Governor prefers private solution to pharmacy reimbursement rate controversy

Governor Asa Hutchinson is hoping that the parties involved in the pharmaceutical business can find a marketplace solution versus a legislative solution despite increased scrutiny from the Arkansas Attorney General and state Insurance Department.

Beginning in January 2018, certain insurance plans in the state health exchange provided substantially lower drug reimbursement rates for Arkansas pharmacists. The differential led to nearly universal pharmacists’ claims that they were losing money on prescriptions.

Last week, Attorney General Leslie Rutledge announced she would investigate the price changes as part of a potential Deceptive Trade Practices Act violation. The Arkansas Insurance Department said it has received many complaints from pharmacists about deficient rates and encouraged Rutledge to investigate them as it is beyond the scope of the insurance agency’s authority.

In a wide-ranging interview with Talk Business & Politics, Hutchinson said he has met with insurance carriers, pharmacy benefits managers (PBMs), and pharmacists to discuss the situation, and hopes that a private solution can be found.

“I know the independent pharmacists in some of the small towns in Arkansas are hurting because of this, and so we’re trying to get to the root of it. I know the attorney general is engaged, our insurance department is engaged in it as well. I’ve met personally with carriers and with others involved with this, as well as the pharmacists. I’ve pushed toward a solution. We’ll see if that can happen. A marketplace solution, I assure you, is much better than a legislative solution,” Hutchinson said.

When asked what a marketplace solution would look like, Hutchinson said an adjustment of rates to correct the alleged deficient payments would be most likely.

“If you look at it simplistically, you’ve got on some pharmaceuticals, drugs that the pharmacists prescribe, they’re being reimbursed at too low of a rate — not for all of them, but for many of them. And so, where is that coming from? It either is through the insurance company or it’s with a PBM, which is the middle person in there, or the pharmacist is just not buying at the right price,” he said.

“I think the pharmacist is doing the best that they can in those circumstances, so I think you have to look at the agreement between the insurance company and the PBM, the middle person, and to see if there’s too much profit being pulled out of that system. And I’ve asked them to meet to look at that carefully to see if that can’t be adjusted to the benefit of the pharmacists,” Hutchinson added. “Those are commercial contracts and if we’re going to invoke ourselves into it, it’s complicated, it’s hard to get it right.”

For now, the governor is satisfied with the private discussions and the AG’s lead on the matter. He is not inclined to call a special session later this year to deal with the issue unless the situation worsens or a legislative consensus forms to remedy the situation. Currently, that’s not the case.

With lawmakers meeting this week for their biennial fiscal session, there is likely to be discussion about 2019 regular session changes or potential budgetary talks to be included in this fiscal session.