Pharmacists encouraged by new law regulating pharmacy benefit managers

Aug. 26--Illinois pharmacists say a bill signed into law last week will enact the state's first major regulations on businesses that act as middlemen and control what public and private insurance plans pay pharmacies for medicine dispensed to patients.

House Bill 465 will help patients save money, create a formal appeals process for pharmacies upset with cuts in reimbursement by Medicaid and private insurance and set the stage for additional rules governing pharmacy benefit managers, or PBMs, according to the Illinois Pharmacists Association.

"This allows us to have more oversight and enforcement," Garth Reynolds, executive director of the Springfield-based association, said Monday.

Signed Friday by Gov. J.B. Pritzker, the bill will put into place as of Jan. 1 the state's first oversight system for PBMs, organizations that contract with health-insurance plans and claim to wring savings for private insurers and state Medicaid programs.

Independent pharmacies, in particular, have complained that they are facing increasing financial challenges because of unfair payment cuts by PBMs. Those challenges accelerated when the state of Illinois' Medicaid managed-care program expanded to all 102 Illinois counties on April 1, 2018.

The new law will eliminate PBM "gag clauses" that prevent pharmacists from informing patients how they can obtain prescription drugs more cheaply, Reynolds said.

The appeals process created by the law could allow some PBM payment cuts to pharmacies to be reversed by state agencies, he said.

And transparency measures in the law will, for the first time, make available to the Illinois Department of Healthcare and Family Services the amounts of money earned by PBMs and how much money those PBMs, in turn, forward to Medicaid managed-care companies that contract for PBM services.

Reynolds' group contends that PBMs are padding their profits at the expense of Illinois taxpayers who support the Medicaid program.

Payment data and other information that must be disclosed under the bill could lead to more legislation restricting PBMs from unnecessarily pinching pharmacies and sometimes putting pharmacies out of business, Reynolds said.

The Pharmaceutical Care Management Association, which is based in Washington, D.C., took a neutral stance on HB 465.

The association issued a news release Monday that said: "The legislation builds on regulations that PBMs are already complying with in Illinois and does nothing to address the root cause of high drug costs: high list prices that only drug manufacturers have the power to set. We look forward to continuing to work with Illinois lawmakers to reduce prescription drug costs."

State Sen. Andy Manar, D-Bunker Hill, who sponsored the bill in the General Assembly with Rep. Greg Harris, D-Chicago, expressed a more critical view of PBMs in a news release.

"PBMs line their pockets at the expense of small businesses and consumers who have no choice but to buy lifesaving drugs at exorbitant prices," Manar said. "For years, these middlemen have been able to exert their influence on the pharmaceutical industry with essentially no oversight. It's time to crack down on unfair practices that target some of the most vulnerable people in our communities."

Michelle Dyer, a pharmacist who operates Michelle's Pharmacy in Carlinville, Gillespie and Bunker Hill, said in Manar's news release that HB 465 is "a great step to reign in the abusive powers that PBMs use against independent pharmacies."

She said PBMs are "creating unprofitable environments that make it difficult to sustain business for independent pharmacies, and the result is that we're seeing these businesses closing all the time in central Illinois."

Owen Sullivan, who operates Sullivan Drugs in Carlinville, Gillespie, Hillsboro and Litchfield, said in Manar's release: "It's vital for consumers, taxpayers and pharmacies to curtail the PBM abuse which is costing Illinois hundreds of millions of dollars annually."

A Critical Access Pharmacy program created by the state at the urging of lawmakers worried about the impact of PBMs on pharmacies has sent out $4.7 million in assistance to select pharmacies and continues to process the remainder of $10 million in assistance set aside in the fiscal 2019 budget, Reynolds said.

Another $10 million for pharmacy assistance is available in the state budget for fiscal 2020, which began July 1, he said.

Contact Dean Olsen: [email protected], 788-1543, twitter.com/DeanOlsenSJR.

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