New guidelines proposed for pharmacy benefit managers included in state budget
Apr. 25—After legislation that would have regulated pharmacy benefit managers failed in last year's Ohio General Assembly, new guidelines are being proposed in the state budget bill.
"Pharmacists believe that PBMs can provide significant value to our health care system," said Jeff Bates, dean and professor of pharmacy practice at Cedarville's School of Pharmacy. "They must embrace, however, approaches that are fully transparent and fair. Accountability is key in this space."
PBMs are companies that often work with large employers, health insurers and/or other payers for health care to help to manage prescription drug benefits, Bates said.
In negotiating on behalf of those clients, PBMs influence how much drugs cost through negotiating rebates with the drug manufacturers and they can also set the reimbursement rates for pharmacies, the Ohio Pharmacists Association says.
Whether or not to regulate
Those looking to impose regulations on PBMs are concerned unregulated PBMs are contributing to growing pharmacy closures, which can impact access to health care. Opponents say imposing certain requirements for PBMs could raise health care and prescription prices.
The provisions for PBMs the Ohio House approved in the state budget bill for fiscal year 2026-2027 are similar to regulations included in H.B. 505, or the Community Pharmacy Protection Act, which failed to make it out of committee in the last Ohio General Assembly.
Some of the provisions recently approved by the House include: — PBMs would be required to reimburse Ohio-incorporated pharmacies that dispense a drug product for the "actual acquisition cost," i.e., the amount paid to the drug wholesaler, plus a minimum dispensing fee determined by the Superintendent of Insurance. — PBMs would be prohibited from reimbursing an Ohio pharmacy less than the amount the PBMs reimburse their affiliated pharmacies for providing the same drug product. — An Ohio pharmacy would be allowed to decline to provide a drug product if the pharmacy would be reimbursed less than the required amount. — PBMs would be prohibited from retaliating against Ohio pharmacies in regard to these rules.
"The problem that's being resolved here is PBMs are both the price maker and the price taker," said David Burke, executive director of the Ohio Pharmacists Association, saying these are anti-competitive business practices.
PBMs set both the contractual cost of how much drugs cost for a pharmacist to stock and then what a pharmacist is paid when they sell the drugs to a customer, Burke said.
"The amendment sets an actuarial rate on both drugs and pharmacy services," Burke said. "...This is the exact same policy that Ohio Medicaid implemented several years ago with a single PBM, where it wanted to actually reimburse pharmacists at-cost for drugs and pay them at-cost for dispensing those drugs."
A minimum dispensing fee
A minimum dispensing fee is a measure to try to bridge the gap between what PBMs reimburse the pharmacies they own versus the reimbursements paid to independent pharmacies, proponents say.
In one analysis, chain pharmacies were paid $46.87 on average for dispensing a 90-day supply of atorvastatin, a drug for treating high cholesterol and triglyceride levels, while an independent pharmacy was paid $1.90, according to the American Pharmacy Cooperative.
Mandating dispensing fees could increase costs for consumers, the Ohio Chamber of Commerce says.
"It was a bit of a surprise to see that make it into the budget," said Molly Mottram, director of health care policy at the Ohio Chamber of Commerce.
A dispensing fee would be estimated anywhere between $10 to $15 in addition per prescription, Mottram said.
"We can't make the assumption that PBMs are going to absorb those costs," , Mottram said.
The chamber is concerned PBMs would to shift the dispensing fee costs down to employers.
"Then that's going to shift down to the employee through cost of increasing premiums, deductibles and whatnot," Mottram said.
The dispensing fee could help small pharmacies, but it risks higher overall costs that could adversely hurt state finances and consumers, said Rea Hederman Jr., executive director of the Economic Research Center and vice president of policy at the Buckeye Institute.
"It would do this by mandating minimum dispensing fees while restricting PBMs' reimbursement flexibility," Hederman said.
By contrast, reforms that boost transparency and competition could benefit consumers and businesses, he said.
"Ultimately, there is a trade-off between helping one group of businesses and keeping overall pharmacy costs down for everyone," Hederman said.
"We understand that pharmacy closures unfortunately happen but blaming PBMs is not based on facts. PBMs recognize the vital role pharmacies play in creating access to prescription drugs for patients," the Pharmaceutical Care Management Association said in a statement.
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