California PBMs would be required to get state licenses and to disclose their rebates as part of a bill under consideration by California lawmakers.
The proposal, which comes at a time when PBMs’ roles are under increased scrutiny both on the state level and nationally, also would develop requirements for PBMs to meet in order to be licensed. PBMs now are not regulated at all in California.
“This lack of oversight coupled with a lack of transparency regarding business operations has generated numerous questions,” says the bill’s sponsor, state Rep. Jim Wood (D). “In order to address questions that have been raised about whether the industry fully discloses how much it is actually saving insurer and employer clients and what portion of those savings are actually passed along to consumers, the Legislature needs to address this issue through the regulation of PBMs.”
The bill would require PBMs to disclose:
The percentage of all oral prescriptions and self-administered drugs that were dispensed through pharmacies affiliated with the PBM and the percentage of oral and self-administered medications dispensed through retail pharmacies;
The total amount of discounts or price concessions the PBM received that was attributable to California residents whose drug benefits were managed by the PBM;
The amount and types of rebates, discounts or price concessions provided to health care plans that could be attributed to patient use under those plans; and
The amount of the rebates, discounts or price concessions that are passed through to enrollees and the total number of prescriptions dispensed.
It’s not clear how much support the bill, AB 315, has among California lawmakers. But it comes as other efforts intensify to place PBMs under more federal and state oversight.
Bill Comes Amid Calls for PBM Oversight
For example, two House members — Reps. Doug Collins (R-Ga.) and Dave Loebsack (D-Iowa) — introduced a bill March 2 (HR 1316) that would require PBMs to update their maximum allowable cost (MAC) lists for Medicare Part D, TRICARE and the Federal Employee Health Benefit Program every seven days. Collins says this would protect local community pharmacies from selling scripts at a loss. “Because of PBMs’ failure to regularly update MAC pricing lists, the true cost of prescription drugs is hidden from employers, consumers, pharmacists, and the federal government,” he contends.
The National Community Pharmacists Association (NCPA) argued in a letter to newly installed HHS Secretary Tom Price in late February that President Trump’s plans to lower drug costs won’t work if PBMs “continue to operate in a virtual black box. The only way transparency can be achieved is to expose the pricing behaviors in which PBMs have engaged since the inception of the Medicare Part D program.” NCPA strongly supports Collins’ bill.
By contrast, the Pharmaceutical Care Management Association (PCMA) says MAC lists reduce drug prices and adds that PBMs are a cost-saving device for the health care system overall.
“PBMs reduce prescription drug costs by 30% on average,” says PCMA President Mark Merritt. “Nobody has to hire a PBM — they choose to hire a PBM because they bring costs down.”
Merritt tells AIS Health that the general public “understands it’s the drug companies” that are responsible for rising pharmaceutical costs. Nonetheless, to counter confusion about the role of PBMs in the marketplace, the association has launched a website, www.drugbenefitsolutions.com, to make PBMs’ case to policymakers and journalists, he says: “It explains how drugs are priced and what PBMs do.”