The Massachusetts Health Policy Commission has released its analysis of state PBM activity titled, Cracking Open the Black Box of Pharmacy Benefit Managers. Notably, the report concludes the need for additional PBM oversight and scrutinized the practice of PBM spread pricing.
According to the report, PBM spread pricing practices appear to be increasing in Massachusetts: “…this practice covered 22% of PBM compensation in 2014, but rose to 54% in 2016. This practice, often used as a means of payment for PBM services instead of administrative fees, may have significant impacts on public insurance programs, employer health plans, and consumers. Additionally, the media has reported growing concerns from pharmacists about low reimbursement rates from PBMs in Massachusetts and other states. PBM payments to pharmacies are sometimes even below the pharmacy’s acquisition costs of the drugs, which can affect the financial viability of pharmacies and potentially impact access to care. Yet the extent to which PBMs profit from this practice, and on which drugs, remains largely hidden from payers and the public.”
Additionally, the Commission cited, “As part of the fiscal year 2020 state budget strategy on MassHealth drug prices, the Baker-Polito administration proposed a new requirement for PBMs to be transparent about their pricing and to limit PBM margins under contracts with MCOs and accountable care organizations (ACOs), which the administration projects will save $10 million. To advance transparency, MassHealth recently released a bulletin directing MCOs and MassHealth Accountable Care Partnership Plans to obtain and submit to MassHealth drug-specific data from their PBMs including payments to dispensing pharmacies and rebate and administrative payment data.”
Based on recent activities and discussions with Massachusetts, additional PBM policies are forthcoming. Frier Levitt Government Affairs’ (FLGA) forecasting and monitoring services help keep healthcare and life sciences stakeholders “in the know” regarding pending policy and marketplace changes. Forecasting and monitoring helps stakeholders make better strategic decisions so that they no longer just “reacting” to outside changes. Contact FLGA today for forecasting and monitoring services tailored for you and your organization.
Over the last week, three states- Alabama, Illinois and Louisiana- sent legislation to their respective Governor’s to sign aimed at fighting back against Pharmacy Benefit Managers (PBMs). Highlights of the pending legislative bills include:
Effective January 1, 2020, a PBM must be licensed by the Commissioner. The legislation also prohibits gag clauses. Furthermore, a health plan may not include a provision that requires an enrollee to make a payment for a prescription drug at the point of sale in an amount that exceeds the lessor of:
1. the contracted co-payment amount; or
2. the amount an individual would pay for a prescription if that individual were paying with cash.
This bill states that a contract between a health insurer and PBM must:
1. Require the PBM to update maximum allowable cost pricing information and maintain a process that will eliminate drugs from maximum allowable cost lists or modify drug prices to remain consistent with changes in pricing data
2. Prohibit the PBM from limiting a pharmacist’s ability to disclose the availability of a more affordable alternative drug
3. Prohibit the PBM from requiring an insured to make a payment for a prescription drug in an amount that exceeds the lesser of the applicable cost-sharing amount or the retail price of the drug
• Prohibits PBM spread pricing unless the PBM provides written notice consisting of spread pricing transparency to the insurer
• Provides the Board of Pharmacy with PBM oversight
• Requires PBM licensure
• Strengthens maximum allowable costs (MAC) requirements
• Creates a PBM monitoring advisory council
• Prohibits unfair or deceptive trade practices by PBMs including prohibits them from patient steering to a PBM owned pharmacy without disclosure and prohibits penalizing beneficiaries or inducing them to use a pharmacy that is PBM owned
• Prohibits retroactive denials or reductions in pharmacy claims that have already been approved by the PBM
This legislation provides a model for other states on ways to combat abusive PBM tactics.
Frier Levitt Government Affairs (FLGA) monitors new legislative developments for pharmacy stakeholders and provides tools to help keep them “in the know.” Contact FLGA today to learn more about new legislative developments and for help preparing legislation that will get you back on track to attaining a level playing field for your respective state(s).