New Arkansas law aimed at restricting companies from influencing drug prices is first of its kind
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At least half a dozen states are weighing new restrictions aimed at limiting pharmacy benefit managers' ability to influence drug prices, including prohibitions on steering business to affiliated pharmacies.
Why it matters: With Congress gridlocked on PBM legislation, more states are taking the lead in addressing industry practices that critics say drive up costs and are pushing independent pharmacies out of business, Axios' Tina Reed writes.
Driving the news: Last week, Gov. Sarah Huckabee Sanders signed a first-in-the-nation law barring PBMs from owning pharmacies in that state.
- 39 state attorneys general have urged Congress to enact similar similar curbs, saying the companies "wield outsized power to reap massive profits at the expense of consumers."
Zoom in: The Arkansas law, Act 624, received bipartisan support in the state legislature plus endorsement from the Arkansas Pharmacists Association.
- "PBMs are massive corporations that negotiate drug prices between pharmacies and insurance companies," according to a news release from Sanders' office.
- "However, in recent years these PBMs have bought up pharmacies, allowing them to take advantage of the convoluted healthcare landscape, inflate pharmaceutical prices and push competitors out of business."
Zoom out: Among the states that might follow suit is Indiana, which is weighing legislation that would ban PBMs from owning pharmacies or having ownership ties with health carriers.
- Mississippi is working on a measure that would end the practice of "spread pricing," in which PBMs charge an insurer more than they pay a pharmacy for a drug, and pocket the difference. The bill also would restrict patient steering to affiliates and require mandatory data reporting to the state.
- Connecticut, Iowa, Maryland, New Hampshire, Oklahoma and Virginia also have bills pending.
- In March, Alabama passed a requirement that PBMs reimburse independent pharmacies at rates no less than those paid by Medicaid.
The intrigue: Large PBMs often are vertically integrated with insurance carriers, and critics say they're capable of funneling the majority of volume and profits directly to insurers and employers.
The other side: The Arkansas measure drew sharp criticism from the trade group representing PBMs, which said it would force the closure of dozens of retail pharmacies, suspend home delivery of prescription drugs and restrict access to specialty pharmacies.
- PBMs like UnitedHealth Group's Optum Rx, which said it had "serious concerns" about the measure and was working with the state to ensure access to drugs for vulnerable populations.
- Patients who receive integrated mental health services that include medicines via an Optum-owned pharmacy for schizophrenia and severe depression could be cut off from their drugs, while cancer patients who get their specialty medications at home could lose that access, Patrick Conway, the CEO of Optum Rx, said during UnitedHealth Group's first-quarter earnings call.
- CVS had said it would close all 23 of its retail pharmacies in Arkansas if the bill became law, the Northwest Arkansas Democrat-Gazette reported.