Legislature Prohibits PBMs From Operating Retail Pharmacies
LITTLE ROCK – Arkansas is at the center of a national battle between local pharmacies on the one hand, and on the other hand a giant industry known as Pharmacy Benefit Managers (PBMs). It is a battle of economic life and death.
Local pharmacies accuse PBMs of anti-competitive practices and multiple violations of state law. More than 60 local drug stores have gone out of business since 2016. They support legislative approval of House Bill 1150 to prohibit PBMs from operating retail pharmacies in Arkansas.
A spokesman for a PBM said that if HB 1150 is passed, the corporation will close its 23 pharmacies in Arkansas. In emotional testimony, employees appeared at the Senate Insurance and Commerce Committee and said they would lose their jobs if the bill passed.
A Senate co-sponsor said he is sympathetic with employees’ concerns about losing their jobs, but he also feels sympathy for the many people who have already lost their jobs because PBMs forced the closing of local pharmacies.
The Senate approved the bill by a vote of 26-to-9 and the House approved it by a vote of 89-to-4. It’s on its way to the governor.
HB 1150 also would prohibit PBMs from using mail-order pharmacies to distribute prescription drugs in Arkansas.
A spokesman for local Arkansas pharmacies said that if the legislature approves HB 1150, it would create a domino effect and numerous other states would enact similar laws.
For that reason local pharmacists, corporate drug companies, elected officials and policy makers throughout the United States are watching Arkansas closely.
PBMs are middlemen between drug manufacturers and the hundreds of millions of Americans who purchase prescription drugs. PBMs negotiate with health insurance companies, pharmacy retail stores and companies that have self insurance for employees’ health coverage.
Opponents of HB 1150 say the government should not pass laws that interfere in the free market. Supporters of HB 1150 say that PBMs use anti-competitive practices toward creating a monopoly and don’t comply with existing laws.
HB 1150 is one of several laws enacted by the legislatures to level the playing field between PBMs and local pharmacies. An Arkansas law regulating PBMs has been upheld by the United States Supreme Court.
According to the Federal Trade Commission, the three largest PBMs set prices for 80 percent of the prescriptions filled in the United States. As one Arkansas pharmacist said, PBMs are his competitor and they have the authority to set his prices.
PBMs are vertically integrated, meaning that they own or have a financial arrangement with other sectors of the health care industry, such as health insurance companies, hospitals and pharmacy retail franchises.
In related news, the Senate passed HB 1531 to prohibit drug manufacturers from restricting medications to a limited network of out-of-state pharmacies. Co-sponsors of HB 1531 say that if manufacturers restrict the availability of prescriptions to out-of-state mail-order companies, it would shut down access at local pharmacies, hospitals and clinics in Arkansas. That could harm patients, they say.