Illinois Officials Push for More Control over Pharmacy Benefit Managers
TL/DR –
Pharmacy Benefit Managers (PBMs), often called pharmaceutical “middlemen,” are under scrutiny at the state and national level for their alleged role in driving up drug prices. State agencies are considering regulation changes for the industry, and multiple hearings have been held to discuss PBMs’ effects on local pharmacies, many of which claim to be selling drugs at no profit or even a loss. Proposed changes to Illinois’ insurance law include requiring PBMs to disclose the net cost of drugs covered by health plans and prohibiting them from pushing patients towards pharmacies owned by associated companies.
Illinois Lawmakers Target PBMs to Improve Prescription Drug Pricing
State lawmakers in Springfield, Illinois are holding hearings to discuss the role of pharmacy benefit managers (PBMs) in determining prescription drug prices within the health insurance industry. Multiple state agencies are assessing how they can effectively regulate these entities.
As intermediaries, PBMs are often called pharmaceutical “middlemen”. They play a crucial role in negotiating the prices insurance companies or pharmacies pay for prescription drugs. Thus, these companies have a significant say in the drugs covered by employer insurance plans, directly impacting the availability of medication for patients and pharmacies.
However, PBMs at both state and national levels have been criticized for allegedly driving up drug prices. Recent hearings have revealed that local pharmacies are struggling due to the high costs of acquiring and dispensing drugs, often at no profit or a loss. The National Community Pharmacists Association reports that around 300 local pharmacies in Illinois have closed since 2013.
Last week, the state’s oversight of PBMs was scrutinized following a critical audit. The audit found that state regulators lacked the required documentation to oversee PBMs effectively. This shortcoming within the Illinois Department of Healthcare and Family Services has resulted in an inadequate ability to supervise state Medicaid spending.
Greater Control Over PBMs
The Department of Healthcare and Family Services plans to implement new rules to enhance its supervision of PBMs. Among other measures, these rules would require PBMs to provide more information about potential conflicts of interest. The rulemaking process is expected to commence soon, with the submission of the rule to the Joint Committee on Administrative Rules by June.
Impact of Corporate Consolidation
The PBM industry, which emerged in the 1960s when prescription drugs became a standard part of health plans, witnessed considerable consolidation in the 1990s. Today, three major PBMs – CVS Caremark, Express Scripts, and Optum RX – control approximately 80% of the US market. The state’s newly appointed insurance director, Ann Gillespie, has expressed her readiness to regulate the industry, citing the consolidation of ownership as detrimental to patients.
Lawmakers are referencing House Bill 4548 as a potential solution, which proposes changes to the state’s insurance law and seeks to enhance government control over PBMs. The bill recommends consistent monitoring of PBMs, including the requirement for an annual report. It also proposes measures to ensure fair payment to pharmacies.
While the bill is still under review, the Federal Trade Commission is conducting an antitrust probe into the major PBMs. Although CVS Health disputed claims of non-cooperation, PBM executives have largely been absent from recent hearings, leading to criticisms from state representatives.
Despite these challenges, lawmakers are determined to continue their oversight of the PBM industry and the role it plays in prescription drug pricing, with additional hearings expected in the coming months.
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