Alabama prescription drug bill sparks debate over price impact

The bill mandates pharmacy benefits managers (PBMs) charge health insurers the same rate they pay pharmacies for medications, but opponents say this could raise price for consumers. (iStock/Getty Images Plus)

The sponsor of HB 238 said it’s a way to ensure pharmacists, particularly small ones serving rural areas, get fair reimbursement for dispensing drugs.

Opponents say the bill could increase costs for consumers and potentially have other long-term impacts.

The bill, sponsored by Rep. Phillip Rigsby, R-Huntsville would require that pharmacy benefit managers (PBMs), third parties that administer pharmacy benefits for health insurance plans, pay pharmacies the price of a prescription set by the state, plus a dispensing fee of $10.64.

Rigsby, a pharmacist by trade, said that pharmacies, especially local ones, are losing money by filling prescriptions, because PBMs set reimbursement rates. When reimbursement is less than the cost, he said, pharmacies can’t pass on the difference to patients. They can either continue dispensing the medication and absorb the loss or stop stocking it.

“Is that good health care for the citizens of Alabama? In either scenario, the outcome is poor. One, the pharmacy eventually cannot pay its costs to continue in business and closes, or the patient does not get their medicine,” Rigsby said.

The bill passed the House Insurance committee last week on a voice vote. It is awaiting a vote by the Alabama House of Representatives.

The bill would require that health insurance companies reimburse PBMs the $10.64 dispensing. Health insurance plans could pass those costs on to the patient, either through higher premiums or higher co-pays.

The legislation would also prevent PBMs from invoicing health benefit plans at a different rate than what they reimburse pharmacies for prescription drugs, mandating that PBMs bill the health insurer the same amount they pay the pharmacy. That means they can’t charge health insurance plans one price for a medication and then pay pharmacies a different price for the same medication.

Robin Stone, executive director of Alliance of Alabama Healthcare Consumers, an organization made up of employers in the state that lobbies state government on their behalf, said the provision would force PBMs to “eat the cost” of doing business by guaranteeing that pharmacists can’t lose money on prescriptions they file.

“This bill is for pharmacists, it’s about pharmacists, it’s sponsored by pharmacists and the only people, the only group that comes out on top of this are pharmacists because they’re going to be making more money,” Stone said.

Rigsby said the fee was mischaracterized as a “tax” added to every prescription. He said nowhere does it say the word tax in the bill, nor does it state that the patient will be charged a fee on top of their prescription.

“If any citizen hears the word tax, instantly that creates a negative feeling, and they knew it would,” Rigsby wrote in an email statement.

Neah Scott, legislative counsel for the Retirement Systems of Alabama, which manages health and retirement plans for state employees and retirees, said the bill would be “a major change in how [RSA does] reimbursements.”

RSA uses a PBM and can currently negotiate prices. They can also negotiate rebates, which she said brings the cost of insurance down and benefits the members.

“Once all payers in the state are paying those average costs, what’s to stop the manufacturers from realizing that and just kind of creeping up the cost, when they know everybody’s got to get reimbursed at whatever the pharmacies pay for the drugs?” she said.

She said they are still running estimates to better understand the impact, but she said they expect it will increase the cost of the program in the short-term and are concerned about potential long-term effects.

“At the end of the day, it’s what the plan pays, and how the plan is funded is by employers’ members, so if those costs come up, we have to figure out how to address that,” Scott said.

Scott said that would either be through raising premiums or asking the Legislature for more funding after the Alabama Employees Retirement System board meeting Tuesday.

Stone said that every health care provider has a cost of doing business. If this bill passes, he argued that other health care providers could seek guarantees of profitability.

“If this bill passes, and it guarantees them that they cannot lose money on any prescription that they [fill]. Well, then it’s obvious that they’re going to be profitable at their business,” Stone said. “You can’t lose money, the only thing you can do is make money.”

This story was updated at 9:21 a.m. to clarify that RSA uses a PBM.

The post Alabama prescription drug bill sparks debate over price impact appeared first on Alabama Reflector.