Gov. Asa Hutchinson on Thursday signed into law a bill that requires pharmacy benefit managers to be licensed by the state.
The Arkansas Pharmacy Benefits Manager Licensure Act requires licensure of any PBM that services any insurance plans that are not self-funded by employers. The legislation was among a handful of items approved by lawmakers during a special legislative session this week.
The act, led by Rep. Michelle Gray, R-Melbourne, and Sen. Ron Caldwell, R-Wynne, puts PBMs under the oversight of the Arkansas Insurance Department, which will promulgate regulations that will address licensed PBMs’ use of spread contracts. It also bans PBM “gag clauses” that prevent pharmacists from discussing the total price of a drug or cheaper alternatives.
Licensing of PBMs will commence on Sept. 1, and licensed pharmacists will face new regulations concerning “market conduct practices” and reports that must be filed with the department.
Arkansas is expected to be the first state to license and regulate PBMs, which had opposed the legislation. The General Assembly put some limits on PBMs with laws passed in 2009 and 2015.
During the bill signing, the governor said the act would “assure fair place in the marketplace.”
Pharmacists got the attention of lawmakers in February, packing a meeting of the Legislature’s Arkansas Health Insurance Marketplace Oversight Subcommittee to complain that new reimbursement rates for generic prescriptions imposed by CVS Caremark Corp., the PBM used by Arkansas Blue Cross & Blue Shield and Ambetter of Arkansas, are often less than the cost of the drugs.
At the same time, CVS Caremark appeared to be getting paid more for some prescriptions than the pharmacy that filled them. It was also able to steer profitable patients into its own pharmacies or mail-order programs in direct competition with the pharmacies whose reimbursement rates CVS is setting in its role as pharmacy benefits manager.