimbursement for a \"B\" rated dr ug subject to maximum\nallowable cost is based solely on that drug and drugs that are not therapeutically\nequivalent to a \"B\" rating in the most recent version of the United States Food and\nDrug Administration Approved Drug Products with Therapeutic Equival ence\nEvaluations, also known as the Orange Book.\n(11) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that reimbursement for a  \"NR\" or \"NA\" drug with a similar\nrating by a nationally recognized reference subject to maximum allowable cost is\nbased solely on that drug and other drugs with a \"NR\" or \"NA\" rating or similar\nrating by a nationally recognized reference that meets criter ia for therapeutic\nequivalence used in the United States Food and Drug Administration Approved\nDrug Products with Therapeutic Equivalence Evaluations, also known as the\nOrange Book.\n(12) For every drug for which the pharmacy benefit manager establishes a m aximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that reimbursement for a drug subject to maximum allowable\ncost is based solely on that drug if there is no other therapeutically equivalent drug.\n(13) For every drug for which the pharmacy benefit manager establishes a maximum\nallowable cost to determine the drug product reimbursement, the pharmacy benefit\nmanager shall ensure that reimbursement for a drug subject to maximum allowable\ncost is not based on a drug that is obsolete, temporarily unavailable, listed on a drug\nshortage list, or that cannot be lawfully substituted.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=45114","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:46Z","sha256":"8e415294d6063ab308f3db7487b1d6e7aecb5d73d8ed5c7b035464b4a7adef9c","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.17a-161","next":"us-ky/krs-304.17a-163"},"notice":"GroundRules: Original legal text. Not legal advice."}