Arkansas Legislators Advance Pharmacy Benefit Managers Regulation

An Arkansas House panel advanced a proposal Tuesday to regulate pharmacy benefit managers, as lawmakers began a special session focused primarily on addressing a cut in reimbursements rates pharmacists have seen.

The House Insurance and Commerce Committee endorsed a proposal that would also allow the state Insurance Department to require the pharmacy benefit managers, or PBMs, to license with the state. PBMs run prescription drug plans for employers, government agencies and insurers, among other clients. They use their large purchasing power to negotiate prices.

The legislation was spurred by complaints from pharmacists around the state earlier this year about cuts in reimbursements they received for generic drugs. Under the proposal, the state insurance commissioner may review and approve a PBM’s compensation program with a health plan to ensure pharmacists’ reimbursements are “fair and reasonable” enough to provide an adequate network of pharmacies.

“Nowhere in here are we saying what the prices are going to be. What we’re saying is the reimbursements have to be fair and reasonable to ensure that you have an adequate network of pharmacies,” Republican Rep. Michelle Gray told the panel.

The proposal also would ban PBM “gag clauses” that prevent pharmacists from discussing the total price of a drug or cheaper alternatives. The House is expected to vote on the proposal Wednesday, and more than three-fourths of lawmakers in that chamber and the Senate have signed on as co-sponsors. An identical measure is pending in the Senate. Republican Gov. Asa Hutchinson said he supported the measure.

“Our independent, our local pharmacists need to be adequately reimbursed and fairly reimbursed so they can survive and they can serve the patients and members of the community that mean so much to them,” Hutchinson said.

A national group representing PBMs criticized the measure as going too far.

“This legislative mandate would enrich drugstore owners at the expense of patients and the employers that provide prescription drug coverage.” PCMA President and CEO Mark Merritt said in a statement.

The anti-tax group Americans for Tax Reform also said it opposed the measure. Grover Norquist, the group’s president, sent a letter to lawmakers Tuesday blasting the bill as “a misguided piece of legislation that would unnecessarily insert state government into certain business-to-business transactions.”