Senate bill would further regulate pharmacy benefit managers

On Thursday, Sen. Tom Butler, R-Madison, introduced a bill to further regulate pharmacy benefits managers, or PBMs. Pharmacy benefit managers provide claims processing services or other prescription drug or device services for private and public health benefit plans. SB 227 expands upon a 2019 law that placed PBMs under the auspices of the Alabama Department of Insurance.

The proposed legislation adds the definition of a PBM affiliate, as “a pharmacy or pharmacist that, directly or indirectly, through one or more intermediaries, is owned or controlled by, or under common ownership or control” with a PBM.

It further allows pharmacies or pharmacists to share information with their customers on their cost share of the drug and provide information to customers on the clinical efficacy of a more affordable drug if there is one. It prohibits PBMs from:

  • reimbursing pharmacies at an amount less than the PBM reimburses their affiliate;
  • conducting “spread pricing”;
  • requiring an individual covered by the PBM to purchase drugs at a PBM affiliate or through mail-order;
  • offering or implementing plans that increase costs to covered individuals if they choose not to use mail order or a PBM affiliate;
  • prohibiting or limiting the customer choice of pharmacy if the pharmacy has agreed to and met the plan terms.

Butler’s bill has been assigned to the Senate Banking and Insurance Committee.

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