Rx ben­e­fit man­ager bill sails to House floor

Arkansas Democrat-Gazette - - FRONT PAGE - ANDY DAVIS

A leg­isla­tive com­mit­tee on Tues­day unan­i­mously rec­om­mended ap­proval of a bill that would al­low the state In­sur­ance De­part­ment to li­cense and reg­u­late com­pa­nies that pay phar­ma­cies on be­half of in­sur­ance plans.

House Bill 1010 is a re­sponse to cuts in re­im­burse­ment paid to phar­ma­cies that took ef­fect Jan. 1 un­der a con­tract be­tween Arkansas Blue Cross and Blue Shield and its phar­macy ben­e­fit man­ager, CVS Care­mark. Arkansas Blue Cross and Blue Shield is the state’s largest health in­surer.

“There was a large

out­cry from phar­ma­cies all across the spec­trum that wanted us to in­ter­vene and do some­thing,” Rep. Michelle Gray, R-Mel­bourne, told the House In­sur­ance and Com­merce Com­mit­tee.

No one spoke against the the bill, which the com­mit­tee ap­proved in a voice vote.

The leg­is­la­tion would make Arkansas the first state with com­pre­hen­sive over­sight and reg­u­la­tion of phar­macy ben­e­fit man­agers, said Sen. Ja­son Rapert, who is pres­i­dent of the Na­tional Coun­cil of In­sur­ance Leg­is­la­tors.

Such com­pa­nies de­velop lists of cov­ered drugs, process drug claims and ne­go­ti­ate con­tracts with phar­ma­cies and drug man­u­fac­tur­ers.

Rapert, R-Bigelow, said he pre­sented a draft of the leg­is­la­tion to the coun­cil’s ex­ec­u­tive com­mit­tee at a meet­ing in At­lanta ear­lier this month. By the end of the year, he said, he hopes the group will craft model leg­is­la­tion that could be adopted by other states.

“I’m all for a free mar­ket, but I’m not for a li­cense to steal, and this is where I draw the line on this is­sue,” Rapert said. “I be­lieve [phar­macy ben­e­fit man­agers] have truly adopted some prac­tices that are preda­tory.”

Speak­ing to the Po­lit­i­cal An­i­mals Club in Lit­tle Rock on Tues­day, Gov. Asa Hutchin­son said he chal­lenged law­mak­ers “to achieve the right bal­ance of pro­tec­tion and proper reg­u­la­tion” with­out “overly reg­u­lat­ing busi­ness.”

“There are a cou­ple of things that I pre­fer not to be in there my­self, but I think over­all it is some­thing that is much needed, and I am con­fi­dent that the de­part­ment of in­sur­ance will make sure they de­velop the rules in a balanced way,” Hutchin­son told re­porters af­ter­ward.

Asked later about his reser­va­tions, he said in an emailed state­ment that the leg­is­la­tion con­tains “some con­tract and com­pen­sa­tion re­view pro­vi­sions that are be­yond the typ­i­cal scope of in­sur­ance reg­u­la­tion.”

“As with any new reg­u­la­tory ven­ture, I ex­pect our ef­forts around [phar­macy ben­e­fit man­ager] over­sight to evolve as needed to ad­dress any new is­sues or un­in­tended con­se­quences that may arise,” he said.

Mark Mer­ritt, pres­i­dent and chief ex­ec­u­tive of the Phar­ma­ceu­ti­cal Care Man­age­ment As­so­ci­a­tion, which rep­re­sents phar­macy ben­e­fit man­agers, said in a state­ment that the bill would “en­rich drug­store own­ers at the ex­pense of pa­tients and the em­ploy­ers that pro­vide pre­scrip­tion drug cov­er­age.”

CVS Care­mark spokesman Chris­tine Cramer said the com­pany re­im­burses phar­ma­cies fairly and com­plies with state laws.

Gray said she ex­pects the full House to vote on the bill to­day.

Mean­while, the bill’s iden­ti­cal Se­nate coun­ter­part, spon­sored by Sen. Ron­ald Cald­well, R-Wynne, will be con­sid­ered by the Se­nate In­sur­ance and Com­merce Com­mit­tee to­day.

The bills have 80 spon­sors in the House, which has 99 mem­bers and one va­cancy, and 29 spon­sors in the Se­nate, which has 32 mem­bers and three va­can­cies.

Grover Norquist, pres­i­dent of Amer­i­cans for Tax Re­form in Wash­ing­ton, D.C., emailed Arkansas leg­is­la­tors early Tues­day urg­ing them to op­pose the bill.

“Your con­stituents have al­ready been hit with 20 fed­eral Oba­macare tax in­creases over the last decade,” Norquist said the email. “The last thing in­di­vid­u­als, fam­i­lies and em­ploy­ers across Arkansas need is to have law­mak­ers in Lit­tle Rock pass leg­is­la­tion to im­pose costly new reg­u­la­tions that will lead to higher costs for em­ploy­ers and con­sumers across the state.”

HB1010 and Se­nate Bill

2 would re­quire phar­macy ben­e­fit man­agers to con­tract with a suf­fi­cient num­ber of drug­stores, not in­clud­ing mail-or­der ser­vices, to pro­vide “con­ve­nient pa­tient ac­cess.”

The In­sur­ance De­part­ment would be al­lowed to re­view the com­pa­nies’ re­im­burse­ment rates to en­sure they are ad­e­quate to main­tain such net­works.

The de­part­ment also would be au­tho­rized to en­force Act 900 of 2015, which pro­hibits phar­macy ben­e­fit man­agers from pay­ing af­fil­i­ated drug­stores more than they pay other phar­ma­cies for the same pre­scrip­tion. (CVS Care­mark is af­fil­i­ated with the CVS phar­macy chain.)

The 2015 law also bars phar­macy ben­e­fit man­agers from pay­ing phar­ma­cies a lower price than the whole­sale cost of a drug.

Cur­rently, a vi­o­la­tion of Act 900 is con­sid­ered a “de­cep­tive and un­con­scionable trade prac­tice,” which is a mis­de­meanor pun­ish­able by up to a year in jail and can also be the ba­sis for a law­suit by the state at­tor­ney gen­eral.

At­tor­ney Gen­eral Leslie Rut­ledge said Tues­day that she is in­ves­ti­gat­ing whether phar­macy ben­e­fit man­agers have vi­o­lated state laws.

The bills also would pro­hibit phar­macy ben­e­fit man­agers from in­clud­ing “gag clauses” in con­tracts that limit phar­ma­cists’ abil­ity to pro­vide in­for­ma­tion to gov­ern­ment of­fi­cials or tell cus­tomers about cheaper op­tions for buy­ing a drug.

The law would ap­ply to plans sold by in­sur­ance com­pa­nies to in­di­vid­u­als and em­ploy­ers but not to com­pa­nies that fund their own em­ployee health plans. Those plans are reg­u­lated by the U.S. De­part­ment of La­bor.

Arkansas Demo­crat-Gazette/STA­TON BREIDENTHAL

“There was a large out­cry from phar­ma­cies all across the spec­trum that wanted us to in­ter­vene and do some­thing,” Rep. Michelle Gray said Tues­day in pre­sent­ing her bill.

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