A band of Republican lawmakers hope to reel in pharmacy benefit managers and save Florida’s Medicaid program millions of dollars.
They say their legislation (SB 1306/HB 1043) would level the playing field to contest unfair practices by pharmacy benefit managers, known as PBMs. In doing so, one sponsor, Doral Sen. Ana Maria Rodriguez, said the state could save at least $143 million in the bill’s first year.
“Our pharmacies are being gouged for providing services to communities that would otherwise be left no choice and they’d suffer dire health consequences from lack of access to care,” said Rep. Jackie Toledo, a Tampa Representative who has routinely tackled issues tied to PBMs.
Stuart Sen. Gayle Harrell, who has also championed health care reform, fears neighborhoods are losing their community pharmacies to PBMs, which she called “mega organizations.”
PBMs are middlemen between health care plans and pharmacies. They help determine which drugs insurance plans will cover and negotiate on behalf of insurers to secure discounts from drug manufacturers. When a claim is filed, PBMs collect money from those plans, then pass money to pharmacies through different methods.
Former Lt. Gov. Jeff Kottkamp, who hosted Wednesday’s press conference on behalf of Small Business Pharmacies Aligned for Reform, said prescription drug costs continue to rise despite PBMs claiming they save Floridians money.
“Common sense tells you that if you cut out the middleman, you’re going to save money,” Kottkamp said.
Their role is a little more nuanced than “middlemen,” according to the Pharmaceutical Care Management Association, a PBM trade association. In their estimation, pharmacists deserve a share of the blame for rising prescription prices.
The bill would end PBM transaction fees and “clawbacks,” in which PBMs charge more for drugs than they initially quoted a pharmacy.
“This is not a business model that anyone can prepare for,” Toledo said.
Toledo and Brevard County Republican Rep. Randy Fine are sponsoring the identical House version. Harrell and New Smyrna Beach Tom Wright were at the press conference in support of Rodriguez’s bill.
None of the bills have yet been scheduled for a hearing in their respective committees.
The press conference comes after a hearing last month in the House Finance and Facilities Subcommittee where Agency for Health Care Administration Deputy Secretary Beth Kidder and John Meerschaert, an actuary with Milliman, presented a report on the state’s PBM structure. The report estimated PBMs are pocketing $89.6 million through spread pricing, a system where PBMs don’t charge fees, but simply retain a portion of the money paid by a plan.
According to AHCA — which administers Medicaid in Florida — and Milliman’s report, PBMs charged $89.6 million in spread costs, $17.9 million in administrative fees, $5.8 million in transaction fees and $47,000 in other fees.
Toledo said shrouded transaction fees could account for $30 million.
Florida spends $150 million to $200 million on drugs that it could get for less, Fine said.
“Hey, maybe we could afford to do that two or three years ago when the money was rolling in, but now I’m working on a budget, along with my colleagues, that may have to cut spending by $2.5 billion, and the idea of wasting $200 million on the same drugs that you get at a much lower cost is simply unacceptable,” Fine said.