By Melissa Patrick
Kentucky Health News
FRANKFORT, Ky. – Two pharmacy bills are a little closer to becoming law: one to let pharmacists tell their patients the least expensive way to pay for their medications and another put the state back in direct charge of its Medicaid drug program, a move sought by independent pharmacies.
Both bills involve questionable practices by the pharmacy benefit managers who process $1.7 billion a year in Kentucky Medicaid prescriptions.
Senate Bill 5, sponsored by Sen. Max, Wise, R-Campbellsville, would allow the state to hire a single PBM to manage the Medicaid drug program. Now they are hired by Medicaid managed-care organizations, or MCOs, which are mostly subsidiaries of insurance companies.
Wise told the Senate that PBMs aren't fairly reimbursing independent pharmacies, which is putting the independents at risk of closing. He targeted CVS Caremark, which has contracts with four of the five Kentucky MCOs and is paying independents a fee of 85 cents per prescription, when the federal Centers for Medicare and Medicaid Services says the fee should be around $10.64.
“That’s not free market,” Wise said. “That’s not capitalism. It’s gaming a system to close our local businesses – and it isn’t right."
He added that the MCOs and the Cabinet for Health and Family Services, which has no authority over the PBMs, have not been able to tell him how they spend the huge sums spent annually on Medicaid pharmacy benefits in Kentucky.
"It troubles me that we have a contract scheme in place where one-point-seven billion of taxpayer dollars are being spent and we have no way of accounting for it," he said.
On top of that, Wise said, CVS has been telling independent pharmacists that the best way to handle the problem is to sell their pharmacies to the company.
Other states are dealing with these issues. Republican Gov. Asa Hutchinson of Arkansas recently said he would call a special legislative session to authorize regulation of PBMs by the state’s Insurance Department.
At a Feb. 21 news conference, the Arkansas Pharmacist Association revealed, among other things, that CVS Caremark paid CVS pharmacies an average of $60 more per prescription than they paid independent pharmacies.
Schroder noted that Kentucky Medicaid has issued an official estimate that SB 5 would cost the state an extra $36 million a year, and said that he was "disappointed" it hadn't been sent to the Appropriations and Revenue Committee, the usual place for bills that cost money.
However, he acknowledged, “It has become abundantly clear that there are problems. The main one I see is a transparency problem. I hope we can address those problems.”
Sen. Robin Webb, D-Grayson, voted yes but also voiced "serious concerns about it not going to Appropriations and Revenue" to resolve issues of cost and transparency and said she hoped passage of the bill "will jolt that information loose."
The second pharmacy bill, if passed, is one that could save Kentuckians on Medicaid some money.
House Bill 463, sponsored by Rep. Michael Meredith, R-Brownsville, would prohibit PBMs from requiring clients to make a co-payment that is higher than an optional cash-payment amount, and keep PBMs from penalizing a pharmacy for telling patients if that option was available.
“What the bill does is it says when you come in to a pharmacy, the cost of a drug – the cost sharing on a drug, the co-pay – can’t be higher than what the cash price would be,” Meredith told the House Banking and Insurance Committee, which voted unanimously Feb. 28 to approve the bill.
Sometimes a patient's co-pay is higher than the cash price of the medication, but pharmacists are forced to charge their patients the higher price, under their contracts with the PBMs, and the difference goes back to the PBM – called a "clawback," Meredith said.
Rosemary Smith, a co-owner of Jordan Drug pharmacies in Eastern Kentucky, added that if a patient asks if there is a less expensive option, the pharmacy can tell them, but under most of the state PBM contracts they cannot offer this information unless they are asked about it – and most people don't know to ask.
"It is an extremely greedy practice to require hard-working men and women of Kentucky and across the country to pay more for their drugs than they should have just to increase profits for pharmacy benefit managers," said Smith, who is a founding member of the Kentucky Independent Pharmacist Alliance, which says it represents more than 500 independent pharmacists.
The "clawback" clause is used in other states. Nicole Craine of The New York Times reports that at least five states have adopted laws to make sure pharmacists can inform patients about the less costly options, and at least a dozen others are considering such legislation, according to the National Conference of State Legislatures.
Mark Merritt, the president and chief executive of the Pharmaceutical Care Management Association, which represents PBMs, told Craine that consumers should pay the lower amount. As for the use of gag clauses, he said: “It’s not condoned by the industry. We don’t defend it. It has occurred on rare occasions, but it’s an outlier practice that we oppose.”
Meredith told the committee that PBMs have agreed to the language in the bill, which he added has had input from many stakeholders.
“This bill is good for consumers in Kentucky. This bill is good for independent pharmacists and pharmacies in Kentucky,” he said. HB 463 now goes to the full House for consideration.
Kentucky Health News
FRANKFORT, Ky. – Two pharmacy bills are a little closer to becoming law: one to let pharmacists tell their patients the least expensive way to pay for their medications and another put the state back in direct charge of its Medicaid drug program, a move sought by independent pharmacies.
Both bills involve questionable practices by the pharmacy benefit managers who process $1.7 billion a year in Kentucky Medicaid prescriptions.
 |
| Sen. Max Wise |
Wise told the Senate that PBMs aren't fairly reimbursing independent pharmacies, which is putting the independents at risk of closing. He targeted CVS Caremark, which has contracts with four of the five Kentucky MCOs and is paying independents a fee of 85 cents per prescription, when the federal Centers for Medicare and Medicaid Services says the fee should be around $10.64.
“That’s not free market,” Wise said. “That’s not capitalism. It’s gaming a system to close our local businesses – and it isn’t right."
He added that the MCOs and the Cabinet for Health and Family Services, which has no authority over the PBMs, have not been able to tell him how they spend the huge sums spent annually on Medicaid pharmacy benefits in Kentucky.
"It troubles me that we have a contract scheme in place where one-point-seven billion of taxpayer dollars are being spent and we have no way of accounting for it," he said.
On top of that, Wise said, CVS has been telling independent pharmacists that the best way to handle the problem is to sell their pharmacies to the company.
"If our local pharmacies continue to receive less than 10 percent of the federally recommended minimum dispensing fee, many of them will be out of business by the end of this year," Wise said.
Other states are dealing with these issues. Republican Gov. Asa Hutchinson of Arkansas recently said he would call a special legislative session to authorize regulation of PBMs by the state’s Insurance Department.
At a Feb. 21 news conference, the Arkansas Pharmacist Association revealed, among other things, that CVS Caremark paid CVS pharmacies an average of $60 more per prescription than they paid independent pharmacies.
SB 5 moved to the House on a vote of 32-4, with Republican Sens. David Givens of Greensburg, Chris McDaniel of Taylor Mill and Wil Schroeder of Wilder, along with Democratic Sen. Perry Clark of Louisville, voting against it.
Schroder noted that Kentucky Medicaid has issued an official estimate that SB 5 would cost the state an extra $36 million a year, and said that he was "disappointed" it hadn't been sent to the Appropriations and Revenue Committee, the usual place for bills that cost money.
However, he acknowledged, “It has become abundantly clear that there are problems. The main one I see is a transparency problem. I hope we can address those problems.”
Sen. Robin Webb, D-Grayson, voted yes but also voiced "serious concerns about it not going to Appropriations and Revenue" to resolve issues of cost and transparency and said she hoped passage of the bill "will jolt that information loose."
Sen. Tom Buford, R-Nicholasville, said likewise: “It might not end up passing the whole General Assembly. It may not make it through the governor’s office. But what you do here today is you send a message to the Medicaid Department to find out what the facts are and report to us."
At the bill's Feb. 16 committee hearing, Sen. Ralph Alvarado, R-Winchester, noted that an Optum study concluded that Kentucky could save up to $348 million if the bill becomes law, but Medicaid Commissioner Stephen Miller told the committee, "We still stand by our numbers."
At the bill's Feb. 16 committee hearing, Sen. Ralph Alvarado, R-Winchester, noted that an Optum study concluded that Kentucky could save up to $348 million if the bill becomes law, but Medicaid Commissioner Stephen Miller told the committee, "We still stand by our numbers."
The second pharmacy bill, if passed, is one that could save Kentuckians on Medicaid some money.
 |
| Rep. Michael Meredith |
“What the bill does is it says when you come in to a pharmacy, the cost of a drug – the cost sharing on a drug, the co-pay – can’t be higher than what the cash price would be,” Meredith told the House Banking and Insurance Committee, which voted unanimously Feb. 28 to approve the bill.
Sometimes a patient's co-pay is higher than the cash price of the medication, but pharmacists are forced to charge their patients the higher price, under their contracts with the PBMs, and the difference goes back to the PBM – called a "clawback," Meredith said.
Rosemary Smith, a co-owner of Jordan Drug pharmacies in Eastern Kentucky, added that if a patient asks if there is a less expensive option, the pharmacy can tell them, but under most of the state PBM contracts they cannot offer this information unless they are asked about it – and most people don't know to ask.
 |
| Rosemary Smith, owner of independent pharmacies, spoke at the Feb. 28 House Banking and Insurance Committee meeting. |
Mark Merritt, the president and chief executive of the Pharmaceutical Care Management Association, which represents PBMs, told Craine that consumers should pay the lower amount. As for the use of gag clauses, he said: “It’s not condoned by the industry. We don’t defend it. It has occurred on rare occasions, but it’s an outlier practice that we oppose.”
Meredith told the committee that PBMs have agreed to the language in the bill, which he added has had input from many stakeholders.
“This bill is good for consumers in Kentucky. This bill is good for independent pharmacists and pharmacies in Kentucky,” he said. HB 463 now goes to the full House for consideration.
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