Numerous
efforts
have
been
made
at
the
federal
level
to
crack
down
on
the
opaque
business
practices
of
pharmacy
benefit
managers,
from
a
lawsuit
by
the
Federal
Trade
Commission
to
bills
in
Congress.
But
no
definitive
action
has
been
taken
yet.
In
the
absence
of
federal
progress,
states
are
stepping
in
to
fill
the
gap.
Just
recently,
California
Governor
Gavin
Newsom
signed
a
law
(SB
41)
that
will
regulate
PBMs.
It
has
several
provisions,
including
banning
spread
pricing.
This
is
when
a
PBM
charges
a
health
plan
more
for
a
drug
than
it
pays
the
pharmacy
and
keeps
the
difference
as
profit.
“I
am
pleased
to
sign
SB
41,
a
bill
that
will
lower
health
care
costs
for
all
Californians.
This
bill
…
represents
the
most
aggressive
effort
in
the
country
to
lower
prescription
drug
costs.
California
continues
to
lead
the
way
in
lowering
costs,
increasing
transparency,
and
ensuring
that
the
savings
are
passed
on
to
payers
and
consumers,”
Newsom
said
in
a
statement.
PBMs
have
come
under
a
lot
of
scrutiny
recently
due
to
their
vertical
integration
with
insurers
and
practices
that
inflate
drug
prices.
The
top
three
PBMs
—
CVS
Caremark,
Cigna’s
Express
Scripts
and
UnitedHealth
Group’s
Optum
Rx
—
control
about
80%
of
the
prescription
drug
market.
Recently,
Arkansas
passed
a
law
that
would
ban
PBMs
from
owning
pharmacies.
Although
advocates
applauded
this
law,
a
federal
judge
blocked
it
from
being
enacted,
arguing
that
it
violates
the
Commerce
Clause.
This
says
that
states
cannot
pass
laws
that
unfairly
hurt
or
discriminate
against
businesses
from
other
states.
Arkansas
has
appealed
this
decision,
and
some
advocates
are
still
hopeful
the
law
will
stand.
Several
other
states
have
also
taken
steps
to
rein
in
PBMs.
-
Massachusetts
enacted
a
law
in
January
that
requires
PBMs
to
submit
detailed
rebate
and
pricing
data
and
obtain
a
state
license. -
Missouri
passed
a
law
in
March
that
bans
PBMs
and
insurers
from
refusing
to
pay
providers
for
physician-administered
drugs
and
requires
fair
reimbursement
based
on
contractually-specified
rates. -
North
Dakota
amended
a
law
in
March
that
requires
PBMs
to
receive
a
license
from
the
state
commissioner’s
office
instead
of
a
certificate
of
authority. -
Utah
enacted
a
law
in
March
that
requires
PBMs
to
offer
plan
designs
that
pass
manufacturer
rebates
directly
to
enrollees
and
bans
spread
pricing.
While
states
are
moving
prescription
drug
pricing
reform
along,
at
least
one
expert
still
hopes
to
see
federal
support.
“We’re
seeing
plans
do
their
own
thing.
We’re
seeing
a
lot
of
disruptive
PBMs
out
in
the
market.
We’re
slowly
seeing
the
states
taking
actions.
It
would
really
be
great
to
see
the
federal
government
advocating
for
this
as
well,”
declared
Kathy
Chang,
head
of
trade
relations
at
Blue
Shield
of
California,
a
nonprofit
health
insurance
company
covering
about
6
million
Californians.
The
California
law
The
new
PBM
law
in
California
has
several
key
provisions.
-
It
bans
spread
pricing. -
It
ensures
all
rebates
being
negotiated
with
the
manufacturer
are
passed
on
to
the
patient. -
It
requires
PBMs
to
be
licensed
by
the
Department
of
Managed
Health
Care. -
It
prohibits
PBMs
from
steering
patients
to
their
own
pharmacies
and
away
from
non-affiliated
pharmacies. -
It
requires
a
pass-through
pricing
model,
in
which
PBMs
can
only
be
paid
a
clear,
flat
fee
for
their
services
—
not
a
fee
that
changes
based
on
the
list
price
of
drugs
or
rebates.
“If
you
break
it
down
in
plain
and
simple
English,
it
really
ends
the
hidden
fees
and
ensures
that
everybody
in
the
state
of
California
is
able
to
see
the
fair
and
true
price
at
the
pharmacy
counter
so
they
can
make
informed
decisions
on
what
is
best
for
their
health,
but
most
importantly,
their
wallet,”
Chang
said.
“It’s
a
huge
step
in
reforming
PBM
practice,
and
it
brings
a
genuine
price
transparency
to
the
system
that
really
was
not
available
for
quite
some
time.”
The
National
Community
Pharmacists
Association
(NCPA)
is
in
favor
of
several
of
the
provisions.
This
includes
requiring
PBMs
to
be
licensed
by
the
Department
of
Managed
Health
Care
(which
brings
more
state
oversight)
and
preventing
PBMs
from
steering
patients
to
their
own
pharmacies
versus
non-affiliated
independent
pharmacies.
A
recent
report
by
the
FTC
found
that
the
big
three
PBMs
are
directing
patients
to
their
affiliated
pharmacies
over
independent
pharmacies.
For
example,
CVS
Caremark
may
steer
patients
to
a
local
CVS
pharmacy.
NCPA’s
director
of
state
government
affairs,
Joel
Kurzman,
said
California’s
law
is
a
“great
first
start”
and
will
have
a
“meaningful
impact.”
However,
there
is
additional
reform
the
organization
hopes
to
see,
including
requiring
PBMs
to
reimburse
pharmacies
in
the
commercial
market
at
the
rate
of
National
Average
Drug
Acquisition
Cost
plus
a
professional
dispensing
fee.
This
was
initially
included
at
some
point
in
the
legislative
process,
but
was
eventually
removed
from
SB
41.
Unsurprisingly,
a
lobbying
group
for
PBMs
came
out
against
California’s
law.
“It
is
a
failure
of
the
Newsom
administration
to
fall
for
Big
Pharma’s
ploy
to
blame
their
high
list
prices
on
others
and
to
undermine
the
very
mechanisms
that
actually
lower
prescription
drug
costs,”
the
Pharmaceutical
Care
Management
Association
said
in
a
statement.
“Nothing
in
SB
41
will
lower
drug
costs
for
Californians.
In
fact,
the
legislation
will
increase
drug
costs
for
everyone
in
California.”
Federal
action
needed
When
asked
what
she
hopes
Congress
and
other
states
take
away
from
California’s
new
law,
Chang
pointed
to
the
need
for
broader
drug
pricing
reform.
State
and
federal
policy
is
necessary
to
make
a
difference
in
this
space,
but
health
plans
can
also
take
action,
she
said.
In
January,
Blue
Shield
of
California
launched
its
new
pharmacy
management
model,
in
which
it
teamed
up
with
five
different
companies
—
Amazon
Pharmacy,
Cost
Plus
Drugs,
Abarca,
Prime
Therapeutics
and
CVS
Caremark
—
for
its
prescription
drug
benefit.
Previously,
CVS
Caremark
was
its
sole
pharmacy
benefit
manager.
An
executive
at
a
health
tech
company
focused
on
prescription
drugs
also
argued
that
national
reform
is
needed.
“We’ll
see
more
states
experiment,
…
but
drug
pricing
crosses
state
lines
—
so
long-term
stability
will
require
federal
harmonization.
The
focus
should
be
consistency,
not
50
different
definitions
of
transparency.
We
also
need
to
move
from
static
regulation
to
dynamic
pricing
transparency
—
using
AI-driven
platforms
that
route
prescriptions
based
on
cost
and
coverage
in
real
time,”
said
Jeff
Park,
president
of
Waltz
Health.
In
the
meantime,
Congress
and
other
states
have
something
to
learn
from
California’s
law,
Kurzman
said.
This
law
took
about
two
years
to
come
through
and
went
through
several
iterations.
“I
like
to
think
that
everyone
everywhere
can
appreciate
the
resilience
that
was
shown
in
California.
…
The
message,
I
think,
can
be
of
resilience,
that
you
can
get
back
up
and
restrategize,
rework,
keep
the
conversations
going,
keep
educating,
and
you
can
eventually
progress,”
he
said.
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