Dispensing fee proposed for prescriptions withers

State officials shelved a proposed regulation Thursday to add a $10.50 dispensing fee for every prescription filled in Arkansas.

The proposed fee would have gone to pharmacists, not the state, according to a draft of the proposal received by the Northwest Arkansas Democrat-Gazette on Thursday morning. That emergency language in the draft proposal was dropped by 12:30 p.m. Thursday, the state Insurance Department’s general counsel confirmed.

A regular rule making process and study on the idea’s impact on insurance rates was planned, counsel Booth Rand said.

Then members of the governor’s staff and various state agencies held a meeting on the matter about 3:30 p.m. Thursday, Rand confirmed by telephone Thursday afternoon. The meeting concluded with the idea of the fee “tabled,” he said.

The state Department of Commerce released a statement just after 6 p.m.: “Any policy decision by AID (Arkansas Insurance Department) is worked on with appropriate stakeholders before it is finalized. This draft rule did not follow normal internal review and any speculation about it being final or ready for emergency consideration is inaccurate.” The Commerce Department is the Insurance Department’s parent agency.

The fee proposal “came out of left field,” said Sen. Missy Irvin, R-Mountain View. Irvin is chairwoman of the Senate Public Health Committee and is a member of the Insurance and Commerce Committee. “I didn’t see a copy of the proposal until Tuesday,” she said in a

telephone interview Thursday night.

Such a fee would impact state health spending in a multitude of ways, Irvin said. Those impacts needed careful consideration, she said. That was a point made in the meeting Thursday afternoon, which she was drawn in to, she said.

Any such fee increase would have required approval by the Legislative Council, which oversees state business between legislative sessions.

A rate study is still planned, Rand said.

The rationale behind the proposed fee increase remains, said John Vinson, chief executive officer of the Arkansas Pharmacists Association and a pharmacist.

“Morrilton is down to one pharmacy now,” Vinson said in a telephone interview.

The retirement community of Holiday Island lost its pharmacy years ago, he said. Marshall, Greenwood and others have also lost pharmacies, driven out by low rates of reimbursement by pharmacy benefit managers. Those managers negotiate drug prices for health insurers and reimburse pharmacists for drug costs.

Calls to the Pharmaceutical Care Management Association, the Washington, D.C.-based lobby for benefit managers, were not returned Thursday afternoon.

The idea behind managers is to lower prescription costs.

The results favor large drug store chains, which are sometimes owned by the same corporations that own the benefit managers, Vinson said. The idea behind the fee would be to fairly compensate pharmacists for the work they do and the cost of running a business.

Similar fees levied in Kentucky, Tennessee and West Virginia stabilized prices and, in West Virginia’s case, drove prices down because more pharmacies meant more competition, Vinson said.

The current formula mandated by the state for reimbursement by managers can be as low as 110% of the current national average drug acquisition cost, calculations made by the federal Centers for Medicare and Medicaid Services show. The proposed fee would have been over and above the 110% rate, according to the draft proposal.

Arkansas Act 900 of 2015 grants the state Insurance Commissioner the authority to impose such a fee, according to a draft of the now-defunct emergency proposal.

Arkansas is a leading state in regulation of benefit managers, taking a case on regulation to the U.S. Supreme Court in 2020. The 2015 law took that long to reach the court through lower court trials and appeals. The law required pharmacy benefit managers in Arkansas to pay drugstores at least as much as what the stores pay to wholesalers to obtain drugs. The act requires a “reasonable administrative appeal procedure” so that pharmacists can challenge reimbursement rates.