W, Va. Senate approves bill aimed at pharmacy benefit managers

The West Virginia Senate on Wednesday approved a bill that would place limits on drug pricing and require more transparency from pharmacy benefit managers.

Pharmacy benefit managers (PBMs) are companies that act as third-party administrators of prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, the Federal Employees Health Benefits Program, and state government employee plans like the Public Employees Insurance Agency.

On more than one occasion prior to this year's legislative session, lawmakers heard testimony from representatives of the state's pharmacies, who reported that smaller pharmacies are losing money due to the reimbursement and transparency policies of PBMs contracted by the state.

A response to those concerns, Senate Bill 453 addresses transparency, reimbursement standards, and data reporting requirements for pharmacy benefit managers in West Virginia, with a focus on protecting the interests of pharmacies and ensuring cost-effective practices within the Public Employees Insurance Agency, according to the text of the bill.

Key Provisions:

Reimbursement Standards: Prohibits PBMs from reimbursing certain pharmacies or pharmacists below the national average drug acquisition cost for prescription drugs or pharmacy services. In the absence of the national average drug acquisition cost, alternative payment calculations are outlined in the bill.Dispensing Fee: Requires PBMs to pay a dispensing fee at least equal to the fee paid by West Virginia Medicaid.Data Reporting: Mandates additional pharmacy data variables to be reported to the Public Employees Insurance Agency. The confidentiality clause for data provided by PBMs is removed.Reporting Requirements: Requires PBMs to report on various aspects of claims, including total charges, reimbursements, and details of claims.Study and Analysis: The Public Employees Insurance Agency would be required to conduct a comprehensive pharmacy business intelligence study and analysis to explore potential savings. A final report with recommendations would be due by Dec. 31.Enforcement: Would provide the authority for termination of contracts and disciplinary action against pharmacy benefit managers failing to provide required information.

Sen. Eric Tarr, R-Putnam, said the goal of the proposed legislation is to bring down prescription costs in West Virginia, while ensuring that independent pharmacies aren't subsidizing PEIA by selling drugs for less than their cost.

The bill would also level the playing field for new PBMs seeking to make contracts with the state, since it would require that the current PBM release data relevant to the bidding process.

"It makes for fair competition for a contract in West Virginia. The way contracts have been done with PEIA for pharmacy benefit management is that some of the data that would be required to give a fair competitive bid to provide that service in West Virginia was obscured by the current contract," Tarr said.

He continued, "What this bill does, is it goes in and creates transparency, so that when somebody wants to come in and contract to manage the pharmacy benefits in West Virginia for PEIA, they have the same access to the data that the incumbent contract has."

Sen. Michael Maroney, R-Marshall, said the bill would strengthen the position of smaller pharmacies in the state and assist PEIA when it's time to find a new pharmacy benefit manager.

"What this bill tries to do is get some of the money out of the PBM's pocket — you know the Fortune 10 companies in this world — and put drug savings back into the patients of West Virginia and into the businesses of West Virginia," he said.

He continued, "This also helps PEIA. We don't know how much, but they have been losing money at the expense of PBMs over many years. This bill will help recover some of that money by putting more transparency into the PEIA drug program."

The bill was approved 34-0 by the Senate and now moves to the House of Delegates.