Oklahoma bill would give Board of Pharmacy oversight of PBMs

February 21, 2013

 

This week an Oklahoma House committee voted 7 to 3 in favor of giving the State Board of Pharmacy the power to regulate pharmacy benefit managers (PBMs).

H.B. 2100, introduced by state Rep. David Derby (R-Owasso) and state Sen. Rob Standridge (R-Norman), would require PBMs to be licensed by the pharmacy board and meet certain standards to protect plan sponsors and the pharmacies who have contractual agreements with them.

“At a time when growing healthcare costs and affected insurance rates are threatening the bottom lines of businesses and families, reforms that both remove waste from the system and provide greater protection to patients are all the more important,” said Derby, vice chair of the Public Health Committee.

Derby noted that PBMs have often arranged for prescription drugs to be obtained by patients from out-of-state mail-order systems. With this legislation, patients would have a choice to decide where they would like to obtain their prescriptions. They could not be contacted directly by a PBM without written permission of the plan sponsor and the covered individual.

The National Community Pharmacists Association (NCPA) said that it strongly supports this legislation because it provides a reasonable level of transparency and offers reform to the PBM industry that has operated without federal or state oversight.

“Currently in the state of Oklahoma, PBMs do not fall under the oversight of any state government entity,” said Kevin Schweers, NCPA’s vice president of public affairs. “In addition, PBMs issue ‘take it or leave it’ nontransparent contracts to health plan sponsors and pharmacies, and do not disclose how pharmacies will be reimbursed for certain services and products they provide.”

H.B. 2100 requires that PBMs provide contracts to pharmacies that include the methodology and sources used for determining the maximum allowable cost (MAC) pricing of the pharmacy, update the MAC pricing every 7 calendar days, and notify pharmacies promptly of pricing updates. The PBMs must also provide a reasonable appeals procedure for the pharmacy to contest MAC rates.

The Pharmaceutical Care Management Association (PCMA) said the bill would increase prescription drug costs by $1.7 billion for Oklahoma seniors, employers, and consumers, according to a press statement.

“Oklahomans should be concerned about a law that lets the ‘fox guard the henhouse’ and in turn undermines healthcare cost savings,” said PCMA President and CEO Mark Merritt in a press statement. “Letting druggists regulate those who negotiate their payments is a conflict of interest and will increase healthcare costs for consumers and employers.”

NCPA said that the arguments that the bill would increase costs were not reliable. Schweers explained that last year the Oklahoma State and Education Employees Group Insurance board was going to move to a mandatory out-of-state mail-order program for all chronic medications that the PBM said would save the state $15.1 million, as noted by the Oklahoma Pharmacists Association.

“When NCPA Past President Lonny Wilson and other local community pharmacies started looking at this closer, they were able to negotiate a plan to save the state $32.9 million and keep the co-pays the same for patients,” Schweers said. “In addition, an estimated $77 million was kept in the state as a result of preventing job loss and loss of tax revenues by shipping out of state.”

PCMA also contended that PBM data transmitted to the board could be used for anticompetitive purposes and lead to increased prescription drug prices if the pharmacy board disclosed the information to drug manufacturers, pharmacists, and pharmacies.

NCPA noted that the legislation requires strict confidentiality in terms of any information disclosed to the pharmacy board by PBMs. “The Board already does for pharmacies as well as for pharmaceutical wholesalers licensed by the Board. Such safeguards render moot those PBM arguments,” Schweers said.