PBM Reform Is Getting Real

Nov 22, 2021

It’s feeling a lot like PBM reform is getting really real as the largest pharmacy benefit managers, especially those that might own or exert enormous influence over large retail pharmacies, come under fire for issues related to real-world concerns for patient safety, drug pricing and limiting access to medications.

First up, and perhaps the most exciting development this month, the 8th Circuit Court of Appeals released its verdict in PCMA v. Webhi, with the outcome decisively upholding the U.S. Supreme Court’s Rutledge v. PCMA verdict that says certain practices by PBMs toward network pharmacies are not preempted by ERISA. What it means: states can confidently move forward in their attempts to regulate PBMs without PCMA playing the ERISA card every 5 minutes.

Until Arkansas Attorney General Leslie Rutledge took on PCMA last year, ERISA (the Employee Retirement Income Security Act) had been a favorite fallback of the PBM lobby. A federal law that sets minimum standards for private industry health and retirement plans, ERISA preemption had become a kind of de facto standard against which the most predatory of PBM practices were compared and found to be, for some reason, allowable. So when Arkansas passed a law protecting its pharmacies from being forced to accept PBM below-acquisition cost reimbursements on drugs dispensed, PCMA naturally claimed ERISA preemption on the grounds that the federal law superseded state law.

In a nutshell, SCOTUS said no, and kicked PCMA v. Webhi back down to the 8th Circuit for review (previously the 8th Circuit had ruled in favor of PCMA’s ERISA preemption argument). But what, exactly, was the 8th Circuit (re)considering?

Briefly, the 8th Circuit reviewed laws enacted by the State of North Dakota in 2018, which proposed to regulate a series of PBM practices that have proved problematic to patients and pharmacies to the point of impacting patient care. The practices in question include the right of pharmacies to mail and/or deliver medications to patients upon request; the right to disclose to the patient or plan sponsor details of pharmacy reimbursements; levying performance fees on pharmacies’ cost of goods sold as well as other fees post-claim adjudication; requiring pharmacy practice standards above those set by the state board of pharmacy including additional standards for inclusion in the PBM’s network; and restraining pharmacies from dispensing the full range of drugs allowed under state licensure. PCMA vigorously objected, claiming ERISA pre-emption on some of the laws, and Medicare D exemption over others.

Ultimately the 8th Circuit decided none of the laws North Dakota enacted were preempted by ERISA, but the ones related to fees were not preempted on Medicare D prescriptions. So a victory for patients and pharmacies in the areas of transparency, access to medication, and the end of certain onerous network inclusion requirements, but a not-insignificant loss on the question of DIR fees, which have increased more than 91,000% in 10 years.

DIR fees were very much a topic during the November 17th Committee on Oversight and Reform Forum on the Role of Pharmacy Benefit Managers in Drug Pricing. The 7-member almost all-star panel that testified before Ranking Member James Comer (R-KY) included 46Brooklyn Research CEO Antonio Ciaccia; Dr. Madeline Feldman, President, Coalition of State Rheumatology Practices and Chair of the Alliance for Safe Biologic Medicines; Dr. Jonathan Grider, independent pharmacist and owner of Lake Cumberland Pharmacy; and Ted Okon, Executive Director of the Community Oncology Alliance.

Pharmacist Kim Caldwell represented PCMA, and as such, professed his discomfort more than once.
The Committee hearing is well worth a watch (or rewatch) and serves as a strong, positive reminder that the work we and our fellow pharmacy organizations have been engaged in is yielding results. Watching our Congresspersons ask direct, educated questions about DIR fees, formulary management, spread pricing, and seeing them hold that line of questioning without falling to double-speak and obfuscation is incredibly satisfying (Rep. Diana Harshbarger is especially riveting) — and only possible because of the tremendous efforts of pharmacy owners and their staff for taking the time to educate their patients and their elected officials.

On that note, last and by no means least, on the list of powerful events this month, is the #PizzaIsNotWorking campaign. Started by Oklahoma City-based Dr. Bled Tanoe to call attention to a systemic problem that no amount of comfort food could possibly fix (even if major retail pharmacy staff had time to eat, which by most accounts it seems they don’t), the #Pizza hashtag is trending mightily as pharmacists and patients demand better from the Fortune 10 companies whose production metrics are at the heart of the problem. Even in retail pharmacy, PBM practices rule the day.

At PUTT, we support our fellow pharmacists in their demand for better working conditions because when it comes to patient safety, there can be no compromises. And we stand by our call for PBM reform because as everyone can see, #PizzaIsNotWorking.