Pharmacists will have to wait another year before the state will be able to adequately enforce the law governing pharmacy benefit managers, and ensure that these giant companies are treating pharmacists fairly and lawfully on a range of issues from audits to reimbursements.
Senate Bill 1505, which would have empowered the Department of Consumer & Business Services to investigate and enforce the law with civil penalties, died late last week as the lobbyists for the PBMs dragged out negotiations beyond the deadline set by legislative bill drafters before the end of the short session.
“That bill was being actively negotiated when the clock ran out,” said Niki Terzieff, a lobbyist for the Oregon State Pharmacy Association. “Literally we were in a room with opponents and [legislative attorneys] drafting a compromise.”
SB 1505 had already been watered down in the Senate Health Committee, removing language that would require PBMs to pay pharmacists for drugs according to the PBM’s own most recently posted price, while leaving the less controversial measure that increases state oversight.
The bill’s defeat favors PBMs and insurers like Cambia Health Solutions, which has its own PBM, but Sen. Alan Bates, D-Ashland, the chief negotiator in the Senate, argued that the opponents had legitimate complaints about how much leeway to give DCBS to penalize PBMs that violate the law.
The complaints against them have been in the thousands, often for pricing complaints involving multiple drugs and multiple pharmacies at the same time, or due to blanket audits over many different individual complaints. DCBS could be charged to fine each one of those individual violations or for multiple identical mistakes at once.
“Nobody was trying to kill this thing,” Bates told The Lund Report. “You want the penalties to be enough to change their behavior but not so much as to be unfair to the PBMs.”
Jonathan Eames, the lobbyist for CVS Caremark, the country’s second-largest PBM and one of the most visible opponents of SB 1505, did not respond to a request for comment.
Bates noted that most of the complaints waged by the pharmacists were from several months ago, and they died off in the past few months, perhaps pushed into line by the threat of legislation. He said one lobbyist told him that many of the violations that PBMs committed may have been computer errors, which PBMs were happy to correct once notified of the mistakes.
Terzieff disputed the notion that the drop in reported complaints indicated the PBMs had improved their behavior:
“I’m not sure if it is that the complaints dropped off or if the agency was not asked to produce information beyond a certain point. It has been difficult for pharmacists to continually be the squeaky wheel; it takes critical time away from service and scant staff resources … and too often has shown no resolutions,” she said. “Despite some time elapsing, the fact that there were nearly 20,000 complaints over the course of one month alone underscores the reach of the problem.”
The loss of SB 1505 won’t be the end of the story -- Bates won approval of a note in a budget bill addressed to the Department of Consumer & Business Services requiring the agency to convene a rulemaking committee that will flesh out what authority it has under current statutes and what legislation might be needed. The agency will be ordered to report back to the Legislature in November, in time for new bills to be filed in 2017.
The rules will set an overall list of fees and fines as well as the maximum a PBM could face annually.
Bates said he had been impressed with the work of DCBS, particularly as it quickly turned around a premium assistance program for Pacific Islanders. He asked for that bill last July and it passed the House unanimously on Tuesday.
Entrusting the agency to develop the rules may create a sounder policy than rushing through legislation in the short session, and the agency may determine it can already do more than it has been doing, although Bates said new legislation will be needed to set fees, including an update of the minuscule $50 statutory fee that the PBMs -- worth billions of dollars -- pay to register with the state.
“They may have the general statutory authority,” said a second pharmacy lobbyist, Bill Cross. “They haven’t exercised it. … There really wasn’t much of a consensus [but] we supported sideboards.”
