During a three-day special legislative session in March, Arkansas Governor Asa Hutchinson (R) signed into law the first bill in the U.S. intended to address a lack of transparency among pharmacy benefit managers (PBMs) and their role in the high cost of prescription drugs.1
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The bill, H.B. 1010: Arkansas Pharmacy Benefits Manager Licensure Act, will require PBMs be licensed under the Arkansas Insurance Department and to provide “a reasonable, adequate and accessible pharmacy benefits manager network … that shall provide for convenient patient access to pharmacies within a reasonable distance from a patient’s residence.”2
After the bill’s passage, the ACR was joined by allies in the Alliance for Transparent and Affordable Prescriptions (ATAP) in a meeting the ACR coordinated with Gov. Hutchinson to discuss how “patients are hurt by PBMs through high drug prices and out-of-pocket costs, and our concerns that PBMs may prevent biosimilars from lowering drug prices or preventing savings from getting to patients,” says Angus Worthing, MD, FACP, FACR, rheumatologist and chair of the ACR Government Affairs Committee. ACR will continue to work with the state on implementation.
“Drug pricing and, similarly, access to medication are probably top on the radar screen of most Americans, many members of Congress and the ACR,” he adds.
A Significant Leap Forward
Advocates see the law as a significant leap forward with respect to transparency when it comes to PBM practices. It may also serve as a model for other states weighing similar legislation, says Joseph Cantrell, JD, the ACR’s senior manager of state affairs. The ACR and ATAP have established language available for other states to use.
“Now PBMs in Arkansas are going to have to provide the Insurance Commission with at least some explanation for the way they do things,” says rheumatologist Christopher Adams, MD, FACP, FACR, and chair of the ACR’s Affiliate Society Council. “The idea behind transparency is not only so patients and physicians can comprehend better what they’re paying for, but also so healthcare purchasers can make informed business decisions.”
How PBMs Work
PBMs negotiate drug prices with manufacturers and process claims on behalf of the insurers they represent. When a patient pays a copay at the pharmacy, the PBM reimburses the pharmacy. Sometimes reimbursement is at a much lower rate than the price the pharmacy paid to acquire the drug. Also, in some cases, the co-pay the patient pays is higher than the off formulary cost of the drug.3