Lawmakers to consider more oversight of pharmacy-benefits middlemen

Pharmacy-benefits managers, the powerful middlemen who help select which drugs are covered for patients and negotiate discounts with drugmakers, could soon get more scrutiny in Indiana.

A pair of bills introduced in the Indiana General Assembly would require the operators—known as PBMs, for short—to be licensed by the state Department of Insurance and to register with the state Board of Pharmacy.

The moves are intended to hold PBMs more accountable and give more protection to consumers and pharmacists, said Randy Hitchens, executive vice president of the Indiana Pharmacists Association, which supports both bills.

“Like many other state pharmacy associations, we are looking out for our pharmacist members to protect them from the reimbursement activities that we feel are unfair and have put one to two dozen of our independent pharmacies out of business in the last couple of years,” Hitchens said.

In recent years, PBMs have come under growing criticism for their secrecy, especially over how they negotiate prices, rebates and commissions between insurers, pharmaceutical companies and insurance brokerages.

PBMs are notoriously protective of their contracts, making it difficult for consumers, employers and insurance managers to see if they’re getting a good deal. Often, PBMs refuse to discuss the amount of rebates, and who gets the money.

Last year, President Trump took aim at PBMs, claiming they inflate drug prices, and promised to crack down.

“We are very much eliminating the middlemen,” Trump said. “The middlemen became very, very rich. … They won’t be so rich anymore.”

In October, Trump signed several bills that bar PBMs from getting in between pharmacists and their customers. The new laws struck down the longstanding practice that gagged pharmacists from telling customers if their prescription would cost less if they paid for it out-of-pocket rather than using their insurance plan.

Separately, Indiana passed a bill last year that would allow doctors and pharmacists to offer cheaper options for prescription drugs if patients paid with cash instead of using their insurance plan.

The law also eliminated prescription reimbursement clawbacks by PBMs that had forced many independent pharmacies to close their doors.

Two new bills now going through the Indiana Legislature would add more oversight.

House Bill 1180, sponsored by Rep. Martin Carbaugh, R-Fort Wayne, would require PBMs to obtain a license from the Department of Insurance, which would set up rules on licensure, reporting and business conduct. The specific licensing rules have not yet been drawn up. The bill has been assigned to the House Insurance Committee.

House Bill 1252, sponsored by Rep. Steve Davisson, a Republican from Salem and a pharmacist, would require PBMs to register with the state Board of Pharmacy, which would set up rules for registration, renewal, conduct, appeals and annual reporting. The bill has been assigned to the House Committee on Public Health.

The state’s Legislature Services Agency estimates that up to 125 PBMs would have to be licensed and registered in Indiana to do business here.

The National Council of Insurance Legislators, a legislative organization comprised principally of legislators serving on state insurance and financial institutions, has held numerous meetings on the topic at the request of lawmakers who want more oversight of PBMs.

“Up until now, the PBMs have been playing streetball, and it is time for a referee” said Arkansas state Sen. Jason Rapert in comments last year. He noted that in many states, PBMs are unregulated, even as insurance companies, pharmacists, doctors and other health professionals are overseen by state boards and commissions.

A trade association representing health insurers, America’s Health Insurance Plans, has been working with the group over a model law that would give states more oversight.

“Over the last six months of drafting and revising the proposed Model, we have stressed the importance of the PBM/health plan relationship.” AHIP said in a letter to the national legislative group in November. “Health plans value the services that PBMs provide to consumers, employers, unions, trusts, and many other organizations, in order to manage increasingly complex and costly prescription drug benefits.”