Pharmacy benefit managers: Kentucky bill to curb prescription drug middlemen bogs down

A bill Kentucky pharmacists are seeking to curb the powers of prescription drug insurance middlemen appears stalled in the Senate after it sailed through the House March 21 on a vote of 88-3.

House Bill 457, aimed at for-profit entities known as pharmacy benefit managers, or PBMs, has been consigned to the Senate Appropriations and Revenue Committee — often a dead-end for legislation.

It follows a law the legislature enacted in 2020 cutting PBMs out of the state's $1.7 billion-a-year Medicaid prescription drug program amid complaints from pharmacists that PBMs were profiting at their expense.

Supporters of HB 457, including Rep. Steve Sheldon, R-Bowling Green, worry time is running out for a bill that won unanimous approval in a House committee and easily passed the House a week ago.

"This doesn't make sense," said Sheldon, a pharmacist and business executive. "How does it fall out of favor in a lickety-split?"

Sheldon and a coalition of health organizations including major hospital systems are pleading with the Senate to advance a bill they said will put community pharmacists on a more equal footing with PBMs.

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"These profit-driven PBM practices are bad for patients, bad for employees of our businesses and bad for Kentucky," said a March 23 letter to Kentucky's 38 senators signed by more than 30 health organizations and 80 independent pharmacies.

"For far too long, PBMS have played an outsize role in the delivery and cost of health care — often dictating what Kentuckians pay at the pharmacy counter, which medications they can access and the amount pharmacists are reimbursed for their critical services," the letter said.

PBMs, which serve as middlemen between health insurance companies and pharmacies, deny those allegations and counter their role is to negotiate the best prices for consumers and keep costs down.

A representative of the industry group, the Pharmaceutical Care Management Association, testified against HB 457 at the committee, saying the purpose of PBMs is to improve patient care and access to medication.

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"We're the only entity whose goal is to lower costs and increase access," said Connor Rose, director of state affairs for the Washington D.C.-based association.

Asked about the status of HB 457, a spokeswoman for Senate Republican leaders, whose party holds a super-majority in the chamber, responded that it had been assigned to the Appropriations and Revenue Committee.

Sheldon said he has no information from the Senate on the fate of his bill.

"They tell me very little," he said.

But industry opposition, including from the PBM association, likely is a factor, Sheldon said.

Ron Poole, an owner of five independent pharmacies in Western Kentucky, said PBMs are a constant source of frustration for independent or community pharmacists who must go through them to fill many prescriptions.

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PBMs decide how much to pay pharmacists and boost their profits by cutting reimbursement to drugstores, he said.

"We continue to have to deal with the middlemen who control the majority of the money," he said.

The role of PBMs has become increasingly controversial in many states, including Kentucky, where lawmakers in 2020 enacted the law to cut PBMs, dominated by several national chains, out of Kentucky's Medicaid prescription drug business.

Sheldon said his bill is meant to rein in some of the same practices that triggered the 2020 Medicaid bill.

HB 457 would ban PBMs from mandatory mail-order drugs and give pharmacists more power to negotiate contract terms.

It also would stop PBMs from "steering" patients to pharmacy chains affiliated with PBMs, which he said is common in the industry. For example, CVS Health operates one of the nation's largest drugstore chains and also runs a major PBM business that until 2020, managed much of the Kentucky's Medicaid prescription drug business.

CVS is among companies opposed to HB 457.

"We urge the Senate to reject HB 457," it said in a March 21 statement. "We should protect consumers from increased health care costs, and lawmakers should focus on the high prices set by big drug companies.”

At the hearing, the Kentucky Association Health Underwriters, the Kentucky Association of Manufacturers and the Kentucky Association of Health Plans testified against the bill out of concern it could raise health insurance costs.

The 2020 law affecting Medicaid followed years of complaints from community pharmacists who say the PBM business practices leave smaller, independent pharmacies threatened with extinction.

Pharmacists say the 2020 law has helped with Medicaid prescriptions,.

But Kentucky's pharmacists still battle daily with PBMs over other insurance claims, Cathy Hanna, president of the Kentucky Pharmacists Association, told the House Health and Family Services Committee on March 10.

"Unfortunately, the services that the local pharmacists provide remain under constant threat from the harmful actions of major players in the health care system," including PBMs, she said.

Rose, with the industry association, testified that HB 457 would harm the valuable work PBMs perform in negotiating good drug prices and keeping overall costs down.

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"We're not paper pushers, monopoly men in the back of the room laughing and pocketing all this money," he said.

But Hanna, the pharmacists association president, said the companies have been reaping profits at the expense of pharmacists and consumers.

With the three largest PBMs controlling about 80% of the market, the industry has posted "record profits over the past several years," Hanna said.

Sheldon said he just hopes it's not too late for the Senate to consider his bill.

"It's taken three years to get to this point," Sheldon said. "I just want to pass a bill that says we're going to level the playing ground a little bit."

Reach Deborah Yetter at dyetter@courier-journal.com. Find her on Twitter at @d_yetter. Support strong local journalism by subscribing today: www.courier-journal.com/subscribe.

This article originally appeared on Louisville Courier Journal: Kentucky pharmacists back effort to curb prescription drug middlemen