Lawmakers pass one PBM bill, but the big fight looms

  Brawner

Should the big companies that reimburse local pharmacists for their drug costs be able to operate their own pharmacies that compete with them?

That’s one of the questions remaining to be answered as the legislative session enters its (hopefully) final weeks.

House Bill 1150 by Rep. Jeremiah Moore, R-Clarendon, and Sen. Kim Hammer, R-Benton, is scheduled to be considered in committee on Wednesday, April 2. The bill would make it illegal for pharmacy benefit managers to operate their own retail pharmacies, unless the State Board of Pharmacy issues a limited use permit for them to sell rare or limited distribution drugs.

If you aren’t familiar with pharmacy benefit managers (PBMs), they are huge companies that manage prescription drug benefits for health insurers and other payers. By processing drug claims, they effectively set the rates at which pharmacies are reimbursed by the private sector. When pharmacists get paid, it’s often by a PBM.

The four largest PBMs control 70 percent of the market, according to the American Medical Association. CVS Health controls 21.3 percent, OptumRx controls 20.8 percent, Express Scripts controls 17.1 percent, and Prime Therapeutics controls 10.3 percent.

Yes, that’s the same CVS that operates 23 pharmacies in Arkansas. The other PBMs also run their own retail services.

Local pharmacists and the Arkansas Pharmacists Association have said for years that PBMs’ payments often have been too low and too slow. The Insurance Department received about 3,000 complaints last year from pharmacists.

John Vinson, the pharmacists association’s CEO and executive vice president, said pharmacists last year regularly waited 30-60 days to be reimbursed and occasionally waited 150-365 days.

Sen. Justin Boyd, R-Fort Smith, who co-owns two pharmacies, told me those long waits can cause a cash flow issue, especially considering pharmacies typically have to pay their drug wholesaler every couple of weeks.

“(When) you start getting into some drugs that cost hundreds if not thousands of dollars, it gets tough if payments are out there,” he said.

The APA has said that the financial pressures are making it hard for some pharmacies to stay in business, and some indeed have closed. Meanwhile, PBMs have been accused of reimbursing their own retail operations at higher rates than they reimburse other pharmacies.

On the other hand, PBMs say that their paying pharmacists such tight margins has helped reduce the costs of prescription drugs for consumers. The Pharmaceutical Care Management Association (PCMA), the national group that lobbies for the PBMs, said in January that PBMs will save the state $8.26 billion across all insurance markets over the next 10 years.

The issue has been simmering and at times boiling at the Capitol the past few years, but local pharmacies have had a good few months. In December, lawmakers voted to make permanent a rule fining PBMs if they pay below the National Average Drug Acquisition Cost scale.

Pharmacists also got a win with legislation meant to speed up the payment process. Earlier this month, Gov. Sarah Huckabee Sanders signed into law Act 350 by Rep. Zach Gramlich, R-Fort Smith, and Hammer. It requires PBMs to issue payments seven to 14 days after the date the pharmacist makes a “clean” electronic claim, or 30 days after the pharmacist makes a clean paper or manually submitted claim. Medicaid pays in seven days, and Medicare pays in 14, so the PBMs will be held to the same standard as those government programs are.

Act 350 passed with zero “no” votes in either the House or Senate. It didn’t even draw anyone testifying for or against it in the committee hearings where it was heard.

House Bill 1150, the one being discussed in committee on Wednesday, will be a lot bigger fight. If this bill were to pass, 23 CVS locations, and others associated with other PBMs, presumably would lose their permits and close. The PCMA definitely will be at the Capitol arguing its case. There’s just too much money at stake this time.

With health care, there often is.

••• Steve Brawner’s column is syndicated to 18 outlets in Arkansas. Email him at brawnersteve@ mac.com.