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Yahoo
10-06-2025
- Business
- Yahoo
PBM lobby sues Arkansas over law requiring drug middlemen to sell pharmacies
This story was originally published on Healthcare Dive. To receive daily news and insights, subscribe to our free daily Healthcare Dive newsletter. The main lobby representing pharmacy benefit managers is suing Arkansas in a bid to stop the state's law preventing the drug middlemen from owning pharmacies. The Pharmaceutical Care Management Association's lawsuit filed Monday in a federal court argues that Arkansas' law — the first of its kind — is unconstitutional and would result in pharmacies closing and medications becoming more difficult for Arkansans to access. It's the latest legal challenge from the PBM industry as it hustles to halt the law and set a precedent that might dissuade other states from passing similar legislation. Arkansas' legislation, called Act 624, is meant to protect local community pharmacies from larger, more diversified chains by requiring companies that own both PBMs and pharmacies to shutter their operations in the state. When signing Act 624 in April, Gov. Sarah Huckabee Sanders said the law was necessary to curb anticompetitive behavior among major PBMs that threatens Arkansas' independent pharmacies. However, PBMs — powerful middlemen that shape interactions and payments between drugmakers, payers and pharmacies — decried the law, arguing it eliminates a significant source of efficiency in the pharmacy supply chain by forcing them to sell off their brick-and-mortar stores and halt mail-order pharmacy operations in the state. The policy would unfairly benefit Arkansas-owned pharmacies at their expense, major PBMs said. Now, the PCMA — which represents 20 PBMs, including the so-called 'Big Three' that control an outsized share of the market — is taking to the courts in an attempt to stop the law before it kicks in at the start of 2026. Arkansas' law will cause roughly 40 PBM-owned pharmacies to close, along with eliminating home delivery options and jeopardizing access to specialty drugs for patients managing complex conditions, according to the PCMA's complaint. Act 624 will also lead to job losses and reduce market competition, which could cause costs to to rise for patients and their payers, the association argues. 'We will continue to fight to protect patients' access to health care and educate policymakers and stakeholders about the severe consequences of harmful legislation threatening patient access to pharmacy services,' the PCMA said in an emailed statement. The lobby's lawsuit argues that Act 624 violates the Constitution's Dormant Commerce clause and Privileges and Immunities clause by penalizing out-of-state operators to protect local businesses. The law also violates the Bill of Attainder clause, which forbids states from enacting punishments — in this case, revoking an actor's permit to conduct business — without a court proceeding, according to the complaint. The complaint makes similar legal arguments as prior lawsuits filed against Arkansas' law by CVS and Cigna, which operate two of the largest PBMs in the country: Caremark and Express Scripts, respectively. 'PCMA does not bring this suit because Act 624 is bad policy, although it very certainly is. Rather PCMA brings this suit because Act 624 is as clear an example of unconstitutional state legislation as the Court is likely ever to see,' the complaint reads. The PCMA's suit, which was filed in Arkansas' eastern district against the state's pharmacy board, seeks a preliminary injunction barring enforcement of the law while the lawsuit proceeds. Navitus Health Solutions is also a plaintiff in the suit. The Wisconsin-based PBM, which operates on a pass-through model — meaning it makes money only through administrative fees and not by retaining rebates — is not a member of the PCMA. The outcome of the suits could have significant ramifications for the PBM industry, as other states considering similar legislation could be deterred or spurred on by the court's eventual decision. Bills with similar provisions were recently introduced in Vermont, Texas and New York. States are stepping into a gap left by Congress as lawmakers scramble to make prescription drugs more affordable. Despite numerous proposals to rein in controversial PBM business practices over the past few years — including a bill that would force PBMs to sell pharmacy businesses nationwide — Congress has yet to pass significant federal reform. However, lawmakers on both sides of the aisle in Washington have expressed anger over PBMs' business practices in recent hearings. And, the GOP megabill currently being considered by the Senate includes some PBM provisions, including banning spread pricing in Medicaid, preventing PBMs from being paid based on a drug's list price and requiring more transparency about PBMs' business practices. Recommended Reading CVS, Cigna sue Arkansas to overturn new PBM law
Yahoo
01-06-2025
- Business
- Yahoo
Illinois bill aims to lower prescription costs, rein in pharmacy benefit managers
A bill that seeks to control the rising cost of prescription drugs while also offering financial help for many small, independent pharmacies in Illinois cleared the state Senate on Thursday and awaits action in the House. The bill, known as the Prescription Drug Affordability Act, contained in House Bill 1697, would put new regulations and impose new fees on a large but little understood segment of the prescription drug industry — pharmacy benefit managers, or PBMs. 'This really restricts the ability of PBMs to extract large amounts of money out of the prescription drug system,' Sen. Dave Koehler, D-Peoria, the bill's chief Senate sponsor, said in an interview. PBMs act as a kind of third-party intermediary in the insurance industry who manage prescription drug benefits on behalf of insurance plans. They do that by negotiating prices with drug manufacturers, setting reimbursement rates paid to pharmacies, developing formularies, or 'preferred drug lists,' and maintaining pharmacy networks where insured individuals get their prescriptions filled. But they have also come under criticism in recent years for being too closely integrated with some of the nation's largest retail pharmacy chains and for helping drive up the cost of prescription drugs, often at the expense of smaller, independent community pharmacies. 'They extract extra profit from patients through opaque and often predatory tactics,' Gov. JB Pritzker said in calling for the legislation during his State of the State address in February. 'Not only are they driving up health care costs for Illinois families by hundreds of millions of dollars per year, but they are also putting small, local, independent pharmacies out of business.' Many large PBMs, such as CVS Caremark, a subsidiary of CVS Health, also either own or are affiliated with large retail chain pharmacies. Critics of their practices argue they use their position to steer patients to their own pharmacies, often to the detriment of smaller, independent pharmacies. That has resulted in what some people call 'pharmacy deserts' in many small towns, rural areas and low-income urban communities. 'PBMs routinely reimburse my pharmacy below cost for brand name prescriptions, medications where they're already pocketing massive rebates from drug manufacturers,' David Bagot, an independent pharmacist from Petersburg who is also president of the Illinois Pharmacists Association, told a Senate committee Wednesday. 'Meanwhile, they pay their own affiliated pharmacies – including PBM-owned community, mail-order and specialty pharmacies – much higher rates for the same medications.' The bill would prohibit PBMs from 'steering' insured patients to their own affiliated pharmacies, either by requiring them to use a particular pharmacy or by forcing the patient to pay more for their medications if they use a different outlet. It would also prohibit the practice of 'spread pricing,' or charging an insurance plan one price for a given drug while reimbursing pharmacies at a lower rate for that same drug and pocketing the difference. In addition, the bill calls for levying a fee on PBMs based on the number of patients they insure. Money from that fee would go into a fund for the Department of Commerce and Economic Opportunity to award up to $25 million a year in grants to independent pharmacies and pharmacies located in rural counties, medically underserved areas, low-income communities and pharmacies that serve high concentrations of Medicaid patients. It also would require PBMs to remit all the money they receive in the form of rebates from drug manufacturers to the insurance plan sponsors. And it would require them to disclose to state regulators how much they receive in rebates each year. Pharmaceutical industry lobbyists argued many provisions of the bill, including the fee levied on PBMs, will actually end up being passed on to insurance plans and consumers, thus resulting in higher prescription drug prices. 'This is not a prescription drug affordability bill,' said Lori Reimers, lobbyist for the Pharmaceutical Care Management Association. 'Costs will rise. When you give more money to pharmacies, when you restrict tools that lower cost, the cost of insurance and health plans are going to go up on your constituents.' Reimers noted that since 2016, Illinois lawmakers have enacted 20 new laws pertaining to PBMs including laws granting the state Department of Insurance regulatory powers over PBMs, all with the intent of bringing down drug prices. 'And I don't think anybody's here saying that drug prices have gotten lower yet,' she said. 'But here we are with a much bigger bill.' The bill passed the Senate with bipartisan support, 56-1. Sen. Dave Syverson, R-Cherry Valley, cast the only no vote. The language the Senate passed was an amendment to a House bill that originally dealt with training for 911 dispatchers. The bill now goes back to the House for concurrence with the Sente amendments.
Yahoo
30-05-2025
- Business
- Yahoo
CVS and Express Scripts sued to block a new law restricting drug middlemen
CVS and Cigna-owned Express Scripts filed lawsuits Thursday to block an Arkansas law that tries to curb the power of pharmacy benefit managers (PBMs) in the state. PBMs, also known as drug middlemen, are third-party administrators of prescription drug plans for health insurers. They negotiate with pharmaceutical companies over how much a health plan will pay for a drug and set the out-of-pocket costs for patients. Arkansas Gov. Sarah Huckabee Sanders signed a law last month that banned PBMs from owning and operating pharmacies in the state, saying at the time that they 'have taken advantage of lax regulations to abuse customers.' The legislation came following two reports from the Federal Trade Commission and the House Committee on Oversight and Accountability last year that accused PBMs of reaping massive profits by pushing patients to pay for more expensive drugs, including life-saving cancer medicine. Supporters of the Arkansas law, which goes into effect in January, claimed it would also greatly help independent pharmacies, which can't compete with PBM-owned chains like CVS. In its lawsuit Thursday, CVS said the legislation will force it to close 23 pharmacies in the state, eliminating hundreds of jobs, and claimed the ban would 'drive-up costs for Arkansans.' CVS, which declined to further comment, said in their press release that the law violates the Dormant Commerce Clause, a part of the Constitution that restricts states from discriminating against or unfairly burdening out-of-state businesses. It also said the law violates the company's Equal Protection rights. Susan Peppers, vice president of pharmacy practice for Evernorth Health Services, which runs Express Scripts and is owned by Cigna, said in a press release that 'if this law takes effect in January, hundreds of thousands of Arkansans will be left scrambling to navigate the forced closure of pharmacies and finding new ways to get their medicines and critical clinical support.' While advocates say the law will help rural Arkansans whose local pharmacies can't stay afloat, Express Scripts is claiming the opposite. The law 'could be especially challenging for the more than 40% of Arkansans that live in a rural area and may not have easy access to a retail pharmacy,' it said. In a statement to Quartz, Arkansas Attorney General Tim Griffin defended the legislation. 'Pharmacy benefit managers wield outsized power to reap massive profits at the expense of consumers,' he said. 'Through Act 624, Arkansas is standing up to PBMs on behalf of consumers, and I will vigorously defend our law.' For the latest news, Facebook, Twitter and Instagram.
Yahoo
08-04-2025
- Business
- Yahoo
Alabama House passes bill regulating pharmacy benefit managers
Rep. Phillip Rigsby, R-Huntsville, speaking on the floor of the Alabama House of Representatives in the Alabama State House in Montgomery, Alabama, on April 8, 2025. Rigsby, an independent pharmacy owner, carried "Community Pharmacy Relief Act", sponsored by Sen. Sen. Bill Beasley, D-Clayton, which passed the House unanimously. (Anna Barrett/Alabama Reflector) The Alabama House of Representatives on Tuesday unanimously passed legislation that creates new regulations on reimbursements and fees pharmacy benefit managers (PBMs) charge to pharmacies. SB 252, sponsored by Sen. Bill Beasley, D-Clayton, and called the 'Community Pharmacy Relief Act,' seeks to address concerns from independent pharmacies over reimbursement rates and business practices that critics say have driven many out of business. PBMs act as a 'middle-man' between health insurers, pharmacies and drug manufacturers. They negotiate drug prices, determine reimbursement rates for pharmacies and manage prescription drug benefits. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX Critics accuse PBMs of using their position to impose unfair fees and steer patients toward PBM-owned pharmacies. PBMs are also accused of keeping manufacturer rebates for themselves instead of passing the savings along to consumers. Rep. Phillip Rigsby, R-Huntsville, an independent pharmacy owner who carried the legislation in the House, said after the bill passed that the process was hard, but that he knew he needed to continue on for the local pharmacies across the state. 'There have been many ups and downs in this journey, and there were days I wanted to throw in the towel, but I realized that my flesh was telling me to quit,' Rigsby said. 'Thanks be to God. When I felt defeated, that's when my faith reminded me.' Rep. Mark Gidley, R-Hokes Bluff, said the legislation is very important for family-owned pharmacies across the state. According to ABC33/40, 300 of Alabama's 800 independent pharmacies have closed across the state in the last six years. 'We have pharmacies that are closing all across the state. My understanding is about 10 since the first of the year,' Gidley said. 'The loss of local pharmacies is a terrible detriment to the health care of our people, especially in the rural areas. This can't happen.' The bill would impose new restrictions on PBMs, including a prohibition on reimbursing independent pharmacies at rates lower than those paid by the Alabama Medicaid Agency. It would also ban PBMs from charging certain fees to pharmacies, require them to pass on 100% of manufacturer rebates to health plans and prevent them from blocking pharmacists from disclosing lower-cost alternatives to patients. The House unanimously passed an amendment from Rep. Joe Lovvorn, R-Auburn, that would allow pharmacies to negotiate with the PBMs to keep a part of rebates used for administrative reasons. 'If I'm a private business and have the right to negotiate with a PBM, that if I want to take part of those rebates from those drugs that are offered, I can either receive those rebates or I can negotiate to be part of the administrative fee,' Lovvorn said. The bill goes to the Senate for concurrence or a conference committee. SUPPORT: YOU MAKE OUR WORK POSSIBLE
Yahoo
21-03-2025
- Business
- Yahoo
Alabama Senate passes bill regulating pharmacy benefit managers
Sen. Billy Beasley, D-Clayton, (right) speaks with Sen. Keith Kelley, R-Anniston on the floor of the Alabama Senate on March 19, 2025 at the Alabama Statehouse in Montgomery, Alabama. (Brian Lyman/Alabama Reflector) The Alabama Senate Thursday passed a bill creating new regulations on reimbursements and fees pharmacy benefit managers (PBMs) charge to pharmacies. SB 252, sponsored by Sen. Bill Beasley, D-Clayton and called the 'Community Pharmacy Relief Act,' seeks to address concerns from independent pharmacies over reimbursement rates and business practices that critics say have driven many out of business. 'We're losing almost one drugstore per week, going out of business because they are paid such a small amount of money from the PBM industry to fill prescriptions for their patients at their drugstore,' Beasley, a retired pharmacist, said on the Senate floor. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX PBMs act as a 'middle-man' between health insurers, pharmacies and drug manufacturers. They negotiate drug prices, determine reimbursement rates for pharmacies and manage prescription drug benefits. Critics accuse PBMs have used their position to impose unfair fees and steer patients toward PBM-owned pharmacies. PBMs are also accused of keeping manufacturer rebates for themselves instead of passing the savings along to consumers. The bill, which passed in a 32-0 vote with one abstention, would impose new restrictions on PBMs, including a prohibition on reimbursing independent pharmacies at rates lower than those paid by the Alabama Medicaid Agency. It would also ban PBMs from charging certain fees to pharmacies, require them to pass on 100% of manufacturer rebates to health plans and prevent them from blocking pharmacists from disclosing lower-cost alternatives to patients. The bill faced intense but cordial debate on the Senate floor, with supporters of the bill saying PBMs are currently straining independent pharmacies. Beasley, pointing to pharmacy closures, criticized the PBM industry for what he described as unfair reimbursement practices. 'The PBM industry owns the mail-order pharmacies. They control the contract that the drug solos agree to,' Beasley said, adding that 'over the last 40 years, and they always say, 'if you let me be your manager, we'll save you money on your expenditures on prescription drugs.' Well, Senators, it hasn't happened.' Sen. Chris Elliott, R-Daphne, introduced an amendment that would have delayed the reimbursement provisions until January 2026 to allow businesses time to adjust. 'We have friends in the business community, both on the pharmacy side and on the employer and employee side. And what this does is simply move again the effective date … so it gives them time to work through their contracts and enter into new contracts,' Elliot said. The amendment failed after Sen. Andrew Jones, R-Centre, opposed the delay, saying that pharmacies needed relief immediately. After further discussion, lawmakers settled on an October 1 effective date as a compromise. After the vote, senators from both parties said the bill was a significant step in addressing rising prescription drug costs and protecting local pharmacies. ' This is something that has been worked on for years to try to rectify this situation, and we've just finally gotten to the point it has been bipartisan. These two gentlemen have practiced pharmacy in the state for a long time. They understand the process,' Sen. Larry Stutts, R-Tuscumbia, said after the Senate adjourned. Jones made a point to say that the bill's provisions would not increase consumer costs. 'The actual acquisition cost of drug plus the reimbursement, which is based on Medicaid, that cannot be passed on to the consumer,' Jones said. 'And anything to the contrary is just a scare tactic.' The bill now moves to the House of Representatives for consideration. SUPPORT: YOU MAKE OUR WORK POSSIBLE
