MONTGOMERY – The Alabama House of Representatives Insurance Committee on Wednesday, March 6, gave a unanimous favorable vote to HB238, the FAIR Meds Act, sending it back to the full House.
The bill proposes to ensure fair reimbursement for Alabama pharmacies, safeguard access to pharmacy services for patients, provide truth and transparency in prescription drug pricing and enhance free market competition.
Since passing out of committee, supporters of the bill say the opposition to this legislation has begun a misinformation campaign to scare the public and halt support in the legislature.
Dustin Beaty, a pharmacy owner who recently sold two independent pharmacies in Jasper to Walgreens, supports the bill. Beaty said the bill would help independent pharmacists handle the costs associated with providing certain medications.
“It had gotten to a point that we were being reimbursed below cost on 30-40% of the prescriptions we filled, we had no choice, we had to sell,” Beaty said. “Independent pharmacies cannot survive processing 30 percent to 40 percent of our claims below cost.”
Beaty said in the last three years approximately 300 pharmacies have closed due to the issues being addressed in this legislation. On average those pharmacies provided 12 jobs. It is estimated another 300 will close in the next 2-3 years without the passing of legislation to protect independent pharmacy from the abusive practices of the pharmacy benefit management (PBM) industry.
“That equates to approximately 6,000 jobs. 6,000 jobs that are not being replaced. This is as much an economic piece of legislation as it is pharmacy,” Beaty said. “If there was another industry that was losing or bringing in 6,000 jobs to the State of Alabama it would be plastered all over the media.”
Beaty said pharmacists want full transparency on prescription costs for them and their patients and want to be able to talk with their patients without restrictions.
“Currently we are in violation of our contract if we discuss that your prescription is reimbursed below cost. This proposed legislation is not about pharmacies making more money,” Beaty said. “This is about access to pharmacy care for every Alabamian. The ability of community pharmacists to serve their patients is being threatened.”
Beaty added that opposition to the bill is focused on the $10.64 fee calling it a “TAX” without addressing the issues. In an
Interview with WBRC FOX6, Robin Stone, currently the executive director of the Alliance of Healthcare Consumers and former Vice-President of Blue Cross and Blue Shield said, “This will add $10.64 to every prescription and on average an additional $1,200 to Alabama Families.”
Beaty disagreed with Stone, saying, “his (Stone’s) PBM math is simply wrong and his threats are the same scare tactics they always use. Pay attention to who Mr. Stone is representing and who is paying his salary and who funds his alliance.”
Beaty also said he would like to send an invitation for an open debate to Stone to publicly discuss the PBMs he represents and the state of pharmacy in Alabama and it not be isolated to the halls of Montgomery.
“This issue isn’t going away but pharmacies and access will,” Beaty said. “If Alabama doesn’t address it now, when it’s provided by out of state pharmacies, Alabama will not be able to fix it.
“We currently have dispensing fees built into our contracts and they are paid mostly at less than $1 per prescription,” he added. “The cost of the drug is an arbitrary number provided and dictated by the PBM to maximize their profits. We have no unified pricing schedule that we are governed by because the PBM and insurances play by their own rules. It will not be an additional $10.64 added on top to every patient or every employer. The payment will be a recalculated reimbursement paid to the pharmacy by the insurance. If this bill causes an increase to patients or employers, it will be because the insurances and PBMs have levied their own ‘TAX.’ In the states that have already passed this type of legislation it has been proven to have saved millions in healthcare costs. I would gladly be available to consult any employer in the State of Alabama and show them how the PBMs and insurances are taking from them as well.”
Beaty said there is a lack of transparency.
“Currently, a PBM or insurance company has a contract with the pharmacy and a contract with the employer. And the PBM keeps the spread on a claim that it reimburses a pharmacy and what it charges an employer. There is no transparency between these two contracts,” he said. “For example: A drug costs a pharmacy $100 – The PBM then reimburses the pharmacy $80 for a $20 loss to the pharmacy – PBM then Bills the Employer $300 for the claim – PBM Keeps $220. Then the PBM and Insurance companies increase your premiums and co-pays, making even more profit.
“This legislation allows for a unified pricing model and covers our cost to dispense” Beaty added. “The opponents of this bill want independent pharmacies to close and remove access to care for Alabamians so the PBMs can move their prescriptions to their PBM-owned mail order pharmacies and monopolize the entire health care cycle in Alabama. When that happens healthcare costs will skyrocket.
Facts about the legislation:
HB238 will require Pharmacy Benefit Managers (PBMs) to pay community pharmacies the cost of dispensing a prescription. That includes a uniformed cost calculation plus a 10.64 dispensing fee. The dispensing fee covers the cost to dispense a prescription beyond the cost of the drug; the vial, the label, the power, the computers, etc. HB238 is not a tax.
HB238 does not mandate any increased cost to patients/consumers. The legislation puts it on the PBM to pay fair reimbursement to the pharmacy.
The legislation does not affect Medicare or Medicaid prescriptions.
HB238 requires full transparency on prescription costs and allows pharmacists to talk with their patients without restrictions. HB238 will require PBMs to allow this.
The payment model in HB238 is exactly what the State Medicaid Administration program has used since 2007. Those records show savings of over $53 million annually and no additional costs to patients, without using a PBM.
Alabama was the first state to implement index-based pricing and since then, the U.S. Government has mandated all states to follow in their Medicaid programs.
