If April is to state legislation what March is to college basketball, then break out your brackets because it’s time for PUTT’s mid-session “State of PBM Reform Legislation” Review as we gather our list of Top States for PBM Reform in 2021.
Who We’re Watching:
Michigan. Easily the most fascinating bill of the 2021 session is HB 4348 introduced by Rep. Julie Calley. The signature bill of House Speaker Jason Wentworth, the “Pharmacy Benefit Manager Licensure and Regulation Act” encompasses what we affectionately call “the greatest hits of PBM Reform”* and addresses nearly every appalling anticompetitive PBM practice with a smart, workable solution. The bill readily passed the House and is now under review by the Senate Committee on Health Policy and Human Services.
*ok, we actually stole this term from Miguel Rodriguez, attorney for our good friends at the Texas Pharmacy Business Council
Oklahoma. As of this writing, the Sooner State has 4 bills on their way to the Governor’s desk, which is incredibly impressive and a testament to the hard work of the Oklahoma Pharmacists Association and their members toward protecting their professional rights. HB 2768, just signed by the Governor on April 19th, expands actions that constitute unfair claims settlement practices under the state’s Unfair Claims Settlement Practices Act. SB 821 amends the Patient’s Right to Choice Act, while HB 2123 created the Patient’s Right to Choice Commission, and HB 2124 closes loopholes in PBM licensure, regulation and levying of fees.
Texas. Because Texas meets only every other year, their legislative sessions feel especially urgent on matters related to curtailing abusive PBM practices. This year Texas legislators are fielding a large number of bills affecting pharmacy both positively and negatively but we’ve got our eye on Sen. Charles Schwerner’s SB 727, which would ban the practice of patient steering; and Rep. Eddie Lucio III’s HB 1093, which would eliminate reducing claims reimbursements via aggregated effective rates; quality assurance programs or DIR fees. Sen. Lois Kolkhorst’s SB 679 is HB 1093’s companion bill. By the way, for ideas on how to organize an excellent advocacy manual, we highly recommend reviewing the Texas Pharmacy Business Council’s 2021 Legislative Session Preview.
Illinois. Although SB 2008 has undergone 3 subject matter hearings, we’re optimistic the bill will be voted and signed into law before the end of session. Sen. David Koehler’s bill and Rep. Greg Harris companion HB 3630 are organized around patient access and correcting the imbalance of power currently tipped in favor of PBMs. Its 4 key provisions: assuring patient choice by requiring PBMs to accept claims from any licensed pharmacy; allowing any willing provider to join PBM networks; restricting abusive audits; and restricting PBM fees, denials and copayments that exceed the cost of the drug.
Louisiana. Always a state to watch, Louisiana continues to lead the charge in forward-thinking legislation. The 2021 session has only just started, but Sen. Fred Mills’ SB 218 and Rep. Christoper Turner’s HB 244 seek to prohibit PBMs and PSAOs from allowing any direct or indirect reductions in payments to pharmacies including “effective rates”, DIR fees, or any other attempts at reduction of payment. Though not exactly alike, the intention of both bills is to create greater accountability and fiduciary relationships between PSAOs and pharmacies. Additionally, Sen. Mills introduced SB 180, requiring the Health Department and Office of Group Benefits to procure PBM services via reverse auction.
Who (Happily) Took Us By Surprise:
Indiana. Fun fact: Indiana has successfully passed PBM reform legislation every year since 2013 and we had no idea until a hearing on SB 143, which seeks to allow public employers and self-funded health plans to use a reverse auction when procuring PBM services, and also requires PBMs to perform their contractual duties in good faith and observance of reasonable commercial standards. The bill was passed in the Senate, referred to the House and was passed by the House Ways and Means Committee.
Arizona. Home to CVS Caremark and 4 of the largest PBM mail order pharmacy fulfillment centers, the Grand Canyon State surprised just about everyone when its anti-PBM transaction fee bill went from introduced to enacted in 12 weeks. Even with PUTT’s Executive Director in Phoenix, Arizona has operated largely under the radar. But with fewer than 200 independent pharmacies left in the 6th largest state, Arizona pharmacies are back in action and making plans for 2022.
New Mexico. This sleeper state has been quietly enacting PBM reform legislation since 2016 when it first banned PBM transaction fees. Since then, the Land of Enchantment has methodically ramped up PBM management and oversight, stretching in 2021 to require annual transparency reporting and requiring PBMs to operate as “pass throughs” (unfortunately that last one didn’t fly). However, New Mexico passed SB 124, the “Prompt Pay” bill requiring PBMs pay pharmacy claims within 14 days of receipt and has a fierce champion in Rep. Kelly Fajardo.
Who We’re Rooting For in 2022:
New York. The legislature’s decision to delay the state’s Medicaid carve out until 2023 was a tough blow for pharmacists and it wouldn’t be an exaggeration to say more than a few hearts were broken. The decision, the fallout of a devastating year of COVID that continues still, is intended to preserve access to federal matching funds for another 2 years.
Florida. With hopes pinned on the state-funded Milliman PBM report that was released late last fall, PBM reform coalitions (there are 2) had hoped to make the case for a Medicaid pharmacy carve out. But the ask, possibly too much too soon for a state dealing with its own version of COVID-response-and-vaccine-roll-out and a steep budget deficit, was ultimately tabled. A bill requiring health plans that contract with PBMs to submit the contract to the Office of Insurance Regulation for review is still alive and in progress.
Minnesota. The “Pharmacy Fair Competition Act” looked promising from the start, with provisions for greater MAC transparency, appeals, banning reimbursement on ingredient cost below NADAC and prohibiting spread pricing. Still, SF 917/HF1279 was pulled when the Commerce Committee Chair and co-author of the bill inexplicably opted to file an amendment that would limit the bill’s applicability to pharmacies with 12 or fewer stores. Other complications only further sidelined this year’s attempts at PBM reform, but we know Minnesota, and they will undoubtedly be back stronger next year.
We’ll continue to keep you informed on PBM reform around the country and encourage everyone to stay involved and up-to-date on what’s happening with PBM legislation in your state. Our board members and staff are advocating in our respective states too, and are happy to share advice and resources. Contact us here for more information or assistance with advocating for PBM reform in your state.