Arkansas Insurance Dept Penalizes PBMs for Law Violations

AR Insurance News

Filed August 6th, 2024

Detected March 19th, 2026

Summary

The Arkansas Insurance Department has issued notices of penalties and hearings against four major pharmacy benefit managers (PBMs) for alleged violations of state law regarding pharmacy payment rates. The department is seeking up to $1.47 million in fines for payments made below national average drug acquisition costs.

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What changed

Governor Sarah Huckabee Sanders and the Arkansas Insurance Department have initiated enforcement actions against Caremark, Magellan, Express Scripts, and MedImpact, four major pharmacy benefit managers (PBMs). These actions follow a June 28, 2024, bulletin that advised PBMs to cease paying Arkansas pharmacies below the National Average Drug Acquisition Cost (NADAC), a practice deemed in violation of state law. The Department is seeking a $5,000 fine for each instance of payment below NADAC pricing, with alleged violations totaling approximately 217 for Caremark, 50 for Magellan, and 19 for Express Scripts, potentially amounting to $1.47 million in penalties. This represents the largest pharmaceutical enforcement action in Arkansas history.

Regulated entities, specifically PBMs operating in Arkansas, must prepare for potential hearings and significant financial penalties. Compliance officers should review payment practices to ensure adherence to NADAC pricing and all other state licensure statutes. The enforcement action underscores the state's commitment to fair pharmacy payments and rigorous enforcement of PBM regulations, with potential consequences including substantial fines and license scrutiny for non-compliance.

What to do next

Review PBM payment practices for compliance with Arkansas NADAC pricing requirements.
Prepare for potential hearings and financial penalties related to past payment practices.
Ensure adherence to all PBM licensure statutes and payment regulations in Arkansas.

Penalties

Up to $1.47 million in possible penalties, with a $5,000 fine for each payment made below NADAC pricing.

Source document (simplified)

| Governor Sarah Huckabee Sanders and Arkansas Insurance Department Commissioner Alan McClain announced notices of penalties and hearings against four major pharmacy benefit managers (PBMs), Caremark, Magellan, Express Scripts, and MedImpact. These enforcement actions follow on the heels of a June 28, 2024, bulletin issued by the Insurance Department advising PBMs to cease paying Arkansas pharmacies below the national average drug acquisition cost (NADAC), in violation of state law. The Department is seeking a $5,000 fine for each payment made below NADAC pricing. PBM Caremark is alleged to have committed approximately 217 violations, Magellan, 50 alleged violations, and Express Scripts, 19 alleged violations. This is the largest pharmaceutical enforcement action in Arkansas history, totaling $1.47 million in possible penalties. "The Department is committed to tackling PBM abuses. It's time for them to make fair and reasonable payments to our pharmacies, as required by the law, and we will enforce all elements of payment and PBM licensure statues that violate state law, no matter the amount," said McClain.

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