Montana lawmakers and the state insurance commissioner are targeting a generally hidden part of the healthcare system, with new regulations aimed at bringing down prescription drug costs. Companies in the drug supply chain, and the state’s biggest health insurance company, are fighting back.
In recent years, both Gov. Steve Bullock’s administration and State Insurance Commissioner Matt Rosendale have tried to change how companies called pharmacy benefit managers, or PBMs, operate in the state.
PBMs negotiate deals between drug manufacturers and insurance companies and government health plans that supply them to patients. Those deals are often complicated and opaque.
Great Falls Republican Sen. Steve Fitzpatrick says PBMs behavior is one reason why costs are so high.
“Some of the conduct I think people feel is kind of unfair and unjust.”
Critics say PBMs' dealmaking amounts to an unfair profit-making system by prescription drug middlemen. PBM companies say the deals they strike with drug makers help drive down costs.
Fitzpatrick introduced a bill (SB 83) Wednesday to regulate the relationship between PBMs and retail pharmacies, where patients get their drugs.
It has the support of pharmacy and primary care groups in the state.
Stuart Doggett is the executive director of the Montana Pharmacy Association.
“Left unchecked PBM conduct jeopardizes the future of independent pharmacies and the patients they serve.”
Doggett and pharmacy owners say more rules on companies that often act in obscurity will help lower the cost of prescription drugs and protect their businesses.
Sen. Fitzpatrick’s bill would restrict some fees that PBMs charge pharmacies, limit copayments for consumers so they don’t cost more than the drugs themselves, and establish a list of rights for pharmacists allowing them to file a class-action lawsuit against PBMs.
Some pharmacy benefit managers and insurance companies operating in Montana say this legislation would have the opposite effect its supporters claim, and that it will actually raise drug costs.
Rachel Lee is with Prime Therapeutics, which negotiates deals between drug stores, prescription drug makers and Montana's largest insurance company, Blue Cross Blue Shield.
“PBMs are the only thing standing between pharmaceutical manufacturers and higher prices. Without us, pharmaceutical manufacturers would be able to continue to raise their prices unchecked.”
In December Prime Therapeutics reached a $375,000 settlement with state Insurance Commissioner Matt Rosendale that will pay for a review of the company’s pricing data. Prime admitted no wrongdoing in the settlement. Rosendale’s office has two more pending legal challenges against PBMs seeking drug pricing information.
Insurance companies also oppose the proposed new regulation some state lawmakers are calling for.
“I view this as bad public policy," says John Doran of Blue Cross Blue Shield of Montana. "This bill reads like a pharmacy wishlist. It’s like they looked up everything they don’t like in their contracts and they've written a bill to nullify them. This bill will no doubt increase premiums for our members.”
Multiple opponents to the bill said some of the new regulations called for could work, but overall the bill needs to change to win their support.
Another bill (SB 71) in the works aims to reform how PBMs interact with insurance companies and, in turn, reduce the cost of drugs. Republican Sen. Albert Olszewski is carrying that bill at the request of Insurance Commissioner Rosendale. It's considered a companion to the one heard Wednesday.
Both the Rosendale’s office and pharmacy benefit managers are planning lobbying efforts in the coming days through what they’re billing as educational meetings, so lawmakers learn more about their takes on the prescription drug industry.