Bill would prevent PBMs from dispensing drugs via retail, mail

by Steve Brawner ([email protected]) 676 views 

A bill filed Thursday (Jan. 16) in the Arkansas Legislature would prohibit pharmacy benefit managers and insurance companies from obtaining retail permits and operating pharmacies and mail order services in the state of Arkansas.

House Bill 1150 by Rep. Jeremiah Moore, R-Clarendon, would prohibit pharmacy benefit managers and insurers from obtaining retail licenses after Jan. 1, 2026. It would require those that currently own pharmacies to sell them.

According to a press release, Arkansas would be the first state to prohibit PBMs from owning pharmacies. Sen. Kim Hammer, R-Benton, is the Senate sponsor.

Pharmaceutical benefit managers serve as middlemen between insurance companies, pharmacies and drug manufacturers. By processing drug claims, they effectively set the rates at which pharmacies are reimbursed for services.

John Vinson, the Arkansas Pharmacists Association’s chief executive officer, said at a press conference at the state Capitol Rotunda Jan. 16 that the biggest PBMs control the market. According to a Federal Trade Commission report in July, the three largest PBMs – CVS Caremark, OptumRX, and Express Scripts, manage 79% of prescription drug claims for roughly 270 million people. Those and the next three, Humana Pharmacy Solutions, MedImpact, and Prime, manage 94% of the country’s prescription drug claims, the FTC report said.

Vinson said all six are vertically integrated, meaning they not only process claims but offer pharmaceuticals at the retail level through brick-and-mortar stores and/or the mail.

Pharmacists say PBMs are reimbursing neighborhood pharmacies below, at, or barely above national average drug acquisition cost (NADAC) prices. Vinson said pharmacies have gone out of business in Marshall, Morrilton, Van Buren and Dumas. Meanwhile, PBMs are reimbursing their own retail operations at higher rates than they are reimbursing other pharmacies.

Moore, who was backed by pharmacists who had come to the Capitol, said PBMs have “rigged the system.”

“If they had it their way, Arkansas patients would be forced to get their medications from either a mail order pharmacy or a big box store such as CVS,” Moore said.

Vinson said there are 35-40 PBM- and insurance-owned pharmacies in Arkansas and another 100 or so located in other states. He said there are roughly 740 pharmacies in Arkansas. The state has also licensed about 600 mail order pharmacies around the country.

Hammer said that not all PBMs are engaging in unfair business practices. He said the legislation is meant to target the bad actors.

Attorney General Tim Griffin said two of the neighborhood pharmacies his family had used had been dropped from his military insurance network. In both cases, he received advertisements encouraging him to join PBM mail order services. The latest occurred over the holidays.

“The problem is vertical integration, where PBMs are distributing the drugs, and they’re also the retailer because what they want to do is give their retail outlets a better deal than the folks that are not part of their company,” he said.

He said he was calling on Congress to prohibit PBMs from owning retail pharmacies. Absent a national law, Arkansas can take its own steps. He said his office believes it can defend House Bill 1150.

Sen. Justin Boyd, R-Fort Smith, a pharmacist, said following the press conference that he is preparing legislation that would be “more inclusive” and would include House Bill 1150’s vertical integration piece. He said he hoped to file it this week.

The Pharmaceutical Care Management Association, the national group that advocates for the PBM industry, did not provide requested comments on the proposed legislation. The organization’s website says PBMs will save health plan sponsors and consumers more than $1 trillion over 10 years in prescription drug costs.

Lawmakers in December spent five hours debating a proposed permanent rule to require PBMs to include dispensing fees in their payments to pharmacists. Some lawmakers pushed back against that rule. Those included Sen. Missy Irvin, R-Mountain View. The Arkansas Advocate reported that she said a dispensing fee would increase prescription drug prices, causing a hardship for some people.

Vinson said House Bill 1150 does not include a dispensing fee, and he’s not aware of a bill this session that would do so. He said the APA has only this one bill drafted. It is still in discussion with legislators about other possible legislation.

“PBMs will save Arkansans $8.26 billion across all insurance markets within the next 10 years. This bill will disrupt those savings and potentially create additional unintended consequences, such as pharmacy shortages and diminished access to critical medications for Arkansas residents. PBMs are the only entity in the drug supply chain seeking to lower the cost of prescription drugs,” said Phil Christofanelli, senior director for state affairs with the Pharmaceutical Care Management Association (PCMA), which is the national association representing America’s pharmacy benefit companies.