Committee advances PBM bill keeping CVS, others from having retail pharmacies

The Senate Insurance and Commerce Committee advanced a bill Tuesday (April 8) that would prevent pharmacy benefit managers (PBMs) like CVS Health from operating retail pharmacies in Arkansas.

The committee passed House Bill 1150 by Rep. Jeremiah Moore, R-Clarendon, and Sen. Kim Hammer, R-Benton, by a voice vote. Sen. Missy Irvin, R-Mountain View, voted no.

The bill passed the House on April 3 by a count of 89-4, with three not voting and four voting present. The bill now heads to the full Senate.

Pharmacy benefit managers manage prescription drug benefits for health insurers and other payers. By processing drug claims, they effectively set the rates at which pharmacies are reimbursed for their services, as well as provide the reimbursements.

The four largest PBMs control 70% of the market, according to the American Medical Association. CVS Health controls 21.3%, OptumRx controls 20.8%, Express Scripts controls 17.1%, and Prime Therapeutics controls 10.3%.

They also are “vertically integrated” in that they operate their own retail establishments that compete against the independent pharmacies they reimburse. CVS operates 23 pharmacies in Arkansas.

THE DEBATE FOR AND AGAINST
Hammer told the committee that PBMs are steering patients to their out-of-state pharmacies while inflating prices. He said the bill “simply says you can’t be a PBM that both sets the price for themselves and their competition.”

John Vinson, Arkansas Pharmacists Association CEO, said Arkansas has had a net loss of 65 pharmacies in Arkansas as a result of PBMs’ anti-competitive practices. A pharmacy in Pine Bluff closed last week.

Greg Reybold with the American Pharmacy Cooperative, which represents more than 80 Arkansas independent pharmacies, said a Mississippi audit found one PBM had paid its pharmacies more than competitors in 75,000 claims.

“I would go so far as to say that today, Arkansas is the center of the pharmacy universe, because you guys are on the verge of pushing forward a solution that will be comprehensive, and it will be complete,” he said.

Irvin expressed frustration that the Legislature has tried in the past to address the issue, saying the state cannot fix what the policymakers at the federal level will not fix. She said the government is picking winners and losers and shutting out competition.

Randy Zook, president and CEO of the Arkansas State Chamber of Commerce, testified in opposition to the bill, saying lawmakers have passed legislation to regulate PBMs, and if there is a problem, the law needs to be enforced. He said vertical integration is common and often used by large organizations, and the bill’s purpose was to remove competition from the marketplace.

He said consumers may like the convenience of mail order pharmacies or of shopping at a particular location.

Sen. Mark Johnson, R-Ferndale, expressed surprise that the chamber would side with the “oligarchs,” arguing the Arkansas Constitution says monopolies “are contrary to the genius of a republic.” Sen. Reginald Murdock, D-Marianna, said pharmacy patients are not as free to choose another provider as they are to choose a fast food restaurant.

CVS Pharmacy District Leader Ashley Ellis, a pharmacist and Greenbrier resident, testified she would lose her job if the bill passes, as would hundreds of her colleagues. She said passing the bill would reduce options for patients.

“We are not just professionals behind the counter,” she said. “We are your neighbors, friends and family members. We are deeply embedded in the fabric of the communities we serve, providing care and guidance to 340,000 Arkansans who rely on us every year.”

In his closing remarks, Hammer expressed sympathy for those who might lose their job. However, he said he also has sympathy for those who have already lost their job.

His district had a CVS that closed suddenly and another large local pharmacy that closed because of cash flow issues. Local pharmacies along with Walgreens, Walmart and Harps Foods Stores picked up the slack. Furthermore, local pharmacies invest in their communities, he said.

Senators could consider HB 1150 as early as Wednesday in the full Senate. If approved, it would go to Gov. Sarah Sanders for signature or veto.