MANAGED CARE

Managed care groups upset over bill to regulate PBMs

A bill to usher in new rules for pharmacy benefit managers, now in the final stages of becoming law in Georgia, has given new hope to other states poised to introduce or pass similar legislation.

Once signed by Gov. Roy Barnes, this landmark legislation, known as H.B. 585, will make Georgia the first state to license and regulate PBMs. A similar drive is under way in Alabama, Illinois, Iowa, Maryland, and Missouri, where attempts to clip the wings of PBMs have been ongoing for some time.

If the Georgia bill passes, it would give the state pharmacy board a predominant role in regulating PBMs, according to Oren J. (Buddy) Harden Jr., executive v.p. of the Georgia Pharmacy Association. In fact, he said, the new law basically levels the playing field for Georgia's pharmacists, who have long been subject to rules that have not been applied to PBMs.

"There were two standards in force in that PBMs were being allowed to perform functions such as medication management without licensure or oversight, while pharmacists were required to be licensed and to comply with certain laws," explained Harden. The bill in fact spells out that every PBM or managed care company providing services in Georgia that constitute the practice of pharmacy must now be licensed to practice as a pharmacy in the state and must comply with the provisions of these regulations.

The clear intent, according to Harden, is not to stop these companies from performing these acts but to ensure that they do so in compliance with the laws of Georgia. As a condition for licensure, PBMs must now allow inspection of their premises by agents of the board, regardless of location in or out of state.

For PBM companies, none of this is good news. In fact, LaVarne Burton, president of the Pharmaceutical Care Management Association, which represents PBMs, contends that there is already sufficient oversight both at the state and federal levels. She thinks additional regulations could lead to duplication and contradictory rules. In the end, she said, this makes the system more inefficient and costly for the ultimate payer, the consumer.

Another argument PCMA has made is that the bill contains some legal flaws, so it should not be passed. The organization has hired a lobbyist to try to talk the governor into vetoing the measure. The association believes it has a 50-50 chance of derailing the legislation.

One association that is pushing hard for PBM regulation is the National Community Pharmacists Association. It has come out with a model bill that states could adopt. According to John Rector, general counsel for NCPA, legislation is needed because PBMs are perceived as being regulated, notably by the insurance commissioner, when, in fact, this is not the case.

With legislation regulating PBMs varying from state to state, the allocation of authority between the insurance commissioner and boards of pharmacy will also fluctuate, Rector said. He predicted that those states with "well-funded and aggressive" boards would typically wrest more jurisdiction from insurance commissioners.

The Academy of Managed Care Pharmacy, which represents some 4,800 managed care pharmacists, is also concerned about the Georgia bill. In a recently published position paper, the group said it opposed any "statutory and regulatory proposals that unduly restrict the ability of pharmacists working with managed care organizations from utilizing tools and services that are essential for the management of a prescription drug benefit."

Since it speaks mostly to business practices of companies, Georgia's legislation has few implications for AMCP. But AMCP executive director Judy Cahill said the model PBM regulation act proposed by NCPA, which contains a provision that would take away PBMs' rights to selectively contract with pharmacies, does speak to one of the tools routinely used by members.

The requirement to contract with any pharmacy interested in joining the network could jeopardize everything from accessibility of services for patients to quality-control issues, Cahill said.

Not every state is jumping into the anti-PBM fray. "Some boards of pharmacy are saying that their role is simply to regulate the role of pharmacy and that they do not have a comfort level when it comes to reviewing insurance contracts," Rector explained. His prediction is that most states will choose to limit their control to practice issues such as licensure of those engaged in pharmacy practice at PBMs. "We believe PBMs have to be regulated to ensure that pharmacists and consumers have some protection," he concluded.

Tina Kyriakos

The author is a writer in Texas.

Tina Kyriakos. Managed care groups upset over bill to regulate PBMs.

Drug Topics

2002;10:74.