Attorney General has sued Two Pharmacy Benefit Managers (PBMs)
LITTLE ROCK – The state Attorney General has sued two pharmacy benefit managers, alleging that they contributed to the dramatic rise in the abuse of painkillers that has ravaged Arkansas.
Pharmacy benefit managers (PBMs) are companies that act as the middleman in transactions between wholesale manufacturers and the people who pay for prescription drugs, such as drug store chains, health insurance companies and government health care agencies.
The intent is for PBMs to use the enormous purchasing power of their clients as leverage to negotiate discounts and rebates. The attorney general alleges that the two PBMs neglected the interests of Arkansas people, and instead enriched themselves by negotiating rebates from drug manufacturers.
The lawsuit contends that the two PBMs increased profits by participating in transactions that flooded Arkansas with millions of prescriptions for opioids like oxycodone, hydrocodone and fentanyl.
PBMs were in a perfect position to curb the excessive growth in prescriptions for opioids, but instead of prioritizing the health of consumers they focused on getting rebates from drug companies, the attorney general alleges.
“As a result, PBMs benefitted financially from the opioid crisis by negotiating favorable deals with opioid manufacturers and by not taking sufficient action to curb excessive opioid prescriptions…” the attorney general alleges.
The lawsuit states that the PBMs, along with some manufacturers, distributors and pharmacies, created the opioid crisis that has caused thousands of deaths and addictions, and which still plagues Arkansas today.
Nationwide, “the death toll has been staggering,” the attorney general said. In 2020 93,000 Americans died from an opioid overdose. In each of the following two years more than 100,000 Americans died from overdoses of painkillers.
In Arkansas the tragedy was even more acute. For several consecutive years the prescription rate for opioids was second in the nation. The number of people who died from overdosing rose to more than 600 a year. In a 12-month period more than 1,600 children were placed in foster care in Arkansas because their parents abused drugs or alcohol.
Last year there were 4,270 emergency calls to first responders to deliver Naloxone, the antidote to overdoses.
Many of those tragic consequences could have been prevented if the PBMs had done its duty to Arkansas citizens by exercising oversight over excessive prescriptions of opioids, the attorney general alleges.
The Arkansas legislature passed Act 900 of 2015 to require fairness and accountability in reimbursements that PBMs paid to local pharmacies. That law was challenged by the trade group representing PBMs. The legal battle went all the way to the United States Supreme Court, which upheld Act 900.
During a special session in 2018 the legislature passed a law that authorized the state Insurance Department to regulate PBMs. Legislators acted in response to pharmacists who were concerned reimbursements were falling so low they were in jeopardy of going out of business.
According to the attorney general PBMs are massive businesses at the center of the prescription drug industry. They contract with manufacturers who make drugs and with pharmacies that dispense them at retail. They also contract with third party payers, such as health insurance companies and state health care agencies.