Latest bill to aid independent pharmacies stalls in Senate after running into one of the session's heaviest lobbying campaigns

By Melissa Patrick
Kentucky Health News

FRANKFORT – The latest bill to help independent pharmacies compete with pharmacy benefit managers sailed out of the House with overwhelming support but came to a resounding halt in the Senate. No one is saying why, but the PBMs mounted one of the session's heaviest lobbying campaigns.

PBMs determine what drugs are offered in insurance plans, where and how a patient gets their drugs, how much is paid for the drug, and how much the pharmacist gets. The leading PBM in Kentucky is CVS Caremark, a sister company to one of the nation's largest pharmacy chains.

House Bill 457 passed the House 88-3 on March 21, with 56 sponsors. The next day it went to the Senate Appropriations and Revenue Committee, not a usual location for such a bill, and never got a hearing. It has had none of its regularly required three daily readings, and only two legislative days remain. 

Key parts of the bill would ensure that patients could pick their pharmacy, instead of being required to use one affiliated with the PBM; increase transparency between insurers and PBMs; and ban PBMs from retroactively denying a pharmacy claim after adjudication, commonly referred to as "clawing back." Opponents say the bill would raise costs for consumers.

Rep. Steve Sheldon, R-Bowling Green

Republican Rep. Steve Sheldon of Bowling Green, the bill's prime sponsor, said he was surprised that it didn't move in the Senate after getting such overwhelming support in the House. He said he couldn't say why leaders of the Senate's Republican majority had not supported it, but did say that many big companies opposed it. 

Those companies' heavy lobbying efforts appear to have worked. 

The Pharmaceutical Care Management Association, PBMs' trade group, was one of the state's top 10 lobbying spenders in the first two months of the legislative session, spending $38,369 to get their messages to lawmakers, according to reports they filed with the Kentucky Legislative Ethics Commission.

That ranked the PCMA ninth in spending, and it seems likely to end the session at a higher rank, because it spent thousands of dollars from March 21 to April 1 on television commercials asking viewers to contact their legislators and ask them to vote against HB 457, saying it would raise drug prices.

Sheldon fought back on his Facebook page March 28, pleading with senators to consider the bill.

"I would appreciate the Senate looking at HB 457," he said. "We are down to 2-3 days … I realize bills that inject millions back into Kentucky and allow our seniors patient choice are not as glamorous as the status quo, but please take a real close look at this. Don’t let your Kentucky dollars get mandated by PBMs out of state while our seniors wait by the mailbox for their medicine !! Don’t believe the lies, propaganda and rhetoric. It’s not TOO late." 

The only group that appeared to spend money lobbying in favor of the bill through February was EPIC Pharmacies, a nonprofit buying group for independent pharmacies, which reported spending $7,416. Lobbying groups' spending reports for March are due April 15.

CVS Health reported spending $21,528 through February. In a statement dated March 21, it said, "House Bill 457 will only increase the costs of prescription drugs in Kentucky, making it more difficult for Kentuckians to access affordable medications. Dozens of Kentucky employers are opposed to this bill because it does not help control the cost of prescription drugs and hurts their employees. We urge the Senate to reject HB 457. We should protect consumers from increased health care costs, and lawmakers should focus on the high prices set by big drug companies."

The Kentucky Association of Health Plans, comprising companies selling health insurance in the state, reported spending $11,316 on legislative lobbying through February, and the Kentucky Association of Health Underwriters reported spending $5,000. Both spoke against the bill in a House committee. 

Individual insurance companies, which have a wide range of interests, also opposed the bill. Anthem Inc. and its affiliates reported spending $35,597 on lobbying in the first two months, ranking 11th; United Healthcare reported spending $14,000.

Senate Appropriations and Revenue Committee Chair Sen. Chris McDaniel, R-Ryland Heights, did not respond to several e-mails from Kentucky Health News asking why he did not give the bill a hearting. 

Angela Billings, spokeswoman for the Senate majority, said in an e-mail that she had reached out to McDaniel with the question and that it would have to be "tabled" until the General Assembly returns April 13 to reconsider bills and budget lines vetoed by Gov. Andy Beshear.

"I daresay that he was extraordinarily busy with the budget and could not get to many bills worthy of hearing," Billings said. 

Sen. Max Wise, R-Campbellsville, who has been instrumental in getting PBM-control bills passed in prior legislative sessions, said he didn't know why this one hadn't moved in the Senate, but said in a text message, "I do support the concept and the language of HB 457." Asked if it was discussed in Republican senators' private caucus, he said, "Policy discussions stay within the caucus."

Kentucky lawmakers have been working on PBM issues for years, most recently passing 2020 Senate Bill 50 to make the state hire a single PBM to manage Kentucky Medicaid's prescription-drug business of more than $1 billion a year. A 2019 state analysis found PBMs made $123 million through spread pricing.

During the bill's House hearing, Sheldon, a pharmacist and businessman who is not seeking re-election, said it had taken three years of collaboration to produce, with upwards of 20 organizations supporting it. Not all of them lobby.

Lobbying groups must list the bills on which they are lobbying, but not whether they are for or against them. Other than those above, those that listed HB 457, and their total expenses between Jan. 1 and Feb. 28, were: American Pharmacy Services Corp., $550; Appalachian Regional Healthcare, $10,209; Chewy Inc., $10,000; Ford Motor Co., $17,500; GE Appliances, $5,000; St. Elizabeth Healthcare of Northern Kentucky, 16,358; and University of Louisville Health, $6,000.