By Morgan Chilson
TOPEKA — A contingent of House Republicans united with Democrats on Monday to push through a bill that reins in the middlemen operating between drug companies and pharmacies, offering more transparency for a system that can drive up prescription drug costs.
Senate Bill 360 was the original bill introduced to regulate pharmacy benefit managers, or PBMs. At the end of last week, it appeared House Speaker Dan Hawkins was going to make sure the bill didn’t move forward this session, along with another bill that addressed the federal 340B program controlling prescription costs for certain clinics and hospitals.
While the fate of the 340B bill is uncertain, the bill setting stricter controls on PBMs was inserted into Senate Bill 20 during a conference committee hearing.
The House passed the measure 104 to 17 after passionate debate, with opponents attempting to insert an amendment that would have sent the bill back to conference committee over a $10.50 dispensing fee to pharmacies included in the bill.
They said the dispensing fee, required to be paid by PBMs to pharmacists on all prescriptions they fill, will raise insurance fees and end up costing consumers.
Rep. Barb Wasinger, a Hays Republican, said was in favor of the transparency portions of the bill but disagreed with the dispensing fee. Although she didn’t think consumers would see it as a charge for each prescription they pick up, she said it would show up on insurance costs.
Rep. Pat Proctor, a Leavenworth Republican, said his constituents are worried the dispensing fee will show up as a “pill tax.”
“I love how, ‘Nobody’s’ going to pay the $10.50,” he said. “$10.50 is going to come out of the ether, apparently. You know who’s going to pay the $10.50? It’s not going to be the unions because they’re exempted. It’s not going to be the multi-billion dollar corporations because they’ve exempted themselves. The people who are going to pay this are all the small businesses that have to buy insurance policies.”
Other states have put similar PBM restrictions in place, along with dispensing fees, including Arkansas and West Virginia. Arkansas’ Insurance Department general counsel Booth Rand told the Arkansas Advocate that savings from rebates incorrectly applied by PBMs covered dispensing fees in West Virginia and he expected it to do the same in his state.
That portion of the bill requires PBMs to disclose the rebates they receive and how they are paid out. PBMs receive rebates from pharmaceutical companies in exchange for promoting their products, and they’re supposed to be used to lower the cost of the drugs. However, a criticism of PBMs that has driven laws being passed nationwide — including recent proposals to control PBM activities at the federal level — is that they keep the rebates as profits.
Both Republicans and Democrats spoke in favor of SB 20, painting it as an opportunity to help all Kansans through lower drug costs.
Augusta Republican Rep. Kristey Williams quoted from a federal report by an oversight committee looking into the effects of PBMs on the market. They found evidence PBMs steer patients to their pharmacies to reduce competition and that they use their position to artificially reduce reimbursement rates for competing pharmacies.
Williams said the $10.50 dispensing cost will be addressed by the elimination of “spread pricing” in the bill. Spread pricing refers to a PBM charging the insurance company or employer plan more than what it pays the pharmacist and then pocketing the difference, she said.
Williams also said a study from 2020 through 2023 of 9 million prescriptions found a “huge discrepancy” between what pharmacists received for the prescriptions — an amount that stayed relatively flat — and the amount charged to health plans, which increased. The report said spread pricing could be part of the difference.
“As our costs are going up, both for your employers, for our state health plan, the pharmacies are flatlining,” Williams said. “They haven’t gotten any more. They’re barely making it. So the study found that the employer cost rose 30% in those three years. You know what the reimbursement amount was for those pharmacies? Negative three.”
SB 20 advances to the Senate, which had already passed HB 360, the original bill.
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