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Pharmacy-benefit managers could face more SD regs

Pharmacists would be at less of a disadvantage on business arrangements such as prescription-drug prices under a proposal that’s one step away from final approval in the South Dakota Legislature.

The state Senate Health and Human Services Committee voted 7-0 on Friday for HB-1135 that would provide for more pricing transparency.

It calls for more regulation of pharmacy-benefit managers — PBMs — that serve as middlemen between drug makers and insurers.

So far, the House of Representatives has agreed. The House Health and Human Services Committee endorsed the bill 12-0. The full House approved it 62-5. The full Senate could consider it as early as Monday.

The South Dakota Pharmacists Association wants the legislation. Pharmacists say they’re being paid less than they should be and that PBMs often ‘claw back’ money from pharmacists months afterward.

Their lobbyist, Craig Matson, said 12 of South Dakota’s 66 counties don’t have a pharmacy, 26 counties have just one and more than 140 South Dakota communities are 10 to 40 miles away from their nearest pharmacy.

“Without change, this negative trend will continue,” Matson said.

The Pharmaceutical Care Management Association, a national organization representing PBMs, opposes the legislation.

“They don’t like us. I wouldn’t either, because somebody’s looking at what they’re doing and auditing it,” PBMs lobbyist Dick Tieszen told the committee Friday.

Republican Rep. Mike Weisgram is the bill’s prime sponsor. “Since the federal government will not make progress with regulation, this bill does,” he said.

Legislation on the topic that failed last year would have cost Wellmark / Blue Cross / Blue Shield members millions of dollars, according to Melissa Klemann, a lobbyist for the insurance group.

Wellmark opposed last year’s bill but is a supporter of this year’s version. “Smart PBM legislation should attain meaningful reforms for rural and independent pharmacies, while also not raising healthcare costs for South Dakota businesses and families,” Klemann said.

Another supporter is the South Dakota Retailers Association, whose president this year happens to be a pharmacist. “We know that this has been a long time coming,” executive director Nathan Sanderson testified.

Lindsey Osterkamp, an independent pharmacist in Sioux Falls who works solo, said the underpayments to her business in 2022 totaled some $27,000, while retroactive fees cost her more than $71,000. She described the combination of those amounts as “utterly devastating.”

Countered PBMs lobbyist Tieszen, “Nobody forces these pharmacies to enter into that book of business. They choose it. They’re here asking you to interfere with contracts that have already been negotiated.”

Republican Sen. Mike Diedrich brought last year’s legislation. He’s lead Senate sponsor on this year’s bill. Said Diedrich, who’s vice president for government affairs at Monument Health, “So what we need to do is try to reduce the out-of-pocket expense of pharmaceuticals to patients and consumers. That’s really what this is about.”

Said Republican Sen. Erin Tobin, “Other states obviously have concerns, and even at the federal level there are concerns about how do we shine a light on this issue and dig down into what is really going on. I think this bill is a step in the right direction.”

Capitol News Reporter: Bob Mercer



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