A bill promoting independent pharmacies passed the N.C. House in a 114-0 vote in April, suggesting little controversy. But the legislation is opposed by national drugstore chains that contend it will hurt consumers by imposing various mandates on pharmacy benefit managers, or PBMs.
The changes would prompt a $10.24 fee for each prescription drug dispensed in the state, according to critics of the bill.
Reps. Chris Humphrey of Lenoir County and Wayne Sasser of Stanly County say House Bill 246 is intended to even the playing field for independent pharmacies, which the lawmakers say are becoming scarce because of unfair practices of PBMs and larger chains. Sasser is a retired pharmacist who lives in Albemarle.
Like everything in health care, the issues are complex, especially given the arcane nature of PBMs, which are third-party companies that manage prescription drug benefits for large employers and health insurers. Three owners now have more than 80% of the PBM market: CVS Health’s CVS Caremark; UnitedHealthcare’s OptumRX; and Cigna’s Express Scripts, according to U.S. Rep. James Comer, a Kentucky Republican who has criticized the industry’s practices.
PBMs sign agreements with clients that allow for discounted prices on drugs. Owners of independent pharmacies, which lack similar negotiating clout, say they often lose money when trying to compete with prices charged by the larger chains.
The current system puts too much control in the hands of a few companies, the independent pharmacists say, prompting proposals to impose more restrictions on the design and policies of PBM plans. But those restrictions could block less expensive options and services popular with consumers, critics of the N.C. legislation say.
The ERISA Industry Committee, which represents large employers, sent a May 25 statement to state employer and advocacy groups threatening legal action if the bill passed.
If enacted, House Bill 246 would “raise health insurance and prescription drug costs across North Carolina and jeopardize the affordable benefits that self-insured employer plans are able to secure and provide to participants,” the group said. It would also conflict with federal law regarding employer health plans. “As such, [the committee] would consider filing or supporting a lawsuit challenging the law.”
The NC Chamber is also opposing the bill because it “either sets price floors, requires mandatory reimbursements, or takes away contracting flexibility from businesses,” according to the Raleigh-based group. It would “prohibit PBMs from reimbursing pharmacies less than national average cost of a drug or less than the PBM manager would reimburse itself.”
The Pharmaceutical Research and Manufacturers of America, which represents the nation’s leading drug companies, supports the bill, according to John Hardin, a Raleigh lawyer at Manning, Fulton & Skinner who represents the trade association. North Carolina is one of the nation’s major pharmaceutical manufacturing states with big employers such as Novo Nordisk and Pfizer.
(By the way, that $10.24 is not referenced in the bill. The legislation calls for a PBM to reimburse drug stores at the national average acquisition cost for the drug in question, plus pay a “professional dispensing fee” that’s “equal to or higher than the fee-for-service professional drug dispensing fee calculated using the reimbursement methodology described in the North Carolina Medicaid State Plan.” That’s a 1,508-page document and the $10.24 appears on page 973, with the proviso that “The professional dispensing fee is determined by the Cost of Dispensing study conducted on behalf of the North Carolina Department of Health and Human Services, Division of Health Benefits.”)
