Independent pharmacists start ads asking Congress for relief from pharmacy benefit managers, ask Supreme Court to hear a case

Photo by Getty Images via The Commonwealth Fund

Kentucky Health News

Independent community pharmacists have begun an advertising campaign to get Congress to rein in pharmacy benefit managers, the middlemen between drug and health-insurance companies. They are also challenging a court ruling that could negate the PBM reforms made by Kentucky and other states.

The ad campaign was launched Thursday, June 13, by the National Community Pharmacists Association. Its CEO, B. Douglas Hoey, said "Eighty percent of all prescriptions in the U.S. are controlled by just three pharmacy benefit managers, and they are all owned by or affiliated with the largest insurance companies in the country. These are Fortune 15 corporations that behave like monopolies, and they are hurting patients with higher prescription costs and killing off small businesses at the average rate of one every day. There is broad bipartisan support in Congress for reform, and we are determined to get it passed before the end of the year."

On Friday, June 14, NCPA joined other pharmacy groups in asking the U.S. Supreme Court to reverse a recent decision from the Tenth Circuit Court of Appeals against a 2019 Oklahoma law than bans PBMs from requiring patients to pick up their prescriptions from PBM-affiliated pharmacies. The groups say the ruling "imperils laws enacted in almost every other state following the 2020 Supreme Court ruling" that approved state regulation of PBMs, reports Gabrielle Wanneh of Inside Health Policy.

In 2023, the Kentucky General Assembly passed Senate Bill 188, aimed at keeping the state's independent pharmacies from closing. It sets dispensing fees, bans PBMs from forcing patients to get their drugs through mail order, and keeps them from steering patients to pharmacies that they own. The PBMs argued that the law will cause insurance premiums to increase and its mandates in the bill won't allow businesses to gain from savings that PBMs offer.

Independent pharmacies say they are losing money because of low fees paid by PBMs. The bill sets a minimum dispensing fee of $10.64 per prescription for the state's independent pharmacies until a study of dispensing costs is completed by the state Department of Insurance. This "gap-fill payment floor" will not be available to chain pharmacies. The results of the study will eventually dictate what the dispensing fee should be going forward. The study is to be repeated every two years, with fee adjustments made accordingly.

The law, sponsored by Sen. Max Wise, R-Campbellsville, also prohibits a PBM from reimbursing a pharmacy that it owns at a higher rate than a community pharmacy, or from keeping a community pharmacy from filling a 90-day prescription for a maintenance drug. And a PBM will not be able to penalize a community pharmacy from sharing information with a patient on the cheapest option to pay for their medications.

Legislative lobbying reports for last session rank pharmacy-benefit managers fifth, hospitals sixth, Altria 11th, Anthem 17th, docs 18th

The legislature meets in the Kentucky State Capitol.

By Al Cross

Kentucky Health News

The trade association for pharmacy benefit managers, which act as middlemen between drug and health-insurance companies, was the fifth largest reported spender on lobbying the state legislature in the first three months of the year, according to a compilation by the Kentucky Legislative Ethics Commission. 

The Pharmaceutical Care Management Association reported spending $94,694 on lobbying the General Assembly from January through March. The session began Jan. 2 and was over for most purposes by the end of March.

On March 28, the legislature gave final passage to Senate Bill 188, which is intended to keep the state's independent pharmacies from closing. It sets dispensing fees, bans PBMs from forcing patients to get their drugs through mail order, and keeps them from steering patients to pharmacies that they own. The PBMs argued that the law will cause insurance premiums to increase and its mandates in the bill won't allow businesses to gain from savings PBMs offer.

Independent pharmacies say they are losing money because of low fees paid by PBMs. The bill sets a minimum dispensing fee of $10.64 per prescription for the state's independent pharmacies until a study of dispensing costs is completed by the state Department of Insurance. This "gap-fill payment floor" will not be available to chain pharmacies. The results of the study will eventually dictate what the dispensing fee should be going forward. The study is to be repeated every two years, with fee adjustments made accordingly.

The law, sponsored by Sen. Max Wise, R-Campbellsville, also prohibits a PBM from reimbursing a pharmacy that it owns at a higher rate than a community pharmacy, or from keeping a community pharmacy from filling a 90-day prescription for a maintenance drug. And PBM will not be able to penalize a community pharmacy from sharing information with a patient on the cheapest option to pay for their medications.

Several other major lobbying interests dealt with health-care issues. The biggest spender was the Kentucky Chamber of Commerce, at $151,010, followed by the American Civil Liberties Union of Kentucky, at $139,599. Among many other things, the ACLU wants the legislature to enact exceptions to the state's near-total abortion ban.

Ranking sixth, just behind the PBM lobby, was the Kentucky Hospital Association, at $85,835. In 11th place was Altria Client Services, a cigarette company, at $73,309; it supported the successful bill to limit legal sales of vaping products to those approved by the U.S. Food and Drug Administration.

Ranking 17th was Elevance Health and Affiliates doing business as Anthem Inc., at $59,946. The health-insurance firm was followed by the Kentucky Medical Association, the main lobby for physicians, at $54,051, and the Kentucky Primary Care Association, a trade group for health clinics, at $49,416.

Overall, spending on legislative lobbying for the first three months of 2024 was a record of $9.719 million, the Ethics Commission reported Tuesday: "The previous record for the same period was $9.343 million, set last year; 933 businesses and organizations registered to lobby in Kentucky, spending $9.427 million; 727 lobbyists were paid $8.289 million in compensation, and also reported $291,942 in expenses."

Bills to become law on vaping, pharmacy reform, vaccinations, drugs, at-home blood testing, coverage of cancer screening, more

Kentucky State Capitol (Photo via Wikipedia)

By Melissa Patrick
Kentucky Health News

In its 2024 session the Kentucky General Assembly has passed dozens of health-related bills that address a range of topics. With one day left in the session, here are some of them: 

Vaping: House Bill 11 limits legal sale of vaping products to those approved by the U.S. Food and Drug Administration. It also creates a database of retailers that sell the products and sets fines for retailers, manufacturers and wholesalers who violate the law.

HB 142 requires school districts to adopt specific policies that penalize students for possession of "alternative nicotine products, tobacco products or vapor products" and report nicotine-related incidents to the state Department of Education. Changes in the Senate, accepted by the House, allow schools and their governing bodies to apply for grants related to nicotine usage and remove the mandate that schools suspend students with a third possession violation. 

Pharmacy reform: Senate Bill 188 changes laws governing commercial pharmacy benefit managers, with requirements aimed at saving the state's independent pharmacies from closing.  It provides for dispensing fees, bans PBMs from forcing patients to get their drugs through mail order, and keeps them from steering patients to pharmacies that they own.

The bill, sponsored by Sen. Max Wise, R-Campbellsville, also prohibits a PBM from reimbursing a pharmacy that it owns at a higher rate than a community pharmacy, or from keeping a community pharmacy from filling a 90-day prescription for a maintenance drug. And a PBM will not be able to penalize a community pharmacy from sharing information with a patient on the cheapest option to pay for their medications.

Reducing barriers to screening

Cancer detection: HB 52 will require health-insurance plans to cover all preventive cancer screenings and tests that are consistent with nationally recognized clinical practice guidelines without requiring patients to pay any cost-sharing requirements, including a deductible charge for the services.

The sponsor, Rep. Deanna Frazier Gordon, a Republican from Richmond, told Kentucky Health News in February that the cost for screenings is often a barrier for people who often don't get screened because they don't have symptoms.

HB 115 will eliminate co-payments and cost-sharing requirements for high-risk individuals who need follow-up diagnostic imaging to rule out breast cancer. Currently, screening mammograms are covered by insurance, but follow-up exams are often not. 

“Thousands of Kentuckians require diagnostic and supplemental breast imaging every year, yet many forgo them due to out-of-pocket costs. Not any more,"  Molly Guthrie, vice president of policy and advocacy at the breast-cancer foundation Susan G. Komen, said in a news release. "This life-saving legislation means they will now receive the breast imaging they require, leading to an earlier breast cancer diagnosis and often better health outcomes."

Vaccines and drugs  

Vaccinations: HB 274 will allow Kentucky pharmacists to order and administer vaccinations to children as young as 5. The state's routine vaccination rates for kindergarteners remain below pre-pandemic levels.

Pseudoephedrine: HB 386 will raise the annual purchase limits on pseudoephedrine to help people with chronic allergies legally obtain enough of the medication to meet their needs. The bill changes the current 24-gram annual limit to an 86.4 grams, and remove the limit on the number of packages per transaction, said sponsor Robert Duvall, R-Bowling Green.

Kratom: HB 293 will regulate kratom, a natural herbal supplement that is not currently regulated. It is often used for anxiety, pain, PTSD and opioid withdrawal. The bill defines kratom, prohibits sales to people under 21, puts it behind the counter and provides guidelines for manufacturing and labeling. It also says federal law supersedes state law on the matter. 

Blood thinners: HB 31 allows Medicaid patients in Kentucky who are on blood thinners to use at-home machines to test their blood. Patients on some blood thinners, like warfarin, now require a weekly trip to the doctor's office for blood work that looks at how fast their blood clots.

Amanda Crabtree, a registered nurse at University of Kentucky Chandler Hospital, told WKYT-TV that she hopes that other states will follow Kentucky's example in this legislation. Crabtree said she expects that Medicaid patients could receive their at-home machines as soon as this summer.

Health-care business issues

Provider liability: HB 159 will protect health-care providers from criminal liability when a medical error harms a patient unless the harm results from gross negligence or wanton, willful, malicious or intentional misconduct. 

This effort was led by the Kentucky Nurses Association, which said the bill "will prevent health-care professionals from being charged criminally for making a medical error; that makes it good for nurses and nursing, and puts Kentucky at the forefront of developing laws to protect health-care workers." 

Workplace violence: HB 194 extends to contract workers, such as travel nurses, the law that makes violence against health-care workers a third-degree assault. It also extends this protection, now limited to hospitals, to contract employees at health clinics, doctor offices, dental offices and long-term care facilities. 

Sepsis: HB 477 establishes diagnostic criteria for sepsis allow hospitals to preserve current rules used for reimbursement of sepsis care, which allow payment when it is detected early, instead of only allowing reimbursement after organ failure occurs. 

"We know that if sepsis is caught early, the likelihood of survival is great," Jim Musser, vice president for policy with the Kentucky Hospital Association, told Kentucky Health News in March. "But for every hour that we wait, the chance of mortality increases by 7 percent." In sepsis, "The body responds improperly to an infection," says the Mayo Clinic. "Sepsis may progress to septic shock . . . When the damage is severe, it can lead to death."

Other health bills that passed

Youth medical records: HB 174 allows parents have access to their child’s medical records until they turn 18. Right now, children 13 and older must sign a waiver for parents to have access to them. HB 174 also updates the state's Medical Orders for Scope of Treatment form, which defines a person's end-of-life wishes.

Veteran suicide prevention: HB 30 calls on the state Department of Veterans Affairs to create a suicide prevention program for service members, veterans and their families.

Stuttering: SB 111 eliminates some insurance coverage limits on speech therapy for stuttering. It was promoted by former UK basketball star Michael Kidd-Gilchrist, who has overcome stuttering.

Medicaid: SB 71 is designed to keep people from coming to Kentucky to establish residence so that they can sign up for drug treatment to be paid for by Medicaid. One challenge resulting from this practice, according to Rep. Shane Baker, R-Somerset, is that when they leave the program, they are often homeless. 

SB 280 will allow Level II trauma centers that partner with a  university to get the university-hospital rate for services delivered as part of that residency program.

Legislature, Beshear pass law to protect independent pharmacies in Kentucky from commercial pharmacy benefit managers

By Melissa Patrick
Kentucky Health News

A bill to address an unfair playing field between commercial pharmacy-benefit managers and independent pharmacists has been signed into law and will take effect Jan. 1, 2025. 

Rosemary Smith, co-founder of the Kentucky Independent Pharmacist
Alliance in her store (Lexington Herald-Leader file photo by Silas Walker)

As the final vote for Senate Bill 188 was made late on March 28, Rosemary Smith, co-founder of the Kentucky Independent Pharmacist Alliance, said she received at least 100 texts while watching it unfold on Kentucky Educational Television, many from pharmacists saying they were crying tears of joy and relief. 

"They were in tears for their businesses, for their patients and for, you know, their profession. . . . We were fighting for pharmacy," she said. "It was a huge victory. . . Our legislators listened to the truth and they voted. And it was just amazing." 

Pharmacy benefit managers deal between insurance companies and drug manufacturers; they determine what drugs are offered, how much someone pays for the drug, and how much the pharmacists are paid.

Smith, who owns six independent pharmacies in Eastern Kentucky with her husband, Luther, said getting SB 188 passed was the "fight of the century."

"It was so much harder to get through than Senate Bill 50" in 2020, she said. "It was in the Senate for 48 days. . . . I mean, they fought us with everything," she said of the pharmacy benefit managers' lobby. 

State Sen. Max Wise

Both bills were sponsored by Sen. Max Wise, a Republican from Campbellsville. SB 50 required the state to hire a single PBM for the state's Medicaid program, resulting in savings of $282 million.

SB 188 addresses commercial PBM reform. It sets a minimum dispensing fee of $10.64 per prescription for the state's independent pharmacies until a study of dispensing costs is completed by the Kentucky Department of Insurance. This "gap-fill payment floor" will not be available to chain pharmacies.

The results of the study will eventually dictate what the dispensing fee should be going forward. The study is to be repeated every two years, with fee adjustments made accordingly. 

"That's huge," Smith said, "because right now we're getting sometimes a 15 cents dispensing fee and it (can) cost more than $10.64 to fill a prescription. They are paying us below our costs, so you can't stay in business."

The bill also says PBMs can no longer force patients to get their drugs through mail order, nor can they steer patients to the pharmacies that they own. "This was really big," Smith said.

The bill's opponents told Senate and House committees that the legislation will cause insurance premiums to increase and its mandates in the bill won't allow businesses to capitalize on savings that PBMs provide. 

Smith called Medicaid PBM reform a "game changer" for many independent pharmacists, but said it is not enough on its own to save local pharmacies because Medicaid only makes up about a third of most pharmacy's business, with commercial insurance taking up another third and Medicare Part D the final third. 

She said in the last two years, 69 independent pharmacies have closed in Kentucky. 

"They either close or they sell to CVS or Walgreens because they don't have a choice," she said. "They've taken money out of their 401-Ks. . . . They weren't getting reimbursed the cost to stay in business." 

As for the ones that sold, she said, "They sold for pennies on the dollar. They didn't have a choice. They were forced out by their competition." 

The bill passed the Senate March 26 with a committee substitute and a floor amendment on a vote of 35-1. Majority Floor Leader Damon Thayer, R- Georgetown, cast the only "no" vote. It passed out of the House 97-0 March 28 and Gov. Andy Beshear signed it into law on April 5. 

Wise said in a Senate floor speech that SB 188 is an "attempt to protect patients and community pharmacies against predatory PBM practices in the commercial market."   

SB 188 also prohibits a PBM from reimbursing a pharmacy that it owns at a higher rate than a community pharmacy or to prohibit a community pharmacy from filling a 90-day prescription for a maintenance drug. Nor can a PBM penalize a community pharmacy from sharing information with a patient on the cheapest option to pay for their medications. 

Smith said West Virginia, Tennessee and Arkansas are the only other states that have done such commercial PBM reform and "Ours is the most comprehensive."

"I think it's the strongest commercial PBM reform bill in the country and I think it will be the model for a lot of other states," she said.  

Wise said, "I'm very proud of this bill. I've carried some pharmacy bills in the past; this was the toughest one I've ever dealt with before. I'm hoping it will solve a lot of the issues." 

But he added that it's time for Congress to tackle the issue on a federal level. To his point, Smith said, "We still have work to do on the federal level and we are going to be involved in that."

Bill to protect independent pharmacies from benefit managers moves after changes; insurers say it would increase premiums

By Melissa Patrick
Kentucky Health News

A bill to set new controls on commercial pharmacy-benefit managers was approved by a Senate committee on March 14 as a measure scheduled to be approved without debate by the full Senate. 

State Sen. Max Wise

The bill's sponsor, Sen. Max Wise, a Republican from Campbellsville, has worked on PBM reform for years. In the 2020 legislative session he won passage of a bill that required the state to hire a single PBM for the state's Medicaid program, resulting in savings of $282 million. 

That said, while thanking everyone who worked on the bill, both for and against it, Wise told the committee that his latest "may be the hardest one that I have worked on yet during my time in this particular legislature." 

Wise walked the Senate Banking and Insurance Committee through a substiute version of Senate Bill 188, with several changes from the original.

He said the original would have prevented a PBM from requiring Kentuckians to receive their prescriptions by mail, from reimbursing a pharmacy that they own at a higher rate than a community pharmacy, stop the steering of patients to pharmacies owned by the PBM. It also would have allowed community pharmacies to fill 90-day prescriptions for maintenance drugs, prohibited higher co-pays at community pharmacies compared to PBM-owned pharmacies, and  protected  community pharmacies from retaliation for providing cost-saving information to patients. 

Wise added that the original bill would have provided a fair dispensing fee, and mandated that PBMs pay pharmacies at least the cost of the dispensed drugs, provided a fair dispensing fee and include community pharmacies in their networks to offer patients the flexibility to choose a nearby pharmacy. 

He then walked through the changes made by the committee substitute. 

He said it excludes prescription drug plans established under Medicare Part D from the legislation regarding self-funded health plans or Employee Retirement Income Security Act (ERISA) plans. 

He said both the original bill and the committee substitute include the phrase "to the extent permitted under federal law" before several sections in the bill.

"The reason for that is the United States Supreme Court in its Rutledge decision greatly limits what authority states have to regulate ERISA plans," he said. "The inclusion of the phrase mentioned means that most of the provisions of Senate Bill 188 will not apply to ERISA plans; it is likely that only the fair dispensing rate will apply." 

Addressing concerns about imposing the Kentucky Medicaid dispensing rate of $10.64 per prescription on the commercial marketplace, Wise said the substitute addresses this in two ways.

First, he said, instead of using that rate as the dispensing fee floor, the state Department of Insurance would conduct a survey of dispensing costs at both large chain pharmacies and small independent pharmacies. While the DOI is completing the survey, Wise said, the Medicaid dispensing rate will be used as a "gap-fill payment floor."

And unlike the original bill, the protection of the Medicaid fee would only be available to independent community pharmacies as licensed by the state Board of Pharmacy and would not be available to chain pharmacies. 

"So why is it important that we include this gap payment for community pharmacies?" Wise asked. "In the last two years over 68 independent pharmacies have either closed their doors or sold out to chain pharmacies [in Kentucky] due to the massive decline in PBM reimbursements." 

The revised bill also removed, at the request of PBMs and insurance companies, provisions on "white bagging," a practice in which a medication must be prepared and distributed by a third-party specialty pharmacy, instead of allowing providers to prepare, administer and bill for the medication.

Wise added that a health-mandate statement estimates that the bill would raise helath-insurance premiums $1.89 to $25.01 per member per month. The range is wide and essentially unpredictable because there is a lack of reliable data regarding PBM contracts. 

Wise said legislators saw similar estimates when they passed his 2020 bill, but this did not come to pass, and "I feel confident that we will see, just like Tennessee and West Virginia have passed, to not see any increases" with commercial PBM reform, which those states have passed.

Sitting at the table with Wise was Ben Mudd, executive director of the Kentucky Pharmacists Association, and Rosemary Smith, co-founder of the Kentucky Independent Pharmacist Alliance. 

Opponents of the bill

Speaking against the bill were Conner Rose, senior director of state affairs for the Pharmaceutical Care Management Association, the national PBM lobby, and Hope McLaughlin, senior director of government relations for Elevance Health, which operates as Anthem Blue Cross Blue Shield in Kentucky.

Rose noted the high estimate of $25 increase in monthly premiums. "I understand that the purpose of this bill is to help independent pharmacies," Rose said. "But the solution we're talking about today falls on the backs of employers, city and county governments, their employees, the employees of employers in Kentucky, and ultimately individual consumers all across the commonwealth."

He added that the mandates and restrictions in the bill hinder the ability of employers and other plan sponsors to capitalize on the savings that PBMs provide, pointing to how generic drugs offered on the PBM formularies often don't have co-pays or dispensing fees if it comes through the PBMs mail service.  

McLaughlin stressed that the committee substitute was not a compromise and that while they appreciate the removal of the white-bagging provision, she said Anthem still has many concerns about it.  

She said the mandated dispensing fee of $10.64 per prescription "will result in significant, additional health-care costs," and also mentioned the "significant increase" of $25 per month.

And she said the bill "sets a dangerous precedent of putting the General Assembly and the Executive Branch in the role of setting provider reimbursement rates."

But the committee approved the bill without dissent and placed it on the Senate's consent calendar, reserved for bills that are passed on a singke vote without debate. It has 20 sponsors, a bare majority of the Senate.

Besides Wise, they are Republicans Stephen Meredith of Leitchfield, Matthew Deneen of Elizabethtown, Donald Douglas of Nicholasville, Greg Elkins of Winchester, Shelley Funke Frommeyer of Alexandria, Rick Girdler of Somerset, Jimmy Higdon of Lebanon, Jason Howell of Murray, Robby Mills of Henderson, Brandon Storm of London, Lindsey Tichenor of Smithfield, Stephen West of Paris, Phillip Wheeler of Pikeville and Mike Wilson of Bowling Green, and Democrats Karen Berg, Gerald Neal and David Yates of Louisville and Robin Webb of Grayson.

State and federal lawmakers say they're still trying to rein in health-insurance middlemen, called pharmacy-benefit managers

By Melissa Patrick
Kentucky Health News

A day after Gov. Andy Beshear talked at a White House roundtable about Kentucky's moving to one pharmacy-benefit manager for Medicaid, First District U.S. Rep. James Comer, spoke at another Washington event about his efforts to reform PBMs as chair of the House Committee on Oversight and Accountability.

U.S. Rep.  James Comer

“The focus of what PBMs' role should be, should be to help the consumer have more choice, have lower costs," Comer said at a March 7 event hosted by The Hill. "But what’s happening is the focus now with the PBMs is which drug can we make the most profit off of, regardless of what’s best for the patient. And I don't think that's a good business model." 

PBMs are middlemen between insurance plans and drug manufacturers; they determine what drugs are offered, how much someone pays for the drug, and how much pharmacists are paid.  

Earlier this year, Comer's committee passed with broad bipartisan support the Delinking Revenue from Unfair Gouging (DRUG) Act, which would rein in practices by some PBMs that offer health plans under federal employees' health program. 

Comer said PBM reform remains a priority, and his committee has received more than 40,000 pages of documents for a report that will be released "very soon." He said his panel will have another hearing once the report is release to discuss next steps.

He said those who understand the issue "realize that PBMs have actually added cost to the consumers" at a time when everyone recognizes that the rising cost of prescription drugs is not sustainable. 

Despite congressional concern about the issue, the government-funding bills just signed by President Biden do not include PBM reforms. Asked if they could pass in the "lame duck" session after the November elections, Comer, using his own committee as an example, said, "I think something can always be done before." 

Comer said much of the problem comes from three major PBMs controlling 80% of the market, noting that they are owned by health-insurance companies and have their own mail-in pharmacies. 

“I believe PBMs have had a negative impact on competition, especially among community pharmacists,” he said. “I believe they have an unfair competitive advantage. I believe they’re doing a lot of things that are unethical at best and should be illegal at worst with respect to – I would even go as far as saying extorting fees from independent pharmacies. We’re losing independent pharmacies.”

Kentucky lawmakers have been working on PBM issues for years. Most recently, in 2020, they passed a bill sponsored by Sen. Max Wise of Campbellsville, a Comer ally, that required the state to hire a single PBM for the state's Medicaid program. Before this law, each of the six companies that manage Medicaid for the state had its own PBM.  

At the White House roundtable, Beshear talked about the legislation and how he began investigating PBMs' drug-pricing methods when he was attorney general in 2016-19.

“That single PBM that answered to us, and not to any other company, has allowed Kentucky Medicaid to maximize drug rebates and has saved our Kentucky families about $300 million since we've done it,” he said. “And it allowed us to understand more about how to get the right price.”

Kentucky PBM reform efforts are ongoing

Wise's latest PBM reform measure is Senate Bill 188, which involves PBM reform efforts on the commercial market.  

State Sen. Max Wise

“I’m optimistic this measure will yield similar savings by applying the same standards to the commercial market, effectively cutting costs for Kentuckians with private health insurance plans,” Wise said in a Feb. 8 news release about the bill.  

SB 188 "aims to empower citizens to choose where they purchase their medication, prevent further closures of community pharmacies and ensure fair reimbursement rates for these essential health care providers," said the release.  

SB 188 has been assigned to the Banking and Insurance Committee. It has not yet been heard or voted on in committee, but has received its first reading, an indication that it has a chance for passage. 

Another bill that addresses PBMs passed out of the House Health Services Committee on March 7. House Bill 190, sponsored by Rep. Scott Sharp, R-Ashland, was approved unanimously and was placed in the House for possioble action as early as Monday, March 11. 

State Rep. Scott Sharp

HB 190, as amended by a committee substitute, would allow people to receive their medication directly from the mail, but if it does not get there in time, they would have the option to purchase it from their local pharmacy at the same price it would cost if it was mailed to them.  

Sharp said he was prompted to file this bill because of a personal experience. 

He said he went to his local pharmacist to get a drug for a family member who was having some trouble getting it delivered. He said he was told it would cost $400, instead of the $36 it would cost if it came by mal. 

Upon talking to his PBM, he learned that this was the "penalty" for using his local pharmacy, instead of getting it mailed direct. Since, he said he's learned that this is a common problem and that's why he wants to "fix it." 

Whipsawed by the system, dozens of independent pharmacies closed in Kentucky last year, and more are expected to follow suit

“No one can withstand this onslaught,” independent pharmacist Rosemary Smith of Beattyville told the Lexington Herald-Leader of the factors causing stores like hers to close. (H-L photo by Silas Walker)

Kentucky Health News

In the past year, at least 67 independent pharmacies have closed in Kentucky, and more are expected to close because of a recent change in the system that favors big pharmacy chains. 

So reports Alex Acquisto of the Lexington Herald-Leader, in a significant story for rural Kentucky. 

"Pharmacists are often the first – and most accessible – health-care-provider point of contact in their communities, particularly in rural parts of Kentucky," Acquisto writes. "Independent pharmacies in Kentucky filled more than half of all prescriptions statewide and before 2023’s closures, independents operated in all but one of the state’s 120 counties."

That's according to Rosemary Smith, who owns six pharmacies across Eastern Kentucky with her husband, Luther, and is co-founder of the Kentucky Independent Pharmacists Alliance. KIPA is seeking help from the Kentucky General Assembly, which has previously tried to insulate independent pharmacists from the middlemen between insurance companies and pharmacies, pharmacy benefit managers.

The sponsor of earlier bills aimed at PBMs, Sen. Max Wise, R-Campbellsville, told Acquisto that he will probably file a bill similar to the recent “commercial pharmacy PBM reform” bills in Tennessee and West Virginia. The Tennessee law "gives independent pharmacies greater control over the PBM contracts they agree to, including by mandating those groups reimburse no less than the actual cost for a prescription drug," Acquisto reports. "That is an aspect not currently mandated by law in Kentucky."

The system

Acquisto explains how it got this way: "Each time an independent pharmacist fills a patient’s prescription, how that pharmacy is reimbursed by insurance companies — and what amount in fees are levied for filling it — is decided by a somewhat arbitrary and complex tangle of decisions by entities outside a hometown pharmacy’s control. This lack of control and contractual obligation to pay every fee levied has paved the way for independents to be financially gouged from multiple angles: Low or break-even reimbursement rates set by insurance companies often blunts a pharmacy’s ability to make a profit on every prescription they fill."

Pharmacy benefit managers charge pharmacies direct and indirect remuneration fees. "Federal regulations have historically dictated these fees be collected retroactively, up to six months after a prescription is filled. But that changed Jan. 1, when DIR fees began to be collected at the point of sale," Acquisto reports. "Pharmacists told the Herald-Leader they expect this temporary overlap, where DIR fees from as far back as June 2023 continue to be retroactively deducted as new fees are levied on prescriptions filled currently, will inevitably force more closures."

“This increase in DIR fees has resulted in many independent pharmacies being left with little to no capital funds to survive 2024,” Maysville druggists Dr. Michael Berry and Elizabeth Berry wrote in a Dec. 31 email to Chiquita Brooks-LaSure, adminstrator of the Centers for Medicare and Medicaid Services. “Most independent pharmacies have been on life support for the last several years. We are witnessing the initial stages of an industry in collapse.”

Health insurers, drug companies and other middlemen account for 45% of America's huge health-care bill, up from 25% in 2013

UnitedHealthcare, the largest insurer, is based in Indianapolis.

Kentucky Health News

Americans spend $4.3 trillion a year looking after their health. That is 17% of the nation's gross domestic product, "twice as much as the average in other rich economies, and yet, American adults live shorter lives and American infants die more often than in similarly affluent places," The Economist reports. "Pharmaceutical firms and hospitals attract much of the public ire for the inflated costs. Much less attention is paid to a small number of middlemen who extract far bigger rents from the system’s complexity."

These are the for-profit health-insurance companies, pharmacies, drug distributors and pharmacy-benefit managers (PBMs), which The Economist dubs "Big Health." They account for about 45% of our health-care bill, "up from 25% in 2013," the British-based magazine reports. "Big Health accounts for eight of the top 25 companies by revenue in the S&P 500 index of America’s leading stocks, compared with four for Big Tech and none for Big Pharma."

The largest private health insurer, UnitedHealth Group, took in $324 billion last year, behind only Walmart, Amazon, Apple and ExxonMobil, "and $25 billion in pre-tax profit," The Economost notes. "Four pharmacy giants generate 60% of America’s drug-dispensing revenues. The mightiest of them, CVS Health, alone made up a quarter of all pharmacy sales. Just three PBMs handled 80% of all prescription claims. And a whopping 92% of all drugs flow through three wholesalers." Kentucky has reined in PBMs, now using only one for Medicaid and using the savings to expand the program.

The Patient Protection and Affordable Care Act of 2010 limited health insurers' profits "to between 15% and 20% of collected premiums, depending on the size of the health plan, but it imposed no restrictions on what physicians or other intermediaries can earn," so that "created an incentive for insurers to acquire clinics, pharmacies and the like, and to steer customers to them rather than rival providers," The Economist explains. "The strategy channels revenue from the profit-capped insurance business to uncapped subsidiaries, which in theory could allow insurers to keep more of the premiums paid by patients. . . . Between 2013 and August 2023 the nine health-care giants spent around $325 billion on over 130 mergers and acquisitions."

These businesses "say that bringing all parts of patient care—primary-care clinics, pharmacy services, pbms and insurance—under one roof is beneficial for all. In the old fee-for-service model, big health argues, doctors or hospitals are paid for each service they provide, encouraging them to perform as many as possible and charge as much as they can. If doctors and insurance companies are part of the same business, by contrast, incentives should be aligned and overall costs should be lower," The Economist reports.

"That, at least, is the theory. And there is some truth to it, [but] vertical integration can have adverse side effects. For example, many studies have found that after hospitals acquire physician practices, prices increase but quality of care does not. A health-care company that controls many aspects of patient care could raise prices for rivals wishing to access its network. Some also worry about physicians being nudged towards offering the cheapest treatment to patients, lowering the quality of care."

Attorney general files lawsuit against pharmacy benefit managers, manufacturers over alleged insulin pricing scheme

By Melissa Patrick

Kentucky Health News

Attorney General Daniel Cameron has filed a lawsuit against three pharmacy benefit managers and drug manufacturers over an alleged insulin pricing scheme.   

The lawsuit alleges that PBMs CVS Caremark, Optum Rx, and Express Scripts along with manufacturers Eli Lilly, Novo Nordisk and Sanofi have worked together to manipulate and increase insulin prices. 

PBMs act as middlemen between insurance plans and drug manufacturers; they determine what drugs are offered, how much someone pays for the drug, and how much the pharmacists are paid.

This graphic from the lawsuit "shows how collectively the manufacturers have exponentially raised
the prices of insulin products in near unison," the attormey general's news release says. 

A Cameron news release said, "The lawsuit alleges that instead of using such leverage to negotiate lower prices for their customers, PBMs have sought to increase their own profits by raising insulin prices. In that scheme, the insulin manufacturers artificially and willingly raised their reported prices and then deceptively refunded a significant portion of that price to PBMs through rebates, discounts, credits, and administration fees. . . . Executives for PBMs recently testified that between 75 and 84 cents of every dollar spent on insulin goes directly to affiliates of PBMs." 

The 133-page lawsuit states, "Insulins, which today cost manufacturer defendants less than $2 to produce and which were originally priced at $20 when released in the late 1990s, now range between $300 and $700." 

Cameron said in the release, “I understand the pain inflicted on Kentucky families by unfair and inflated insulin prices. The unlawful business practices that drove these increases have to end, and normal market forces must be allowed to lower the cost of insulin for all Kentuckians.”

Nearly 450,000 Kentuckians live with diabetes, and an additional 1.1 million are prediabetic.

Kentucky #insulin4all Chapter Advocate Angela Lautner told WKYT that it's time for both manufacturers and PBMs "to be held accountable for the massive insulin prices we see here in the United States" and questioned why they exist at all. 

“These lawsuits have been going on for a number of years, and it’s time that they come to a conclusion,” Lautner told the Lexington TV station. “Everybody knows that we are being taken advantage of and lives are literally being lost because of greed.”

Attorneys general from Arkansas, California, Illinois, Kansas, Louisiana, Mississippi, Montana, and Ohio have filed similar lawsuits in their states. 

Kentucky lawmakers have been working on PBM issues for years, most recently passing 2020 Senate Bill 50 that among other things, required the state to hire a single PBM to manage Kentucky Medicaid's prescription-drug business of more than $1 billion a year. Kentucky has saved at least $38 million from this move, money Gov. Andy Beshear has used to expand Medicaid benefits over objections of the Republican-controlled legislature. He and Cameron are running for governor. 

U.S. Senate panel OKs bill to rein in pharmacy benefit managers; Kentucky pharmacist applauds similar efforts by House members

By Melissa Patrick

Kentucky Health News

At least one Kentucky pharmacist is applauding the latest efforts to rein in pharmacy benefit managers.

PBMs are middlemen that negotiate drug prices with drug manufacturers and pharmacies. They also design prescription-drug benefits for health plans.  

Taylor Williams

"Fortunately, lawmakers are hearing our concerns loud and clear," Taylor Williams, a second-generation pharmacist from Hazard and an executive fellow with the Kentucky Pharmacists Association, wrote in an op-ed submitted to  Kentucky Health News and other publications.

"Congressman Brett Guthrie, chair of the Health Subcommittee on House Energy and Commerce, and Congressman James Comer, chair of the house Oversight Committee, are working hard to rein in PBMs’ profit-driven role in our healthcare system and ensure that patients can afford the prescriptions they rely on," she wrote.

Williams submitted the op-ed on the same day the Senate Finance Committee advanced a bipartisan bill to change how PBMs interact with federal prescription-drug programs as a way to help lower costs.  It is called the Modernizing and Ensuring PBM Accountability Act. 

The Hill reports, "While other committees have also passed PBM reform bills, the Finance Committee has jurisdiction over Medicare and Medicaid, which make up a large portion of U.S. health spending. Still, all the separate bills in the House and Senate will need to be combined into one floor-friendly package." 

Among other things, the Senate bill includes provisions that would delink PBMs' compensation from drug prices, which would remove an incentive for PBMs to favor higher-priced drugs. It would also add new transparency and reporting requirements and ban spread pricing, in which a PBM keeps the difference between what it bills Medicaid for medications and what it pays the pharmacy to dispense the drug. Click here for a summary of the Act. 

Kentucky lawmakers have been working on PBM issues for years, most recently passing 2020 Senate Bill 50 that among other things, prohibits spread pricing. A 2019 state analysis found PBMs made $123 million through spread pricing in Kentucky.

SB 50 also required the state to hire a single PBM to manage Kentucky Medicaid's prescription-drug business of more than $1 billion a year. Kentucky has saved at least $38 million from this move. 

This year, companion PBM bills were introduced in the state House and Senate, but neither got a hearing.

PBMs argue that they lower costs for consumers because they negotiate for lower drug costs and pass the savings onto to the insurance plans. 

Williams said she recently met with Kentucky's congressional delegation in Washington to share her concerns about PBMs and their impact on Kentucky's independent pharmacies and the patients they serve. 

"Our profession is facing serious challenges because of largely unknown middlemen in the drug pricing system called pharmacy benefit managers," she wrote. "If we don’t do something about them soon, the local community pharmacies that people trust may become a thing of the past. . . . Without much needed reform, PBMs will continue to find new ways to increase their profit margins at the expense of patients, providers and taxpayers. Even worse, it could leave Kentuckians without a local, trusted health-care advisor as many community pharmacies will be forced to close their doors." 

Legislators nix Beshear's 2nd regulation to expand Medicaid dental, vision and hearing services, but it'll remain in place for now

Kentucky Voices for Health graphic supports the expansion,
which legislators say they oppose on procedural grounds. 

By Melissa Patrick

Kentucky Health News

The legislature's Administrative Regulation Review Subcommittee voted May 9 to find Gov. Andy Beshear's new regulations to expand Medicaid's vision, dental and hearing services deficient, based largely on process. 

"This deficiency vote has nothing to do with the regulation itself," said Co-Chair Sen. Steve West, R-Paris. "As far as expanded dental services, I think every single person up here on this committee would be in support of expanded dental services. I don't think there's any question about that. But our job in this committee is to protect the legislative process and protect the legislative branch and our role in the process. I don't think we would be here if there was some level of effort from the cabinet to meet us halfway, to discuss it, to show up in our office and work through this thing together. But in my case personally, there has been none of that." 

Beshear, asked what the deficiency means for Kentucky adults who are receiving these new services under the regulation that was recently found deficient, said, "They're still in place, at least until the next legislative session." 

At his weekly news conference, Beshear also talked about how important these basic services are to getting Kentuckians back into the workforce.

"This is about helping people with very basic needs . . . being able to see, being able to hear, being able to get the dental appointment, because we lose millions of productive hours at work due to emergency dental procedures that could otherwise be prevented," he said. "So this is a no brainer when you look at the low costs versus the number of people we can get back into the workforce."

This is the second set of regulations aimed at expanding these Medicaid services to be found deficient by the subcommittee. 

The original set was also found deficient by the 2023 General Assembly in Senate Bill 65, thus ending the benefits. SB 65 also stated that the Cabinet for Health and Family Services was prohibited from promulgating any new regulations unless they were "substantially different" from the original one. 

Within two weeks of SB 65 becoming law, the health cabinet filed the new regulations to expand vision, dental and hearing services for people on Medicaid, with each of the regulations stating the reasons that they were "substantially different" from the original regulation. 

West said in a news release, “What we are witnessing here from CHFS is an overt effort to ignore duly enacted legislation and, to make it worse. It is a poor administration of the Medicaid program and those it serves. We want to provide the highest-quality services to the most people we can, but this isn’t the appropriate way to achieve that goal. We can’t afford the current Medicaid program, so why would we expand services in an already unsustainable program? The regulation discussed today is irresponsible, strains the system, and picks winners and losers. Taxpayers and Kentucky residents deserve better.”

Officials from the state Department for Medicaid Services told the committee that the new regulations were in compliance with SB 65. Medicaid Commissioner Lisa Lee said the new regulations were "substantially different" because they added services and increase fees for a number of services in each category. 

Lee also called the expansion of these benefits a great "return on investment" because federal funds will cover $31 million of the $36 million total cost. The state's share is coming from savings that Medicaid achieved by moving to only one pharmacy benefit manager, the middleman between drug manufacturers and the managed-care organizations that deal with Medicaid beneficiaries. 

Several subcommittee members voiced concern that Kentucky’s Medicaid program does not adequately cover behavioral-health services, emergency medical services and other services, and that those programs should have been considered when deciding how this money is spent.  

"What we should be doing is having a holistic conversation about how do we appropriately raise rates to take care of our most vulnerable population, so that we don't just have one winner, that we can have a lot of different winners," said Sen. Julie Raque Adams, R-Louisville. 

The expanded services cover 900,000 adults on Medicaid. 

Rep. Daniel Grossberg, D-Louisville, noted that because of these expanded services, "We've gotten 60,000 Medicaid members who have received glasses who would not have otherwise received glasses, 932 dentists have received reimbursement for crowns on more than 5,600 individual members who would not have otherwise been reimbursed or received crowns. We have nearly 1,200 members who have received dentures who would not otherwise receive dentures. And providers have received over $11 million that would have not otherwise yet received." 

Just a few more days remain for Kentuckians to offer public comment about the new regulations. The cabinet is accepting written comments until May 31. Comments should be sent to Krista Quarles, policy analyst, Office of Legislative and Regulatory Affairs, 275 East Main Street 5 W-A, Frankfort KY 40621. Her phone number is 502-564-6746; her fax is 502-564-7091; and her email is CHFSregs@ky.gov.

Meanwhile, Kentucky Voices for Health is still collecting comments from anyone who would like to make a public comment on these regulations, as they have done before for other rules. KVH will submit the comments for anyone who fills out one of their comment forms.

Guthrie, new chair of House health subcommittee, calls for more price transparency by pharmacy benefit managers and hospitals

By Melissa Patrick
Kentucky Health News

U.S. Rep. Brett Guthrie of Bowling Green is playing a priominent role as Congress investigates the role of pharmacy benefit managers in the growing cost of drugs.

PBMs are middlemen that negotiate drug prices with drug manufacturers and pharmacies, and design prescription drug benefits for health plans. 

On March 28, the House Energy and Commerce Committee's Subcommittee on Health, which Guthrie began chairing when Republicans took over the House in January, discussed the role that transparency and competition can play to help make health care more accessible and affordable.

Rep. Brett Guthrie (screenshot from March 28 committee meeting) 

"We are holding a bipartisan hearing to examine the rising costs of health care for patients and their families," Guthrie said in his opening remarks. "Rising cost of care for individuals is one of the single greatest threats to the overall economic security of Americans."

The hearing touched on some hidden aspects of the health-care system that Guthrie said drive up consumer costs, including hospital consolidation, lack of competition and practices of PBMs, which have been a hot topic in Kentucky for many years. 

Guthrie noted that the three largest PBMs have more than 80% of the market and have merged with insurance companies, specialty pharmacies, retail pharmacies, and even drug distributors.

“We should build on our bipartisan work to make pharmacy benefit managers be more transparent and ensure patients as well as employers are getting the best possible deal on their prescription drug benefits," he said. "This could also lead to greater access to biosimilars and generics when they come to market. Shining a light on middlemen who are making prescriptions more expensive is one important step to bolster competition and lower prices."

One focus of the meeting was "lack of compliance with two Trump-era rules created to require that hospitals and insurers follow through on various price transparency requirements," reports Gabrielle Wanneh of Inside Health Policy. One rule "requires hospitals to make their standard charges public through machine-readable files and make their payer-specific negotiated charges, including those for cash-paying patients, public for 300 shoppable services."

Another rule "requires insurance companies to disclose several machine-readable files, including a file on in-network rates for all covered services with in-network providers, a file containing allowed amounts and billed charges from out-of-network providers, and a file that covers the historical net price of covered prescription drugs, Inside Health Poliocy reports.

Guthrie said, “It is imperative for the Biden administration to conduct greater enforcement efforts on these rules to better serve patients with clear and actionable price information, ”Guthrie said. “It is also crucial for Congress to codify and strengthen these important transparency rules to support a more efficient price transparency regulatory environment.”

The day before Guthrie's committee met, Politico published a short primer that looked at the PBM issue from several angles. It noted that PBMs say they've been misunderstood, while Health and Human Services Secretary Xavier Becerra has said, "There is a growing concern that the middlemen … are skimming off a good deal of the money. We’re going to try to move to make sure that if there’s a middleman … that it’s done efficiently.”

Senate committees are also working on the issue, and the House Oversight and Accountability Committee has launched an investigation into the industry's effect on patients. The House Oversight committee is chaired by another Kentucky congressman, Rep. James Comer of the First District.

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. Kentucky has saved at least $38 million from this move to one PBM. A 2019 state analysis found PBMs made $123 million through spread pricing.

That said, companion PBM bills were introduced in the House and Senate during the most recent legislative session and neither one of them were heard in their respective committees.

Spending reports by health-care lobbying interests reflect their success at having their way in the Kentucky General Assembly

The legislature meets in the Capitol. (State photo)

Kentucky Health News

Seven of the top eight spenders on lobbying the General Assembly last year had health-care issues in play. Most of the seven were mainly focused on health issues, and most of them were successful.

Lobbying reports to the Kentucky Legislative Ethics Commission showed the Kentucky Chamber of Commerce, which lobbies on some health issues, ranked first by spending $408,301, mainly for the 16 lobbyists it employs. The Kentucky Hospital Association was second at $304,707.

"Included in the hospital advocacy group's spending was $23,000 on digital advertising for its priority legislation that passed into law after stops and starts, loosening requirements on ambulance services to improve slow response times," notes Joe Sonka of the Louisville Courier Journal. "KHA also successfully lobbied for two bills providing incentives to attract and retain nurses and health care workers and one to expand hospitals' remote access to pharmacy databases."

The third-place spender, at $269,685, was tobacco company Altria, parent of Philip Morris USA. Altria "successfully lobbied to block a bill raising taxes on cigarettes and vaping products and another that would give local governments the ability to add extra regulations on the display of tobacco and vaping products," Sonka reports.

The fourth-ranking spender was the ACLU of Kentucky, at $195,489. Among other things, it lobbied unsuccessfully against bills to restrict abortion.

The main lobbying group for doctors, the Kentucky Medical Association, ranked fifth at $157,416. KMA spent $30,000 "for polling it commissioned late in the year to craft messaging for one of its top legislative priorities" in the session that begam Jan. 3 and will resume Feb. 5. "The KMA has a website promoting a "physician-led, team-based care model," urging people to contact legislators and oppose legislation to lift limits on services that can be provided by nurse practitioners," Sonka rpeorts.

Hospital firm HCA Healthcare, which has hospitals in Bowling Green and Frankfort, was seventh in lobbying spending at $146,548. LifePoint Health, which has hospitals in Flemingsburg, Georgetown, Lebanon, Mayfield, Maysville, Paris, Somerset, Versailles and Winchester, reported spending $110,002, ranking it 17th. 

The Pharmaceutical Care Management Association ranked eighth, at $142,257. The group represents pharmacy benefit managers, who are middlemen between drug manufacturers and insurance companies; the managers have come under much legislative scrutiny in recent years. The group successfully oppposed a bill to rein in in pharmacy benefit managers; House Bill 457 "breezed through the House by an 88-3 vote but then ground to a halt in the Senate without any readings or committee hearings — all while the association spent more than $52,000 on advertisements urging legislators to defeat the bill," Sonka writes. "Senate President Robert Stivers said the bill stalled after his caucus began to hear concerns from the business sector about the measure increasing the costs of health plans, mirroring the association's messaging."

The other lobbying group in the top eight was the Kentucky League of Cities, which ranked sixth at $151,308. Its main legislative interest, a constitutional amendment to give cities more taxing options, including sales taxes, was defeated by the No. 9 group, the Kentucky Retail Federation, which reported spending $142,237. Overall lobbying expenses hit a record $24.3 million in 2022.

Time for pharmacy-benefit managers to 'share the savings' in prescription-drug costs, crusaders against diabetes write

OPINION By George Huntley and Stewart Perry

George Huntley of Indianapolis is CEO of the Diabetes Leadership Council and the Diabetes Patient Advocacy Coalition. He has lived with Type 1 Diabetes for 39 years. Lexington insurance agent Stewart Perry is a lifelong patient advocate living with Type 2 diabetes and a founding member of the Diabetes Leadership Council.

American health-care innovation has saved countless lives. Whether it’s a new vaccine to prevent serious illness, or a breakthrough treatment to help someone manage a previously debilitating chronic disease, we owe a lot to those researchers and scientists in white lab coats.

But what if they toiled away in the lab to make that new medicine and no one could access or afford it? And what if the reason was because some unknown middleman was dictating the cost and skimming vast sums of money off the top to pad their bottom line?

While we’d like to think that no one would stand for such a thing, this is unfortunately what happens every day in our modern health-care system.

It should be a lot simpler. Scientists develop a medicine, physicians determine when to prescribe it, pharmacists dispense it, and a patient takes it to manage their health. But somehow it became commonplace for an insurance company to dictate which medicines a patient can take—and for a pharmacy benefit manager, or PBM, to determine how much they pay for it. And we’re supposed to believe they do this to help businesses and individuals save money.

Because of these unfair practices, tens of millions of Americans struggle at the pharmacy counter. And with worsening inflation on all the other necessities of life, this situation is only getting worse. In fact, the Kaiser Family Foundation found that 30 percent of patients don't take their prescriptions as prescribed due to cost—and instead, choose to cut pills, skip doses or not fill prescriptions at all.

If you’re still not convinced, consider this: in recent years, the net prices of drugs—the list price, minus rebates and other discounts and reductions—have been going down. This should translate to lower costs for patients, but we’re seeing the opposite. Patients are spending more on prescription medications, even though PBMs and insurers are hauling in more savings.

Not surprisingly, PBMs and insurers are working hard to protect the complex web they’ve created to snare as much money as possible and increase their profits. But legislators at the state and federal levels are continuing to fight on patients’ behalf—and thanks to their efforts, we’re moving in the right direction.

In 2020, the Kentucky General Assembly passed groundbreaking legislation to rein in PBMs’ involvement in the state’s Medicaid program by creating a single drug formulary, managed by one PBM. Cutting out multiple unnecessary PBMs is expected to save taxpayers hundreds of millions of dollars a year, while ensuring patients can more easily access the medications they need to manage their health.

Of course, additional work remains to ensure patients are not bearing the brunt of PBMs’ unfair practices. That’s why a large and growing group of patient advocates and health-care providers are encouraging legislators to focus on patients over PBM profits—and are calling for legislation that would require middlemen to share manufacturer rebates directly with patients at the point of sale.

PBMs and insurers negotiate with drug manufacturers to get lower prices on prescription medicines. In theory, these savings should be passed along to patients to reduce their out-of-pocket costs. In reality, the system allows PBMs and insurers—massive, billion-dollar corporations—to keep the rebates, while continuing to charge patients higher prices for their medications.

“Share the savings” legislation would put an end to this unfair practice—and could save Americans living with chronic diseases hundreds or even thousands of dollars per year. That’s more money in the pockets of Kentuckians where it belongs.

PBMs and insurers defending the status quo argue that premiums will rise sharply if these rebates are shared with patients. And they also falsely claim that it will increase the costs for our businesses as well. But actuarial studies show that's not true, including a 2022 study from Milliman that projects an increase in premiums of less than 1 percent—and that's not even counting the savings from reduced hospitalizations that would result from patients taking their medications as prescribed.

The truth is that patients can't afford not to share in these rebates. And that’s why it’s time for PBMs to start sharing the savings.

Pharmacy benefit managers' group ranked No. 7 in spending for lobbying the General Assembly, after laying out $53,634 for ads

Commonwealth Fund flow chart, amended by Kentucky Health News to include patients and employers

By Al Cross
Kentucky Health News

The lobbying organization for pharmacy benefit managers, the middlemen between insurance companies and drug manufacturers, spent $86,168 in its successful effort to defeat a bill in the recent legislative session that would have reined them in. They prevailed over pharmacists with the help of insurers, who argued that the bill would raise costs.

The Pharmaceutical Care Management Association ranked seventh in spending by lobbying interests in the session that ended in mid-April, mainly because it spent tens of thousands of dollars in television commercials attacking the bill. The ads started the day the bill overwhelmingly passed the House, where a pharmacist-legislator was the sponsor. PCMA said it spent a total of $53,634 on TV, internet and newspaper ads.

The bill got nowhere in the Senate, where President Robert Stivers said "When it got here, we started getting, from business sector and provider sector, various questions and comments about what the overall cost would be to various plans."

Tom Stephens, executive director of the Kentucky Association of Health Plans, cited a state Department of Insurance statement that a family of four would have paid up to $167 more a year for coverage if the bill had passed.

House Bill 457 would have ensured that patients could pick their pharmacy, instead of being required to use one affiliated with a pharmacy benefit manager; increase transparency between insurers and PBMs; and ban PBMs from retroactively denying a pharmacy claim after adjudication, commonly referred to as "clawing back." It passed the House 88-3.

The Federal Trade Commission voted Tuesday to investigate how pharmacy benefit managers affect the cost of prescription drugs and consumers' access to the drugs.

Several other health-care interests, or lobbying groups with interests in health care, were big spenders on lobbying the session, according to their post-session reports. The Kentucky Chamber of Commerce was again No. 1, spending $183,949; the Kentucky Hospital Association was second with $149,046. Third and fourth were the American Civil Liberties Union of Kentucky, whose issues include abortion rights, $128,258, and Altria Client Services (Philip Morris Cos.), $126,793. Insurer Anthem Inc. ranked 10th by spending $70,597.

Other big health spenders were the Kentucky Medical Association, 16th, at $54,044, and HCA Healthcare, 22nd at $48,832. The state Legislative Ethics Commission’s searchable register of lobbyists, employers and lobbying expenses is online at http://apps.klec.ky.gov/searchregister.asp.

OPINION: Insurers say killing bill hospitals, pharmacists backed against pharmacy benefit managers saved Kentuckians money

By Tom Stephens
Executive Director, Kentucky Association of Health Care Plans

Pocketbook issues were front and center in this most recent session of the Kentucky General Assembly as runaway inflation at the national level continues to outpace wage gains. Lawmakers and the governor worked to ease inflationary burdens for working families by offering relief on hefty vehicle property tax increases caused by a pandemic surge in used car values. The General Assembly also moved to lower the personal income tax to keep more dollars in taxpayer wallets.

Tom Stephens

There were encouraging policy moves in health care as well. One driver of cost increases are government health-benefit mandates, which can add as much as 5 percent to coverage premiums. Kentucky has more healthcare mandates than the national average, but with a few exceptions, legislators largely resisted pressure from powerful lobbying groups to add more in 2022. This was a big win for Kentucky businesses and employees.

One group, the Kentucky Pharmacists Association, worked with an independent pharmacist in the General Assembly to introduce HB 203, a lengthy mandate bill that would have added a minimum $10.64 dispensing fee (5 times the current rate) to Kentuckians’ prescription drugs. The legislation also would have ended quality-driven, pay-for-performance contracts, significantly limiting the ability of companies and health plans to negotiate better pharmacy prices for their employees and members. This would have created a guaranteed payday for high-cost pharmacists. To further tip the scales in their favor, a pharmacist-controlled board would have been established to set future policies on prescription drugs.

As part of their legislative strategy, the pharmacists worked to broaden support for HB 203 and ratchet up pressure by allowing lobbyists for certain hospital systems to insert monopolistic provisions on specialty drugs (medications administered by a provider through injection or infusion typically, in a hospital outpatient setting or a provider’s office). This measure effectively banned a successful innovation known as “white bagging” or “alternate sourcing,” whereby health plans and businesses fight hospital price gouging by using specialty pharmacies to safely distribute these drugs.

Sensing a growing concern over the costs and complexity of the bill, proponents quickly pulled HB 203 before an official Kentucky Department of Insurance cost assessment could be posted. A Pharmaceutical Care Management Association analysis estimated that HB 203 would have increased prescription drug costs by a staggering $5 billion over the next decade. (Editor's note: PCMA lobbies for pharmacy benefit managers, firms that are middlemen between insurance and drug companies, determining what drugs are offered, at what price, and how much pharmacists are paid.)

Immediately upon withdrawing HB 203, a slightly revised bill, HB 457, was introduced. It also drew heavy opposition from multiple Kentucky employers, including the Kentucky Association of Manufacturers, General Electric, Mercer and dozens of other Kentucky employers. The Kentucky Association of Health Underwriters rang the alarm: “This bill does nothing to address the cost of prescription drugs, it’s going to do the opposite.” The Kentucky Association of Health Plans pointed to the negative impacts by reminding legislators that the Department of Insurance statement showed a family of four would have paid up to $167 more a year for health coverage.

Fortunately for Kentucky businesses and individuals, HB 457 was not enacted into law. Senate President Robert Stivers illuminated HB 457’s potential effects in an end-of-session press conference when he said, “we started getting, from the business sector and the provider sector, comments and questions about what the overall cost would be to various plans because it would have cost impact on various health insurance plans, including potential fiscal impact to the state employees’ health plan.”

Kentucky businesses would be wise to stay vigilant and continue to raise their voices against expensive health care mandates and disruptions in the healthcare marketplace through legislation that does not have broad support from all stakeholders.

KAHP Executive Director Tom Stephens can be reached at tom@kahp.org.