Alabama lawmakers advance regulations on pharmacy benefit managers

MONTGOMERY, Ala. (AP) — Two blocks from the Alabama Statehouse, a black wreath hung on the door of Adams Drugs — a symbol to draw attention the number of neighborhood pharmacies that have closed, or are in danger of closing, across the state.

Dozens of independent pharmacies have shuttered in Alabama over the last two years, according to the Alabama Independent Pharmacy Alliance. Pharmacists said that is, in part, because it can often cost more to dispense a drug than they are reimbursed by pharmacy benefit managers.

“We’re losing almost one drugstore per week going out of business because they are paid such a small amount of money from the PBM industry to fill prescriptions for their patients at their drugstore,” Sen. Billy Beasley, a Democratic senator and retired pharmacist, said.

Alabama is one of several states considering new regulations on pharmacy benefit managers, the middlemen between health insurance companies, drug companies and pharmacies. The Alabama Senate voted 32-0 Thursday to advance legislation to require minimum reimbursement rates to community pharmacists. The bill now moves to the Alabama House of Representatives.

Legislation seeking regulations on the benefit managers have also been proposed in Mississippi, Arkansas and other states.

Pharmacy benefit managers leverage purchasing power with drug companies with the goal of driving down drug costs for consumers. However, independent pharmacists say the business practices of benefit managers cause them to lose money on about 20% of prescriptions.

“The biggest issue is we’re not getting paid what it actually cost to fill a prescription, including labor,” Trent McLemore, a pharmacist with Star Discount Pharmacy.

The Alabama bill would require that PBMs reimburse community pharmacies at the Alabama Medicaid Agency reimbursement rate. It would also prohibit the practice of “spread pricing” where a benefits manager charges health plans more for drugs than they pay pharmacies.

Groups opposed to the bill have said it would effectively put a new $10.64 fee on prescriptions under the requirement to match state Medicaid rates, which include a $10.64 dispensing fee. That fee, they argued, will eventually get passed down to consumers and businesses.

Helena Duncan, president of the Business Council of Alabama, told a legislative committee on Wednesday that small businesses, which might already be struggling to provide insurance to their workers, will have to either absorb the increased cost or pass it along to employees through premium increases.

“Shifting the financial burdens from pharmacies to the Alabama employers is fundamentally unfair,” Duncan told a legislative committee on Wednesday.

Republican Sen. Andrew Jones, a cosponsor of the bill, said Thursday said other states have seen drug prices go down. Jones said it is important to protect neighborhood pharmacies because they play a vital role in communities.

“You are not going to get a big box store to open in the middle of the night to get you the medication you need,” Jones said.