Both federal and state authorities are increasing the scrutiny and regulation of Pharmacy Benefit Managers (“PBMs”).
In the U.S. Senate, Senator Chuck Grassley (R – Iowa) and Senator Maria Cantwell (D – Washington) have sponsored the Pharmacy Benefit Manager Transparency Act of 2022. The bipartisan bill would empower the Federal Trade Commission to increase drug price transparency and hold PBMs accountable for unfair and deceptive practices that escalate prescription drug costs. The Act would ban deceptive unfair pricing schemes, prohibit arbitrary clawbacks and require PBMs to report to the FTC how much money they make through spread pricing and pharmacy fees. “Spread pricing” is a practice where a PBM charges a health insurance plan more to process a prescription than the reimbursement the PBM provides to the pharmacy. The PBM then keeps the difference.
On the state level, multiple pieces of legislation have been enacted to reign in PBMs. New York Governor Kathy Hochul announced the creation of the Department of Financial Services’ Pharmacy Benefits Bureau. The Bureau will be responsible for implementing and overseeing new PBM licensing and reporting requirements. Florida Governor Ron DeSantis signed HB 357 which moves PBM oversight from the Board of Pharmacy to the Office of Insurance Regulation and requires PBMs to register or risk getting fined. The Florida bill also authorized audited pharmacies to appeal certain findings. Finally, Iowa Governor Kim Reynolds signed into law a bill protecting pharmacies from PBM strong-arming. House File 2384 requires PBMs to provide weekly updates to their list of reimbursement rates. It also disallows PBMs from prohibiting pharmacies to disclose their prices or selling lower cost drugs to patients.
As our firm recently reported, The United State Federal Trade Commission announced a probe into PBMs’ roles in prescription drug costs. PBM heavyweights OptumRx, CVS Caremark and Express Scripts account for 89% of prescription drugs in the United States. These companies also operate health insurers, pharmacies and care delivery companies, effectively integrating themselves in the healthcare process from top to bottom. The FTC probe will investigate that vertical integration and its impact on healthcare costs. It will also examine fees and clawbacks charged to unaffiliated pharmacies, methods to steer patients towards PBM-owned pharmacies, potentially unfair audits of independent pharmacies, complicated and opaque methods to determine pharmacy reimbursement, the prevalence of prior authorizations and other administrative restrictions, the use of specialty drug lists and surrounding specialty drug policies, and the impact of rebates and fees from drug manufacturers on formulary design and the costs of prescription drugs to payors and patients.
The relationship between pharmacies and PBMs is changing across the country as authorities continue to pass new rules of oversight and accountability. It is important for independent pharmacies to know their rights when engaging with PBMs, whether it is during the application process or an audit. If your pharmacy needs assistance contracting with a PBM or responding to a PBM audit or termination, contact Boesen & Snow today.
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