Arkansas To Regulate PBMs

Allows the state insurance department to have oversight over PBMs and essentially treat them as insurers………………….

Ark. House and Senate Approve Regulation of PBMs

A longer version of this article was published in the March 9, 2018, issue of RADAR on Drug Benefits. Subscribe today for biweekly business strategies and analysis for health plans, employers, PBMs and pharma companies.

March 19, 2018

Arkansas’s House and Senate approved a proposal to regulate pharmacy benefit managers and require PBMs to be licensed by the state’s Dept. of Insurance. Gov. Asa Hutchinson (R) is expected to sign the bill, according to news reports.

The debate was spurred by changes that CVS Health Corp.’s Caremark unit made in January to drug reimbursement rates paid to independent pharmacists.

The bill would allow state regulators to supervise PBMs’ networks to ensure that they provide convenient patient access to pharmacies and a fair and sustainable reimbursement rate for pharmacist services.

The Pharmaceutical Care Management Association (PCMA) in February said it opposed the initial version of the legislation. Its President and CEO Mark Merritt said in a statement, “this resolution would raise prescription drug costs for Arkansas’s patients, employers, state government and taxpayers, and do nothing to improve the quality of pharmacy benefits.”

The concept of regulating PBMs in itself isn’t new, according to Jay Godla at PwC’s Strategy&. Yet what makes Arkansas stand out is that it would allow the state insurance department to have oversight over PBMs and essentially treat them as insurers, which in theory “give[s] meaningful teeth to the existing regulations.”

According to Milliman actuary Troy Filipek, certain areas have the potential to piggyback or do something similar. But it is also remained to be seen how the state’s insurance commissioner would implement the bill’s provisions.

Godla says, “it’s a survival move by independent pharmacists in an industry that is continuing to struggle,” given that independent pharmacists make 25% less in profits than larger retail chains in an environment where per-script revenue has been on decline.