Governor Kay Ivey signed legislation regulating pharmacy benefit managers (PBMs) into law on Tuesday.
PBMs operate as intermediaries between drug manufacturers and insurance companies by negotiating rebates and discounts, processing claims, reviewing drug utilization and much more.
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.
“The Alabama Legislature unanimously voted for Senate Bill 252 to help support independent pharmacists across our state, and I was pleased to sign it into law. I commend Sen. Billy Beasley and Rep. Phillip Rigsby for their dedication to this issue. I believe this new law will help many struggling pharmacies stay in business and continue to provide vital health care to Alabamians,” Ivey said.
SB 252 would regulate PBMs and require them to pay "community pharmacies" at least the Medicaid reimbursement rate for a prescription filled.
“We believe that several bottom-up movements this year were the reason for the success of SB252,” said Alabama Pharmacy Association Chief Executive Officer Louise Jones. “Among them, the Pharmacy Walkout for PBM Reform helped pharmacists spark conversations with patients that started a barrage of calls to the Statehouse.”
State Sen. Billy Beasley (D-Clayton), bill sponsor and retired pharmacist, said, “This has been a win for the people of Alabama. It’s been a huge win for the community pharmacists in the state of Alabama who just want to be able to go to work, make a living and take care of their patients.”
State Rep. Philip Rigsby (R-Huntsville), a pharmacist who carried the bill in the House and is himself an independent pharmacist, said, “It’s a big win for not only pharmacies that are able to stay open and take care of those patients, but a big win for Alabamians because they can continue to go to that pharmacy that’s taken care of generations.”
The Alabama Independent Pharmacy Alliance (AIPA) said in a statement on Tuesday, “This landmark legislation is the result of a widespread grassroots effort that began in May 2024 when a group of pharmacists, pharmacy owners and concerned members of the community met together to discuss the unethical practices of Pharmacy Benefit Managers (PBMs) that were rapidly affecting access to healthcare all over the state.”
“Many voices from the opposition maintained that PBM Reform would never be passed in Alabama due to the unique landscape of corporate affiliations. Despite those voices, these individuals launched a mass effort that would eventually result in one of the largest victories in the nation against PBMs,” the AIPA said in a statement. In October, AIPA was officially formed and engaged pharmacists from all over the state in helping to write SB99, the initially proposed legislation that gained quick momentum in Montgomery and forged the path towards PBM reform. These dedicated and passionate individuals devoted their time and resources to educate the public, business owners and legislators on the threat that the anticompetitive practices of PBMs pose to healthcare access and small businesses in Alabama.”
The AIPA continued, “While we celebrate this historic milestone, there is still work to be done. SB252 is only the first step in dismantling the corrupt behemoth that is responsible for the increased cost of healthcare in Alabama, all at the expense of pharmacies, employers and patients. AIPA will continue to work with legislators to accomplish this goal. AIPA would like to sincerely thank our members and all other pharmacists who contributed to this monumental effort that will allow pharmacies to continue to serve their communities. Above all, we thank God and glorify Him for guiding this effort and ensuring that the truth came to light. Finally, AIPA would like to thank SB252 sponsor Senator Billy Beasley, Senator Larry Stutts, and President Pro Tempore Garlan Gudger for their efforts to understand this issue and negotiate SB252 through the legislative process, as well as the other legislators who unanimously supported this bill.”
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