Protect Missouri employers from legislature's misguided Rx proposal
Misguided government mandates proposed in the Missouri General Assembly targeting pharmacy benefits would result in increased interference in the marketplace, new and restrictive regulations, and higher prescription drug costs. The ineffective bill in question, HB197, would create five new provisions related to prescription drug prices and the role of pharmacy benefit companies, or pharmacy benefit managers (PBMs), including price controls. The legislation, if enacted into law, would further distort the medical marketplace, and increase government intervention. Price controls never work, and they will end up harming patients.
Pharmacy benefit companies serve more than 275 million Americans who obtain health coverage from their employers, unions, state government plans, and other sponsors who rely on them to administer their prescription drug plans. These companies support various pharmacy benefits for employers and consumers, including cost-reducing rebates, pharmacy networks, drug utilization reviews, formularies, specialty pharmacies, mail-order, and audits to drive down drug costs, improve quality, increase patient medication adherence, and prevent fraud. In Missouri, these pharmacy benefits could save $19.96 billion in healthcare costs over the next 10 years.
Pharmacy benefit companies provide services for large groups and thus have increased negotiating power to secure substantial price discounts. Provisions in HB197 require pharmacy benefit companies to become fiduciaries, which could cost the state of Missouri $158 million in excess drug spending in the first year and more than $1.8 billion over the next 10 years. Changing the operations of these companies to require them to become fiduciaries will result in higher operating costs that will be passed on to consumers, along with fewer options for financial structuring agreements made with a plan sponsor.
The provisions in the bill also negatively impact cost-saving pharmacy networks with heavy-handed regulations that interfere with private contracts. Pharmacy benefit companies make agreements with preferred network pharmacies, including independent, chain, mail-order, and specialty, to keep costs low and safety a priority. Eliminating these agreements and requiring that all pharmacies be included in the plans is inconsistent with the purpose of these companies and the agreements they make with pharmacies on behalf of their customers. Pharmacies agree to charge lower prices to receive a large share of patients from a plan; if any pharmacy can participate, there is far less incentive to lower costs. Patients on a PBM-negotiated plan already have the option to go to any pharmacy they choose — but this new law would block them from accessing lower costs at an in-network pharmacy.
Instead of more restrictions, Missouri legislators should be promoting less interference in the marketplace to lower costs. The state government should create an environment that encourages competition in pharmacy benefit plans. HB197 will not achieve that objective.
At the federal level, the use of price controls in Medicaid, Medicare Part B, the coverage gap in Medicare Part D, the 340B program and the Veterans Affairs Department have distorted the marketplace and driven up costs in the private market. Similar policies should not be emulated in the states.
Christina Smith is the Director of Health and Science Policy for Citizens Against Government Waste (CAGW)
This article originally appeared on Springfield News-Leader: Protect Missouri employers from legislature's misguided Rx proposal
