Small pharmacies compel lawmakers to rein in drug middleman

Medicap Pharmacy in Cheyenne is one over 20 independent pharmacies that have asked the Legislature to adopt additional regulations for pharmacy benefit managers. (Maggie Mullen/WyoFile)

By hyperlinked author, WyoFile

Wyoming lawmakers are considering adding more regulations to an obscure yet powerful link in the pharmaceutical drug supply chain — pharmacy benefit managers. PBMs work behind-the-scenes as middlemen between insurance plans, drug manufacturers and pharmacies. Public scrutiny has led many states to pass legislation to better regulate PBMs. That includes Wyoming, which has added four PBM measures to its statutes since 2016.

Now, the Legislature is considering adding several more regulations to the books with House Bill 36 – Pharmacy benefit managers act enhancements. The bill has sparked much ado among lawmakers and stakeholders about how exactly PBMs work and who they are costing or saving money.

What’s a PBM?

PBMs are multi-million dollar companies that manage prescription drug benefits on behalf of health insurers or large employers. They negotiate discounts, rebates and reimbursements, and purport to provide the sole source of downward pressure on the rising cost of drugs. They can also make money by pocketing some of the cash saved through those negotiations.

That’s where some parties, including many independent pharmacists in Wyoming, take issue. Last spring, more than 20 of them requested the Joint Labor, Health and Social Services Committee study PBM regulation in the last interim. The concerned pharmacists say such companies harm their businesses by not properly reimbursing them, and asked the committee to create legislation mimicking regulations passed by Arkansas.

House Bill 36 is that bill.

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Cheyenne pharmacist Melinda Carroll spoke in favor of the bill during a House Labor, Health and Social Services Committee meeting Wednesday. The bill will make needed changes to the reimbursement process, she said.

PBMs reimburse pharmacies for the cost of drugs covered by insurer prescription drug plans. The health insurer, in turn, reimburses the PBM. Currently in Wyoming, PBMs have the ability to reimburse pharmacies at a lower cost than what the pharmacy paid to purchase the drug from a wholesaler. House Bill 36 would put restrictions on that practice.

Fiscal cost

The bill may save dollars for independent pharmacists, but concerns also exist about what it will cost the state. It’s estimated to cost the state Employees’ Group Insurance an additional $7 million annually.  A lot of that has to do with a dispensing fee for prescriptions that would go into effect under the bill.

Bill sponsor Sen. Troy McKeown (R-Gillette) countered those concerns, implying the cost is worth it to help independent pharmacists.

“Are we willing to risk independence to save money for the state?” McKeown asked during Wednesday’s meeting.

But detractors of the bill say the fate of independent pharmacies is a matter of consumer choice. That included Johnson County Commission Chairman Bill Novotny, who spoke on behalf of the Wyoming County Commissioners Association. He told the committee the bill would cost counties up to an additional $20,000 a year.

The committee voted 3-2 in favor of the bill, with Sens. Fred Baldwin (R-Kemmerer) and Dan Furphy (R-Laramie) in opposition. Next week, the Senate Appropriations Committee will debate the bill and decide whether it’s worth the cost to the state.

WyoFile is an independent nonprofit news organization focused on Wyoming people, places and policy.