Bipartisan Florida House bill to address Pharmacy Benefit Managers’ ‘predatory practices’

By John Haughey | The Center Square

Florida Reps. Randy Fine, R-Palm Bay, and Jackie Toledo, R-Tampa, have filed a 2020 bill they say would increase Floridians’ access to prescription drugs, lowering costs while also clamping down on “predatory practices” by Pharmacy Benefit Managers (PBMs).

House Bill 961, filed Dec. 16, had not been assigned a committee Monday afternoon. Eight House co-sponsors have signed on, including four Democrats, most notably three from Orlando – Reps. Kamia Brown, Anna Eskamani and Amy Mercado.

The bipartisan proponents of HB 961clearly view PBMs as unnecessary middlemen in the marketplace, an emphasis that is evident in the bill’s intent to “address a number of PBM-related practices,” including:

• “Spread pricing,” the difference between what the PBM charges a health plan and how much it reimburses the pharmacy;
• “Self-dealing,” with PBMs paying their own pharmacies more per prescription than other network pharmacies and steering patients to the pharmacies they own. Critics say PBMs dodge free-market principles and force patients to use pharmacies owned by those very same PBMs where costs are often higher;
• “Cost-sharing,” with PBMs collecting rebates offered by pharmaceutical companies but then failing to pass the savings on to patients.

“Our priority is advocating for Floridians who have felt the pinch in their wallets because profit-driven policies by PBMs are robbing patients of savings that should rightly be theirs,” Toledo said. “Consumers need to know that their state lawmakers are fighting for their best interests, and our legislation will help put the power back where it belongs: with the patient.”

According to HB 961, the top three PBMs control about 85 percent of the Florida market, with those companies owning their own mail order, specialty and retail pharmacies they often use a process called “steering” to direct patients to.

HB 961 supporters say such PBM practices are anti-competitive, reduce consumer choice and devastate neighborhood pharmacies – 15 percent of Florida’s remaining independent pharmacies have closed within the last three years, they claim.

“When pharmaceutical middlemen also own a dominant retail partner, inherent conflicts of interests arise that can lead to reduced competition and increased prices,” Fine said. “Those increased prices not only hit consumers through both higher drug and insurance prices but also taxpayers through more expensive Medicare and Medicaid programs.”

In 2018, Florida became one of 33 states to prohibit PBMs from including “gag orders” in contracts that restrict pharmacists from informing patients about lower-cost alternatives, according to the National Council of State Legislatures (NCSL).

Florida is among at least 20 states with “anti co-pay clawback” provisions designed to prevent numerical price overcharges for retail drugs in a pharmacy.

Examining PBMs’ spread pricing, self-dealing and cost-sharing practices is due diligence, Fine said.

“When you think about it, the distribution of drugs is a commodity business and government should be doing everything possible to reduce transaction costs to create the most efficient, low-cost drug prices possible,” he said.

The Pharmaceutical Care Management Association (PCMA), which represents PBMs that administer prescription plans for more than 270 million nationwide, said “rather than offer solutions to lower prescription drug costs, the pharmacist’s lobby prefers to vilify PBMs” with punitive measures such as those in Florida.

HB 961 ”would cause health care costs to skyrocket for many Floridians, their employers, and the state while lining the pockets of independent pharmacists and padding the bottom line of Big Pharma,” writes Scott Woods, PCMA Assistant Vice President of State Affairs, in a Dec. 20 Florida Politics op-ed.

PBMs reduce drug costs through negotiations with drug manufacturers and pharmacies, Washington-based PCMA maintains, saving consumers and health care programs more than $43 billion over the last 10 years, including $2.3 billion in savings for Florida’s Medicaid program.

The PCMA refuted HB 961’s contention Florida independent pharmacies are failing and that PBMs are contributing to that decline, providing statistics that show the number of independently owned pharmacies is “holding pretty steady.”

The number of independent pharmacies now operating in Florida is 1,541, the PCMA documents, up nearly 400 from 1,164 in 2010.

“That’s right: there are over 32 percent more independent pharmacies open today in Florida than 10 years ago,” Woods wrote. “So why are they calling for lawmakers to impose additional mandates on PBMs? Actually, it’s a pretty easy answer: pharmacy owners want state legislators to guarantee that patients pay more so they can make higher profits.”