NAHU Washington Update - 04/12/2019  (Plain Text Version)

Return to Graphical Version


In this issue:
•  Fast Facts
•  Senior Issues, State Innovations and Healthcare Cost Containment Dominate NAICís Spring Agenda
•  NAHU Submits Comments on the Trump Administrationís Drug Rebating Rule
•  Medicare-for-All Legislation Introduced in the Senate
•  Republicans Introduce AHP Legislation to Provide Legal Path for Invalidated Plans
•  State Spotlight: Oklahoma Mirrors Trump Administration with PBM Regulation
•  Healthcare Happy Hour: Special Guest Discussion on Balance Billing
•  Register for Next Weekís Webinar on Frequently Asked Compliance Questions
•  Applications Are Now Open for NAHUís Legislative Council
•  CMS Announces Agent and Broker Summit
•  Register Now for the State of the Long-Term Care Insurance Industry Webinar
•  HUPAC Roundup: Defining the Center
•  What We're Reading


State Spotlight: Oklahoma Mirrors Trump Administration with PBM Regulation

Why is the Oklahoman legislature coming down so hard on pharmacy benefit managers? The prevailing attitude among lawmakers seems to be that PBMs are not transparent enough...

HHS Secretary Alex Azar proposed regulation last week that would target pharmacy benefit managers, pharmaceutical middlemen that Secretary Azar claims are significant contributors to high drug prices. Whether regulating PBMs would help or hurt the consumer is still very much up to debate, but the state of Oklahoma has already been considering similar legislation for several months. The bills, H.B. 2632 and S.B. 841, introduced earlier this year, would transform how PBMs operate within Oklahoma’s borders.

The proposed laws would institute an unexpected amount of government regulation and oversight for a solidly conservative state. This includes a requirement that all compensation a PBM or health plan receives from a manufacturer be used to lower costs that the consumer is ultimately responsible for, including premiums, copayments, and reinsurance amounts. The bills also demand that PBMs refrain from using “misleading advertising” and allow any pharmacy to participate in their networks.

Why is the Oklahoman legislature coming down so hard on pharmacy benefit managers? The prevailing attitude among lawmakers seems to be that PBMs are not transparent enough and require greater oversight to ensure that savings are truly passed on to the consumer. Another reason lies in market share; as of 2018, 85% of prescriptions in the U.S. are processed through just three PBMs: CVS Caremark (owned by CVS), Express Scripts (owned by Cigna), and OptumRX (owned by UnitedHealth Group). Smaller pharmacies claim that they have little to no leverage when dealing with these formidable conglomerates, and virtually no recourse if excluded from their networks. Proponents of PBM regulation argue that those three companies possess too much control over the prescription drug market, pushing any possible savings directly upward, rather than down to the consumer.

Other provisions in the bills would put an end to “gag rules,” which prevent pharmacists from informing patients about cheaper but equally effective drugs, as well as institute “access minimums” that would demand networks have pharmacies within a reasonable distance of the majority of policyholders.

Many in Oklahoma are confused by the legislation, claiming that these laws “would make it much more difficult for PBMs to achieve drug savings for consumers.” Critics say that Oklahomans who enjoy employer-sponsored insurance have good reason to worry; healthcare compliance consulting firm Visante estimates that PBMs as they currently operate will save Oklahoman employers $7.5 billion over 10 years, and that the pending legislation may jeopardize those savings.  Oklahoma State Chamber CEO Fred Morgan told reporters that the bills “would increase Oklahomans’ prescription drug costs and limit the tools available to business to contain costs.”

Morgan also claims that the price of commonly used prescription medication is increasing 12% per year. This is a very serious problem for a state whose citizens have some of the worst health outcomes in the United States, in addition to being one of the least insured; one in seven Oklahomans do not have health insurance. In fact, although Governor Kevin Stitt opposed Medicaid expansion on the campaign trail, he has opened up to the idea since taking office. With these facts in mind, perhaps the majority Republican legislature’s decision to take such strong regulatory action is not as surprising as it seems. Their goal may be to help the patient, but it is unclear whether these laws will achieve that goal.