Those responsible for setting your prescription drug prices will soon have state oversight. This comes after fights from pharmacists who claim they weren’t getting reimbursed for their drug sales fairly. A public hearing was held, Wednesday, July 11, as the state will begin reviewing public comments on the proposed rules.
The legislature enacted the "Arkansas Pharmacy Benefits Manager Licensure Act" earlier this year. Pharmacy Benefits Managers, or PBMS, work between the pharmacy and your insurance company. New state oversight will ensure they're treating all pharmacists fairly.
"Pharmacies were operating at a negative reimbursement pattern, operating below cost," said Booth Rand with the Arkansas Insurance Department.
The Arkansas Insurance Department will oversee Pharmacy Benefit Managers.
"They kind of brought this on themselves,” said State Insurance Commissioner Allen Kerr. “If you’re not paying out a fair reimbursement to an entity, then that's going to draw the attention to the legislature and the public at large."
The commission will regulate PBMs by first requiring them to pay a $1,000 licensing fee plus a $1 million surety bond to operate in the state.
"We’re one of the leading states in doing this," said Kerr.
This comes as pharmacists claim they aren't getting fair reimbursement rates.
“Where we didn’t have oversight before, we didn’t have the ability to go in and audit, we do now," said Kerr.
Just Monday, Kentucky's Department of Insurance fined CVS Caremark $1.5 million with a one year probation for more than 450 violations related to reimbursements.
"When your pharmacist is getting paid less for his product than what he is paying for it in wholesale, he is not going to be in business very long," said Kerr.
When your pharmacist fills your prescription, it’s the PBM’s job to reimburse them for the cost of the drug through your insurance company. But often, they're losing money on the sale because their reimbursement is less than what they paid for the drug.
With this rule, the commission can review reimbursement patterns. It also requires PBMs to maintain network adequacy, meaning they must reimburse pharmacies fair amounts to ensure they stay in business.
The State Insurance Department will review comments and make any changes needed before passing along the rules to the governor and legislature for final approval. The rules should go into effect January 1.