After weeks of negotiation and compromise, the Alabama Legislature finally passed legislation regulating pharmacy benefit managers (PBMs) this week, sending it to Gov. Kay Ivey for her signature.
Similar legislation was attempted last session but failed to reach the finish line. This year, after much back and forth, lawmakers were able to see the PBM reform to the finish line with plenty of time remaining in the session.
Senate Bill 252 (SB252) would further restrict PBMs' practices, specifically regarding fees and rebates. State Sen. Billy Beasley (D-Clayton) carried the bill in the Senate, and State Rep. Phillip Rigsby (R-Huntsville), himself a pharmacist, carried it in the House.
"In many parts of our state, the local pharmacist is the only healthcare provider in town, and it's vitally important they continue serving our communities," Rigsby said. "SB252's only goal is to ensure pharmacists are fairly compensated for services they provide, which has unfortunately not been the case for quite some time. This legislation is the result of countless conversations and compromises that, in the end, allowed us to pass a bill supporting community pharmacies across our state. I'm proud of the work we've done on this important issue and confident it will have an immediate, positive impact in Alabama."
PBMs operate as intermediaries between drug manufacturers and insurance companies by negotiating rebates and discounts, processing claims, reviewing drug utilization and much more. PBMs are generally understood to reduce the cost of prescription medication. However, critics claim that PBMs cut down on consumer choices and that PBM savings never reach the customer's pocket.
Drug wholesalers determine the actual price of a drug. PBMs then negotiate with pharmacies and insurance providers regarding the price a customer pays for an individual drug, depending on the customer's insurance plan. PBMs also determine how much pharmacies are reimbursed for the cost of a drug, meaning some pharmacies could be forced to sell any number of medications at a net loss.
Additionally, PBMs negotiate rebates with drug manufacturers, for which they keep an undisclosed amount.
SB 252 would regulate PBMs and require them to pay "community pharmacies" at least the Medicaid reimbursement rate for a prescription filled. It exempts hospital and large chain pharmacies like Wal-Mart, Publix, CVS and Walgreens.
The debate on the bill was split between groups with opposing views on the bill's effect.
Supporters of the bill claim that PBMs have long stiffed small pharmacies by not giving sufficient reimbursement and that the legislation would help smaller businesses with a significantly higher risk of closure than big stores.
Opponents of the bill, however, claimed it would lead to higher costs for consumers.
State pharmacists and the Alabama Pharmacy Association ubiquitously supported the bill.
The bill was opposed by the Business Council of Alabama and the Alliance of Alabama Healthcare Consumers (AAHC). AAHC's members include Alabama Power, Regions, Alabama League of Municipalities, Association of County Commissions of Alabama, BlueCross BlueShield of Alabama, Business Council of Alabama, CVSHealth and the National Federation of Independent Businesses.
The bill eventually passed unanimously in both houses, sending it to Ivey for her signature.
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