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.
New York State Senator James Skoufis, Chair of the Senate Committee on Investigations & Government Operations, in coordination with Senator Gustavo Rivera, Chair of the Senate Committee on Health, has released the Final Investigative Report: Pharmacy Benefit Managers in New York. The report comes after the Committee opened an investigation into the practices of Pharmacy Benefit Managers (PBMs) in New York State in January 2019.
Some key findings of the report include:
• One of the key mechanisms by which PBMs generate revenue is through spread pricing
• The lack of transparency and oversight of PBMs has created an environment in which PBMs are able to engage in self-dealing to the detriment of consumers across New York State
• New York State must take immediate action to regulate the practices of spread pricing, MAC appeals, mail order operations, and reimbursements
• The New York State Comptroller should perform a full audit of all dollars paid to PBMs via spread pricing
Legislative recommendations provided by the report include:
• Regulate the practices of spread pricing in all pharmacy benefit contracts
• Enhance the transparency of MAC appeals
• Require the licensing and registration of PBMs to enhance accountability and oversight by instituting a fiduciary duty for their clients
• Prohibit PBMs from mandating that patients use specialty and mail order pharmacies
• Providing for the adequate and transparent reimbursements for pharmacies
• Require PBMs to pass-through all discounts or rebates received from drug manufacturers to its Medicaid managed care clients
This is definitely not the last time New York, or any other state, will develop policies to help regulate abusive PBM practices. Frier Levitt Government Affairs (FLGA) is constantly monitoring new state PBM policies and working with pharmacy stakeholders nationwide to have their voices heard. Contact FLGA today to learn more about getting involved.
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).
Senators Alexander (R-TN) and Murray (D-WA) of the U.S. Senate Health, Education, Labor and Pensions Committee, have introduced the introduced the Lower Health Care Cost Act as their proposal to decrease health care costs. This large piece of legislation will address issues such as surprise medical billing, prescription drug prices, and vaccine hesitancy.
The bill addresses patent protections to open markets to generic medications. In addition, the bill tackles PBM business practices by requiring PBM transparency through mandated quarterly reports from PBMs regarding fees, costs, and rebate information, as well as limits their spread pricing practices.
Senator Alexander has stated his desire for the bill to get to the Senate floor by July 2019.
With laws and regulations changing all the time, it is imperative for healthcare and life sciences stakeholders and organizations to be proactive instead of reactive.
Frier Levitt Government Affairs (FLGA) offers a hybrid service flexible with an organization’s changing needs. FLGA monitors and forecasts issues of importance for healthcare and life sciences stakeholders, including state and federal legislation and regulation, all presented in a concise, easy to understand and time friendly format. FLGA’s monitoring and forecasting services allow stakeholders to stay educated and engaged on new developments before the trends become mainstream.
Contact FLGA today to get “in the know” and start preparing for the changes ahead.
The Georgia legislature has taken an aggressive step against the PBM business practice of patient steering.
The Pharmacy Anti-Steering and Transparency Act (H.B. 233) seeks to prohibit PBM and payer owned pharmacies from filling prescriptions that were received through prohibited referrals from their PBM and insurer affiliates.
According to the new law, “the referral of a patient to a pharmacy by an affiliate for pharmacy care represents a potential conflict of interest.” Furthermore, “These referral practices may limit or eliminate competitive alternatives in the health care services market, may result in overutilization of health care services, may increase costs to the health care system, may adversely affect the quality of health care, may disproportionately harm patients in rural and medically underserved areas of Georgia and shall be against the public policy of this state.”
The enacting of H.B. 223 opens the door for other states to pass similar laws to combat PBM patient steering, among other PBM abusive practices that negatively impact independent pharmacies. Frier Levitt Government Affairs (FLGA) assists pharmacies, pharmacy associations, and other stakeholders introduce and lobby similar legislation in their states, based on their interests, priorities, and other elements not fully addressed by current laws.
Contact FLGA today to get started in putting together a solid legislative strategy.
In 2017, North Dakota enacted S.B. 2258 and S.B. 2301, which among several PBM issues, addressed gag orders, clawbacks, PBM transparency, and accreditation standards. In their objective response filed through their national trade association, the Pharmaceutical Care Management Association (PCMA), the PBMs sued North Dakota in an attempt to use the courts to invalidate North Dakota’s legislative efforts.
On September 5, 2018, the North Dakota federal court decision PCMA v. Tufte was issued by Chief Judge Hovland in favor of North Dakota pharmacy. Surprisingly, PCMA filed the appeal with the Eight Circuit just two days later on September 7th. The appeal is currently pending in the 8th Circuit and the case is “fully submitted” and awaiting oral argument. The ruling is expected by the end of the year, and regardless of the outcome, an appeal to the U.S. Supreme Court is almost guaranteed, making this one of the most important cases pending in the federal court system to pharmacies and state pharmacy associations.
PBMs are a formidable force nationwide, strategically fighting against pharmacy interests by using their legislative, regulatory and legal resources. When it comes to legal efforts, PBMs take an aggressive stance whenever a law has been enacted by the legislature that threatens their market share. North Dakota’s PCMA v. Tufte serves as a prime example of law that could stand as a model for state and national pharmacy interests and is an excellent illustration of pharmacy stakeholders can take action against abusive PBM tactics.
For pharmacy stakeholders, North Dakota’s law lays the groundwork for helping formulate and pass the similar laws in other states. However, the real action happens with enforcement as PBMs try to get around compliance with these laws. Frier Levitt Government Affairs (FLGA) works with pharmacy stakeholders at both the state and federal level to not only formulate and pass the laws, but also litigate to defend them. Contact FLGA today for help maximizing your organization’s resources to fight against PBMs through government affairs and lobbying efforts to enact similar laws in your state and get you the fairness you deserve.
2018 was a key year for further shedding light on Pharmacy Benefit Manager (PBM) business practices. As state budgets continue to be squeezed and patient populations require more specialty care, state Medicaid Directors have an opportunity to pull back the curtain on PBMs and realize additional ways that your state can benefit from transparency.
An important lesson can be learned from Ohio’s 2018 successes. In a report to the Ohio Joint Medicaid Oversight Committee, the Ohio Auditor gave an overview of the audit of the state’s Medicaid program and its dealings with PBMs.
The report found:
∙ The “spread”- difference in dollar amount between what Plans pay to PBMs and what PBM pay to pharmacies- has been growing and hit its peak in the fourth quarter of 2017
∙ An overwhelming portion of PBM spread is occurring on generic drugs
∙ Spread pricing totals varied wildly from region to region
∙ There is a disconnect between the Medicaid drug spend and what PBMs reimburse to pharmacies
∙ Data confirms a high number of pharmacy closures amid reimbursement cuts
∙ Spread totals were highest on specialty drugs, which are typically dispensed at PBM-owned pharmacies
The Ohio audit report concludes that PBMs enjoyed an 8.8% spread on Medicaid beneficiary claims, yielding PBM profits in excess of $250MM—that’s just in Ohio state Medicaid. Ohio decided that it would no longer permit PBM spread pricing and now requires PBMs to have pass through model contracts.
Frier Levitt Government Affairs, LLC (FLGA) and Frier Levitt, LLC, have extensive experience working with Medicaid Directors and other stakeholders to provide money saving solutions against PBMs. For Medicaid Directors witnessing population growth, we can help unravel savings from complex PBM contracts and relationships. We can assist your state in reviewing your Medicaid contracts to determine if you are paying too high for negotiated items. We can also provide you with substantial education on the PBM business model with the goal of saving your program much needed resources. Contact us today to put an end to questions and confusion and start requiring accountability from your PBM.