Increased regulation on pharmacy benefit managers appears to be on the way.
The Senate Banking and Finance Committee on Wednesday approved the latest version of a bill seeking to impose some form of regulations on PBMs – the middle-men companies between major pharmaceutical companies and pharmacies – and protect independent pharmacies around the state.
That bill, SB252, which has 28 co-sponsors from both sides of the aisle, including Senate leadership, would restrict PBMs from reimbursing pharmacies less than Medicaid rates for a period of two years, prohibit fees and other miscellaneous charges imposed on pharmacies, forbid restrictions on pharmacies informing consumers of pricing and alternative medicines and mandate that 100 percent of rebates offered by manufacturers be passed on to the pharmacies.
“Our independent pharmacies are dying and we can’t afford to sit back and do nothing,” said Sen. Billy Beasley, the bill’s primary sponsor and a pharmacist. “We’ve lost three drug stores this month because they didn’t have enough money in the bank to pay their wholesalers. We’ve lost over 50 drug stores this year in the state of Alabama.”
The issue, which has been the focus of numerous committee hearings and various pieces of legislation over the last two years, is fairly obvious price manipulation by PBMs, which often leave independent pharmacies either paying more for medications than they’re reimbursed or simply refusing business. The intent of that practice, several pharmacists have told legislators in public hearings, is to push business to the PBM-owned pharmacies or their preferred pharmacies, resulting in higher revenue for the PBMs.
No one at Wednesday’s public hearing, which was again a packed crowd, spoke in favor of the PBMs or their business practices. But several opponents to SB252 did take issue with the manner in which the bill went about protecting the pharmacies, and they indicated that the burden imposed by the bill would not fall on PBMs, but on employers around the state.
Business Council of Alabama President Helena Duncan said her organization, which represents some of the state’s top employers, found the solution to be unfair to many Alabama businesses and said BCA had offered a number of suggestions to better address the problem without imposing undue burdens on those employers.
“Shifting the burden from pharmacies to Alabama employers is fundamentally unfair,” Duncan said.
A spokeswoman for Manufacture Alabama also spoke against certain provisions in the bill, asking that lawmakers at least offer a period of time for businesses to make adjustments and prepare for the changes.
Several opponents predicted that the costs would ultimately be shouldered by consumers, in one way or another.
But proponents said the unfair practices – to the point that PBMs even denied pharmacists the right to tell patients why they couldn’t stock their medications or inform them of cheaper or better options elsewhere – have to be addressed and some form of limitations must be placed on PBMs.
“Pharmacies like ours is in trouble, not because of competition or innovations or lack of business, but because of corporate greed,” said Joe Burns, a third-generation pharmacist from Tarrant. He said the recent closure of a local Walgreens meant hundreds of customers were looking for a new pharmacy – ordinarily a great situation for a local pharmacy. But under current conditions, Burns said he was hesitant because the extra business, and the potential to be trapped into dispensing medication for which he received less reimbursement than he paid, actually could put him out of business.
“When businesses stop chasing customers, you know there’s a problem,” he said.
