Northwest Arkansas Democrat-Gazette
Regulation bills clear chambers
Aim is fairness for pharmacies’ reimbursements
A proposal to regulate companies that process prescription drug claims is headed for a pair of final legislative votes today after identical bills on the issue cleared the state House and Senate by overwhelming margins Wednesday.
House Bill 1010 and Senate Bill 2 were crafted in response to cuts in reimbursement to pharmacies that took effect Jan. 1 under a contract between Arkansas Blue Cross and Blue Shield and its pharmacy benefit manager, CVS Caremark.
The House passed its bill,
sponsored by Rep. Michelle Gray, R-Melbourne, 92-2 on Wednesday morning, the second day of a special session of the Legislature. Hours later, the Senate version, sponsored by Sen. Ron Caldwell, R-Wynne, cleared its chamber 30-2.
The bills each went to the other chamber, where they are expected to receive final votes today. Gov. Asa Hutchinson has said he supports the bills.
Speaking on the House floor, Gray, who manages the finances for her husband’s family practice clinic, said pharmacy benefit managers once helped hold down drug costs, but “that time’s come and gone.”
“They’re just in it to make as much money as they possibly can without regard to the beneficiary, to the patient, to the pharmacy, to anyone else in that chain,” she said.
After voting against the Senate bill, Sen. Bart Hester said insurers wouldn’t hire pharmacy benefit managers if they didn’t believe they helped reduce costs.
While pharmacies might be suffering, it’s not the Legislature’s job to ensure their survival, he said.
“I’ve been down here for five years, and for five years, I’ve heard my local pharmacist is going out of business,” Hester, R-Cave Springs, said. “At some point the wolf story is no longer valid to me.”
The pharmacists’ complaints came after Arkansas Blue Cross and Blue Shield switched to a new reimbursement model for generic drugs covered by plans it offers on the state’s health insurance exchange, including those covering enrollees in the state’s expanded Medicaid program.
Other companies were already paying similarly low rates, but the move by Blue Cross had a bigger effect because of the large number of patients involved, pharmacists said. Pharmacists also complain that benefit manager CVS Caremark pays pharmacies owned by its parent company, CVS Health, more than other pharmacies for the same drugs.
The legislation advancing Wednesday would require pharmacy benefit managers to be licensed by the state Insurance Department, which would be allowed to review the firms’ reimbursement rates to ensure they are adequate to provide “convenient patient access” to pharmacies.
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.
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.
The new 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.
The Insurance Department would be directed to adopt regulations implementing the new law by Sept. 1.
At a meeting of the Senate Insurance and Commerce Committee, which recommended SB2 for approval on Wednesday, Conway pharmacist David Smith said CVS Caremark last week refused to pay for a patient’s medication because she had already reached her plan’s limit on prescription refills at a nonCVS pharmacy.
The medication, which the patient needs to take every day to treat an abnormal heart rhythm, wasn’t available from an area CVS store, he said.
After CVS Caremark refused to grant an exception to the plan’s policy, the patient ended up paying $181 out of
pocket at his store for a 10-day supply, he said.
“Clearly their decisions are not based on the proper care of the patient, but they’re based on their bottom line,” he said.
By Monday, the drug was available at a CVS store, where the patient made a $37 copayment for a 90-day supply, he said.
Melodie Shrader, senior director in state affairs for the Pharmaceutical Care Management Association, said employers and insurers adopt such drug coverage policies to hold down costs.
“If health care dollars were infinite, we wouldn’t be having these discussions,” she said.
Derrick Smith, a lobbyist for America’s Health Insurance Plans, which represents insurers, said the legislation “goes beyond fair and balanced regulation by interjecting the government into the business relationships of competent private parties.”
He credited pharmacy benefit managers for helping to control drug costs, which he said account for more than 22 percent of the average health plan premium.
Sen. Larry Teague, D-Nashville, countered that pharmacists are at a disadvantage because a handful of pharmacy benefit managers handle the drug claims for most people covered by insurance plans.
“I would say I kind of agree with you on the free business practices, except in cases where it’s not a free and open market,” Teague told the lobbyist.