Summary of SB 201 and HB 511
Access to Community Pharmacy Services
The legislation gives retail community pharmacies access to participating provider networks used to dispense prescriptions to beneficiaries of health plans if they agree to accept the standard network terms and conditions, which may not provide less compensation than is paid to pharmacies affiliated with PBMs and insurance companies. Total compensation includes any indirect revenues captured by PBMs that are used to directly or indirectly subsidize mail order operations that compete with community retail pharmacies, including any rebates, discounts or allowances received by PBMs for prescriptions dispensed by retail community pharmacies.
The legislation prohibits the establishment of any artificial barriers to the freedom of patients to choose providers of pharmacy services, regardless of whether these artificial barriers benefit mail order or retail pharmacies, such as discriminatory network access requirements, the use of confidential patient information obtained by PBMs to promote the use of affiliated order pharmacies, and the imposition upon patients of administrative requirements that discourage the use of retail community pharmacies.
To ensure that a level playing field is established, the legislation brings PBMs and their marketing practices under the supervision of the State Insurance Department and requires review and approval of network access plans. Because there is significant disagreement and controversy about whether and to what extent PBMs subsidize the operations of their mail order pharmacy affiliates to capture a greater market share, these issues will be subject to review by the Insurance Department.
The legislation will help lower total health care costs by encouraging generic substitutions which are more extensively dispensed by community pharmacies. PBMs and their mail-order pharmacy affiliates often promote more expensive brand name medications in order to earn marketing rebates and allowances. The use of community pharmacies also helps control health care costs by ensuring better face-to-face access to pharmacy counseling; reducing waste associated with unnecessary dispensing of long term supplies of medications; minimizing the risk that mediations may be damaged, lost or stolen in mail order distribution; and facilitating the use of home delivery services which many community pharmacies provide which benefit home bound and elderly patients, especially in rural areas.
The legislation contains requirements similar to those found in the Medicare Part D program to ensure adequate access to community pharmacy services. Because mail order pharmacies cannot be relied upon to provide immediate access to medications needed to acute care, it is critical that pharmacy network requirements ensure access to an adequate number of retail community pharmacies, especially in rural and intercity areas.
The legislation provides grievance and enforcement provisions, but maximizes the use of non-governmental internal dispute resolution procedures and binding arbitration in which the prevailing parties are awarded attorneys fees and costs to as to discourage frivolous appeals and protests.
The legislation creates a fund to be financed by a fee deducted from amounts paid to pharmacies to pay any administrative costs incurred by the Insurance Department.