The Mississippi House of Representatives passed legislation to prohibit “spread pricing,” the term used to describe when a pharmacy benefit manager hikes the price of prescription drugs when charging health plans or insurance companies.
While pharmacy benefit managers, serving as middlemen between drug manufacturers and insurance companies, use the practice of charging higher rates than what they pay the pharmacy for ingredient costs and to dispense drugs as a way to make a profit, critics of spread pricing argue it leads to higher drug costs for patients since extra dollars are being doled out by insurers. Lawmakers, for the most part, agreed on legislation Thursday to provide transparency into the process.
House Bill 1123, authored by Republican House Speaker Jason White, would implement several regulations aimed at increasing transparency and oversight in drug pricing and pharmacy benefit management. It would not only do away with spread pricing, but it would also require pharmacy benefit managers and drug manufacturers to submit detailed reports to the Mississippi Board of Pharmacy. The Board of Pharmacy would be allowed to subpoena pharmacy benefit managers and other related individuals or entities during audits. If noncompliance is discovered, those subpoenaed would be forced to pay for the audit.
Additionally, the Board of Pharmacy would have the authority to impose monetary penalties ranging from $1,000 to $25,000 on those engaging in spread pricing.
“We’re going to be on the forefront of transparency and sunshine as it relates to drug pricing and how much rebate money these aggregators are keeping,” Republican Rep. Hank Zuber said when presenting the bill on behalf of the speaker.
Even with an eventual 88-8 vote in favor of the legislation, some concerns were raised over a perceived lack of protection for independent pharmacists. While pharmacists are reliant on pharmacy benefit managers to work with insurers, inadequate reimbursements and excessive fees have been blamed for some across the state closing their doors.
Rep. Stacey Hobgood Wilkes, a Republican who did not vote in favor of the bill and has filed an opposing yet similar piece of legislation, believes a priority for lawmakers needs to be changing the way pharmacies are reimbursed. Her bill would implement a standardized pricing model for prescription drugs based on national prices, a metric change urged by the Mississippi Independent Pharmacies Association and killed by lawmakers in years past.
“The Independent Pharmacies Association, on behalf of their pharmacists, have stated that their pharmacy organization does not support this bill,” Hobgood-Wilkes said during the floor debate. “They’re saying it’s not going to do a whole lot to help them.”
Hobgood-Wilkes said that she received a statement from the Board of Pharmacy prior to the vote, and while the board is not as concerned with a pricing model change, it has reservations over what resources will be available to collect the data intended to create transparency. She added that the board would like more authority over pharmacy benefit managers, but did not go into detail on what that would look like.
The Board of Pharmacy has not released its full statement referenced by Hobgood-Wilkes.
Hobgood-Wilkes and others’ concerns aside, Zuber asserted that the approved bill is a “good step” in protecting customers and pharmacies from spread pricing. The legislation will soon be shipped to the Senate, where it will be considered in committee before potentially heading to the floor for a full vote.
