New Arkansas law to try to stop PBMs from 'systematically destroying rural pharmacies'

Before the session closed, House Bill 1150, for which Rep. Jim Wooten (R-Beebe) was a co-sponsor, passed the House of Representatives (April 3) and the Senate (April 9). Gov. Sarah Huckabee Sanders signed it into law Wednesday. The legislation prohibits PBMs from owning or operating pharmacies, with Arkansas becoming the first state to enact such a restriction.

The measure comes as other states are considering restrictions on PBMs, which run prescription drug coverage for big clients that include health insurers and employers that provide coverage.

Supporters of the restrictions have said pharmacy benefit managers are forcing independent pharmacies, especially in rural areas, out of business.

"For far too long, drug middlemen called PBMs have taken advantage of lax regulations to abuse customers, inflate drug prices and cut off access to critical medications. Not anymore," Sanders said in a statement released by her office.

CVS Health had been running TV ads in the state opposing the bill and urging Sanders to veto it. CVS officials have said the legislation would force the company to close 23 pharmacies in the state and would disrupt service for thousands of customers.

The company on Wednesday said it welcomed a discussion with policymakers in Arkansas and other states on ways to make medicine more affordable and accessible.

"Unfortunately, HB1150 is bad policy that accomplishes just the opposite: it will take away access to pharmacy care in local communities, hike prescription drug spending across the state by millions of dollars each year and cost hundreds of Arkansans their jobs," CVS Health said in statement.

Eaves said last week that he didn't know "that I've ever seen a bill in the time that I've been down there that had so many mistruths told about it from different groups. 
I mean, I'm getting emails, 15 or 20 a day, about that bill. And when you call those people, they have no idea that they've even sent an email to you." 

He said the legislation just says that "nope, you can be a PBM, but you can't be also a pharmacist. You've got to pick one or the other."

Detractors of the legislation were saying that "state government shouldn't be telling a company how to run their business model," Eaves said, "but the opposite stance to that would be, what other vertically integrated market have you ever seen where that vertically integrated company tells its competition what they can sell their product for? I don't know another one that's ever done that.

"And maybe there is, but I don't know it. I mean, I think we've got oil and gas, there are the refineries and then they own the Exxon store, but that Exxon is not telling Texaco what to sell and how much to sell it for. That's kind of what's happening in this PBM fight."

He said the state started fighting PBMs in 2015, "and we thought we had it solved. We were the model legislation in the country. Every conference I went into they were like, tell me about your PBM stuff, and and it's just gotten worse and worse and worse. I mean, we've got friends in here that come to these meetings sometimes that have shown me, here's what it cost me to buy the product, here's what I'm required to sell it for. And in a lot of cases, they're losing money."

He mentioned an instance "where an independent pharmacy was reimbursed around $90 for some medication. The PBM-owned pharmacy was reimbursed $19,000 for the exact same drug. Tell me that's fair. I don't know how you stay in business like that."

Eaves said PBMs "paying themselves significantly more" than what they pay the independent pharmacies is "already against the law," but "they're not following the law. Seems like they should be able to … that’s criminal to me, they should be able to convict them."

However, he said that the burden is on the pharmacists because "they have to file complaints. I mean, and then we've got, what, 75,000 complaints at one point. And how do you handle that? So I don't know if this is the right way, but it's an attempt to make sure that they're not influencing the market."

Wooten said he believes "the problem in essence is a federal problem, but they won't deal with it, they will not address it, and it's gotten worse and worse and worse. And not only the whole medical … it's the whole medical system … the federal government has made a mess of it and they’ve just turned their backs on it." 

He said HB1150 was "an attempt to stop what's just nearly criminal in my mind what they're doing, but I think it's going to take federal legislation to really solve it. We can only do so much."

Thirty-nine attorneys general urged Congress this week to pass legislation similar to Arkansas' new law. In the letter, the attorneys general said such legislation "would foster fair competition and promote choice and transparency for the American people."

The Arkansas ban, however, has drawn criticism from some lawmakers who said it is anticompetitive.

"The government should not be put in the position of saying, 'Guess what, we don't like our competition and we're going use the government and the law to put our competition out of business,' " Sen. Missy Irvin (R-Mountain View) said during debate over the measure in the Senate this month.

Several other states have taken up other pharmacy benefit manager restrictions this year. In Alabama, Gov. Kay Ivey on Tuesday signed legislation that will require pharmacy benefit managers to reimburse independent pharmacists at least at the state Medicaid rate for prescription drugs.