MONTGOMERY — On Tuesday, the Alabama House of Representatives unanimously passed amended legislation regulating Pharmacy Benefit Managers (PBMs), sending it to Gov. Kay Ivey's desk for a signature after the Senate voted to concur with the House's amendments.
Senate Bill 252 (SB252) would further restrict PBMs' practices, specifically regarding fees and rebates.
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.
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, claim it will lead to higher costs for consumers.
State Rep. Phillip Rigsby (R-Huntsville) presented the bill before the House, gaining broad support from lawmakers.
"The loss of local pharmacies is a terrible detriment to the health care of our people, especially in rural areas," said State Rep. Mark Gidley (R-Hokes Bluff). "This can't happen. So I appreciate you bringing this bill. I want our House to know how important it is. I have stayed in close contact with the local pharmacies in my district, and this is a lifeblood to make sure that they're able to offer that service to the people, especially in the rural areas."
Likewise, State Rep. Ernie Yarbrough (R-Trinity) applauded the bill, saying he was "proud" of Rigsby.
Support for the legislation was bipartisan, with Republican and Democratic lawmakers pushing for final passage.
"In my district, we have a ton of independent pharmacies, and I've spoken to them as well," said State Rep. Ontario Tillman (D-Birmingham). "I support this bill. So, anything we need to do, I urge the members to pass this bill."
House Rules Committee chairman Joe Lovvorn (R-Auburn) offered an amendment on the floor.
"Under this amendment, it would just allow private businesses out there to negotiate with the PBMs on how they do their rebates, whether they receive them in full or they make it as part of their administrative fee," Lovvorn stated.
After passing the amendment, the House approved the bill with a vote of 102-0, earning applause throughout the body.
Following the vote, a visibly emotional Rigsby took a moment of personal privilege. Fighting through tears at multiple points, Rigsby thanked everyone who helped him get his bill to the finish line.
"I just want to say thank you, and I appreciate your work, your conversation, and your commitment," Rigsby said. "There have been many ups and downs in this journey, and there were days I wanted to throw in the towel. But I realized my flesh was telling me to quit. But thanks be to God, when I felt defeated, that's when my faith reminded me: we know that for those who love God, all things work together for good for those who are loved according to his purpose."
After passing the House on Tuesday, the Senate voted to concur with the House's changes later that afternoon.
"This legislation will undoubtedly help community pharmacies keep their doors open and continue serving patients, which is a big win for the state of Alabama," said House Speaker Nathaniel Ledbetter (R-Rainsville). "Members of the Legislature are sent to Montgomery to solve complex issues affecting their districts – and this one is as challenging as they come, impacting every corner of our state. Accomplishing this is a testament to the strength of the legislative process, and I commend Rep. Rigsby and the rest of my colleagues for staying the course on this important issue."
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