A bill to curb the power of corporate middlemen who handle about $1.7-billion-a-year in prescription drug claims for the state Medicaid program moved a step closer to becoming law Thursday.
The House passed Senate Bill 50 on a vote of 95-0 with some minor changes that must be approved by the Senate.
Rep. Steve Sheldon, a Bowling Green Republican and pharmacist who presented SB 50 on the House floor, said the Senate is expected concur and give it final passage.
“We have a great bill here,” he said. “We will provide much more fair reimbursement to our community pharmacists.”
SB 50, sponsored by Sen. Max Wise, R-Campbellsville, is aimed at companies known as pharmacy benefit managers, or PBMs, that handle prescription drug claims for health insurance companies that oversee most of Kentucky’s Medicaid business.
The PBMs act as subcontractors to the five outside managed care health insurance companies that handle most of the state’s $11-billion-a-year Medicaid business for about 1.3 million Kentuckians.
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They have come under increasing fire in Kentucky and in other states, including Ohio and West Virginia, mostly from local pharmacists and their advocates who claim PBMs slash payments to pharmacists while reaping profits from state Medicaid programs.
The Kentucky Pharmacists Association on Thursday hailed SB 50 as “a major milestone for Kentucky patients, providers and taxpayers” and urged Gov. Andy Beshear to sign it into law as soon as it gets final approval in the Senate.
Wise has said SB 50 would end “the shenanigans” of PBMs.
CVS Health, which serves as a PBM for four of the state’s five Medicaid managed care companies, opposed the bill, warning Thursday that “the Kentucky legislature is barreling toward a government takeover of health care.”
Contrary to lawmaker claims that it will save the state millions of dollars a year in Medicaid money, it could instead cost the state more than $380 million per year, according to a statement from a CVS spokesman.
“CVS Health will continue to oppose this harmful legislation and work with policymakers to support policies proven to reduce costs and maintain health care access.” the statement said.
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But lawmakers are convinced SB 50 will save the state money. The also cite years of complaints by community pharmacists about the outsize power PBMs have to determine how much they pay drugstores for prescriptions filled through Medicaid, with reimbursement cuts some claim will force them to close.
Under the bill, the state Medicaid program would hire a single PBM that all Medicaid managed care companies must use for prescription drug claims. It also would establish a standard list, or formulary, of prescription drugs approved for patients instead of five separate lists currently used by each of the five managed care companies.
That also has been a source of irritation for pharmacists who say they never know which drug a company will approve for payment.
SB 50 has an emergency clause to take effect immediately, so it will apply to the current contract awards for Medicaid managed care companies the Cabinet for Health and Family Services plans to have in place by 2021.
Initially, WIse proposed eliminating PBMs entirely and having the state Medicaid program pay pharmacies directly for prescriptions they fill.
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But it drew an immediate outcry from community health clinics and the Kentucky Hospital Association, saying it would have the unintended effect of eliminating aid from a federally approved program that gives them steep discounts on prescription drugs. Those funds are available only through prescriptions filled through managed care.
Opponents included the Family Health Centers in Louisville and many hospitals — especially those in rural areas.
Under the revised version Medicaid prescriptions will go through a PBM hired by the state, allowing hospitals and clinics to continue collecting millions of dollars a year in discounts from drug companies. Wise said those groups have signed off on the new version of the bill as one that will protect them from any loss of funds.
Reach Deborah Yetter at dyetter@courier-journal.com or 502-582-4228. Find her on Twitter at @d_yetter. Support strong local journalism by subscribing today: www.courier-journal.com/subscribe.
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