27-05-2025
New law raises prescription drug costs for most Hoosiers
SEA 140 mandates insurers, pharmacy benefit managers, or other administrators of pharmacy benefits to reimburse pharmacies at a rate that includes "a fair and reasonable dispensing fee.' This mandated fee will raise prescription drug costs on consumers. (Getty Images)
Because most Hoosiers rely on their employers for health care coverage and the manufacturing industry employs 1 in 5 Hoosiers, the Indiana Manufacturers Association (IMA) has long championed efforts to control spiraling health care costs. This issue is critical to individuals and employers alike, and the IMA is encouraged that Indiana has seen a lot of improvement on this topic in recent legislative sessions.
Senate Enrolled Act 140, however, takes a step in the wrong direction. By mandating pharmacy dispensing fees, SEA 140 will ultimately burden employers and individuals with higher prescription drug expenses across the board.
At the heart of our concern is the provision within SEA 140 that mandates insurers, pharmacy benefit managers, or other administrators of pharmacy benefits to reimburse pharmacies at a rate that includes 'a fair and reasonable dispensing fee.' This mandated fee will raise prescription drug costs on consumers.
Our estimates indicate that this bill will lead to at least $100 million in new health care spending.
It's crucial to understand that these increased costs won't simply be absorbed by insurers or employers. Instead, they will inevitably be passed down to consumers, further straining already tight family budgets.
As businesses grapple with higher health care expenses, they may be forced to make difficult decisions, such as reducing benefits, raising employee deductibles, or increasing employee copays for prescription drugs. This ultimately translates to less money in the pockets of Hoosier families, making it harder to afford essential goods and services.
Indiana employers, who provide health insurance benefits to their employees, will also bear a substantial burden. The increased cost of providing these benefits may very well negate any progress made this year in lowering health care costs. This is a serious concern for Indiana manufacturers, who already face a competitive disadvantage compared to companies in states with lower health care costs. The new spending mandated by SEA 140 will only exacerbate this problem.
We are also troubled by the fact that SEA 140 exempts Medicaid and the state employee health plan. This exemption means that commercial payers, employers and individuals who purchase private health insurance will disproportionately shoulder the burden of these increased costs, while the state itself avoids the financial impact.
Simply put, legislators recognized the cost of this new fee and protected the budget they were writing but still raised the cost of prescription drugs on the private sector.
Pharmacy benefit manager (PBM) reform is necessary, and SEA 140 does contain some positive provisions. However, these positive aspects are overshadowed by the misguided and unfair mandate on health care payers.
The IMA is committed to addressing the rising cost of health care in Indiana because we recognize the burden it places on Hoosier employers, employees, and families. Moving forward, we encourage the legislature to pursue a more equitable approach to addressing pharmacy reimbursement issues.
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