Georgia lawmakers have proposed legislation aimed at offering more transparency for prescription drug prices.
Senate Bill 313 includes several provisions that regulate pharmacy benefit managers and the way they operate in the state. The bill’s sponsor, Sen. Dean Burke, R–Bainbridge, who is a physician, said many local pharmacies and residents have sent complaints to lawmakers.
“I do feel like the state of Georgia and its citizens deserve a little more sunshine on how pharmaceutical prices are reached from the standpoint of the consumers,” Burke said.
Pharmacy benefit managers (PBMs) are subcontractors that often dictate how much a pharmacy can charge a customer for prescription medications. Health insurance companies and Medicaid pay PBMs to negotiate prices with drug manufacturers on their behalf and maintain medication lists.
Drug manufacturers set the list price, which is the real cost of the drug without health-care coverage. However, PBMs often obtain rebates or discounts on the list price.
According to a report by Pew Charitable Trusts, manufacturer rebates play a role in the rising costs of prescription drugs. Drug manufacturers have raised prices because of the increase in rebates being paid out to PBMs.
A Consumer Reports survey found 30 percent of American adults say their out-of-pocket cost for their recurring prescriptions has increased in the past year.
PBM rebates grew from $39.7 billion in 2012 to $89.5 billion in 2016, according to Pew’s research. PBMs passed through 78 percent of manufacturer rebates to health plans in 2012 and 91 percent in 2016. Since PBMs garner rebates on a percent of the list costs, they can benefit from more kickbacks for more expensive medicine, but they come with higher out-of-pocket costs for consumers.
SB 313 would require PBMs to report all rebates to the health insurance companies, pass 100 percent of them on to health plans, apply discounts to the co-pay for patients and follow national benchmarks for prices.
"Unfortunately, SB313 would restrict the work we do to offset rising prescription drug costs," CVS Health spokesman Trey Hollern said. "For example, a recent analysis shows that this proposal could increase drug spending by more than $650 million annually, leading to increased costs for Georgian families, employers and the state. We look forward to working with Georgia lawmakers to find solutions for rising drug costs, including the high prices set solely by pharmaceutical manufacturers."
The bill also increases the Department of Insurance's ability to regulate the industry by requiring licenses for PBMs to operate in the state.
It also limits delays caused by prior authorization requests.
Some insurance companies require an additional layer of approval for certain medications, which are set by the PBMs, according to Burke. That authorization is performed by doctors or pharmacists who work for the insurance companies, who sometimes refer the patients to alternative medicine.
Burke said those physicians may not know the best course of therapy for the patients and may just be adhering to the company’s rules.
SB 313 would require PBMs to use doctors who are licensed in Georgia and who actively see patients. It also only allows those physicians to give medical advice on conditions they specialize in.
Scott Woods, a representative of the Pharmaceutical Care Management Association, said SB 313 will not make the impact it intends for patients. Instead, it removes accountability measures for pharmacies.
Woods plans to meet with lawmakers to help improve the bill.