Latest news with #PrescriptionDrugAffordabilityAct
Yahoo
3 days ago
- 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.
Chicago Tribune
03-03-2025
- Business
- Chicago Tribune
Editorial: Another layer of bureaucracy isn't the answer for beleaguered pharmacies, Gov. Pritzker
In Gov. JB Pritzker's Illinois budget address on Feb. 19, he lamented the decline of small-town independent pharmacies like those of Michelle Dyer, who abruptly closed three stores in rural Macoupin County during 2022, transferring their prescriptions to Walgreens. As Pritzker described it, the reason for Dyer's abrupt shutdown wasn't competition from rival stores and online pharmacies, for instance, but rather the actions of pharmacy benefit managers, or PBMs. These are middlemen, acting on behalf of health insurers in negotiations with pharmacies and drugmakers. Retailers say they threaten the future of independent drugstores and the giant Walgreens alike. The truth? More complicated than most anyone might think. And as for solving the problem of high drug costs, Pritzker's proposal for a new bureaucracy empowered to set maximum prices faces a rocky road in Illinois and in other states that are trying it. With his 'Prescription Drug Affordability Act,' Pritzker envisions a blue-ribbon panel prying profits away from PBMs by capping prescription prices. But it's unclear who would benefit in this highly integrated marketplace if a nanny state were to intervene. Big Pharma, at the top of the food chain, is well positioned to cash in if PBMs are weakened. Drug stores like Dyers' are middlemen themselves, and this legislation seems more likely to add administrative burdens than increase their profits. The state, meantime, purchases drugs on behalf of government insurance programs, and presumably Illinois could benefit if it succeeds in reducing the prices it pays. As for patients, in some cases they already use manufacturers' coupons and assistance programs to sharply reduce their out-of-pocket costs, with no new state board required. The governor's proposed 'Affordability Board' would add another layer of complexity, potentially reducing access to cutting-edge drugs and likely facing a constitutional challenge if it followed through on fixing prices. And — do we really have to say it? — the last thing Illinois needs is yet another state board trying to control market forces the governor doesn't like. For a couple of years now, the General Assembly has considered setting up one of these boards and, so far, opted to stay out of it. Here we go again. Skepticism about ham-handed state bureaucracies doesn't mean turning a blind eye to what Pritzker described in his speech as the 'opaque and often predatory tactics' of PBMs. Much of their negotiating leverage does indeed come from opaque tactics that boost their profits at the expense of other stakeholders. To call them predatory, however, ignores that they're one of the few checks on the near-monopolistic pricing power of drugmakers, which have jacked up U.S. prices far above those in other countries. What's needed is comprehensive, nationwide reform that takes a holistic approach to a complex marketplace and introduces greater transparency. To some extent, the PBMs are starting to get the message and voluntarily change some of their least-transparent business practices. Case in point: CVS Health's Caremark, the biggest PBM (yes, one of the companies Pritzker blames for wiping out drugstores is affiliated with the CVS drugstore chain). In a call with investors Feb. 12, the company touted two new programs aimed at making prices more transparent — and eliminating so-called market baskets that group drugs for pricing and work to increase PBM profits. It's a start, but far from sufficient. In recent months the Federal Trade Commission has identified a slew of self-dealing practices that it claims PBMs use to inflate drug costs, restrict access to certain medicines and squeeze Main Street retailers. PBMs say the FTC has it all wrong, but the government investigations have been revealing. In September, the FTC accused Caremark, Express Scripts and OptumRX of inflating the price of insulin, impairing patient access and raising costs for vulnerable Americans who need the drug every day to stay alive. In January, the FTC followed up by accusing those 'Big Three' PBMs of adding huge markups to specialty drugs for cancer and other critical conditions, then steering the most profitable sales to affiliated pharmacies. Congress responded to these findings with plenty of fulminating but no constructive solution. Late last year, it advanced a half-hearted reform as part of a continuing resolution to fund the government. Given that it would have legitimized some of the self-dealing, it's just as well that 'reform' got dropped. PBMs and Big Pharma continue to blame each other for the high cost of prescriptions. President Donald Trump has blithely promised to fix this mess, providing little indication of how. At one point, he vowed to eliminate PBMs altogether. That would be a mistake, as they are the only part of the supply chain positioned to challenge Big Pharma — and it's no crime to make a profit, after all. But the FTC's impressive reports indicate that seeking profits has sometimes turned into a harmful exploitation of market power. We haven't yet seen a comprehensive reform proposal, but it will have to come from the feds. Medicare and Medicaid account for the bulk of U.S. prescription purchases, and Uncle Sam could use its enormous leverage more effectively. At the same time, we would welcome less finger-pointing, greater restraint and a unified effort to self-regulate from the warring companies involved. As for Gov. Pritzker's proposal, laudable as his desire to fix this problem is, a new state drug board would only make matters worse.
