Hard-fought bill to protect independent pharmacies passes Senate committee; would regulate pharmacy benefit managers

By Melissa Patrick
Kentucky Health News

Update March 28: SB 117 passed the Senate March 14 with a 38-0 vote and passed the House March 25 with a 97-0 vote. It now awaits the signature of the governor.

Approval of Senate Bill 117 by the Senate Appropriations and Revenue Committee March 11 brought Kentucky’s independent pharmacies one step closer to getting better price transparency from the companies that negotiate with pharmaceutical manufacturers, insurance companies and their beneficiaries. The bill would subject pharmacy benefit managers to regulation by the state Department of Insurance.

Republican Sen. Max Wise

“We are talking about independent pharmacies that have had family histories for years,” Sen. Max Wise, sponsor of the bill, said in an interview. “They are trying to compete just to stay alive and . . . are suffering right now. This is a fight for the little guy and I am happy to stand up with the independent pharmacies.”

Wise, a freshman Republican from Campbellsville, told the committee that while pharmacy benefit managers still don’t support his bill, they did come to the table over the last week with independent-pharmacy representatives and the state Cabinet for Health and Family Services to reach a compromise that the committee approved unanimously.

The legislation would allow the Insurance Department to regulate PBMs much like insurance companies are regulated. It would also provide an appeal mechanism to resolve pricing disputes between pharmacies and PBMs.

The bill would not require PBMs to change how they work with fee-for-service Medicaid, nor does it require them to release their pricing methodology unless absolutely necessary, and any releases would not be subject to the state open-records law.

The bill was intensely debated for weeks, first in the Senate Health and Welfare Committee and then heard twice in the A&R Committee. Last week’s A&R meeting involved “several hours of testimony from a local pharmacist, PBM representatives, and members of the Cabinet for Health and Family Services,” the Kentucky Independent Pharmacist Alliance said in a news release.

Wise, a former FBI agent who was elected in 2014, told the committee, “This has been a very tough and complicated bill to work on.”

The legislature passed a “maximum allowable cost” law in 2013 to require increased transparency in reimbursement practices. “Kentucky is one of only a handful of states to regulate the actions of PBMs,” said the independent pharmacists’ release. It said the state has more than 500 independent pharmacists.

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