Alaska Legislature passes pharmacy bill

Natalie McCay, Cate Kowalski and MacKenzie Peeler help customers on Tuesday, May 8, 2018, at Petersburg Rexall Drug. (Photo by Joe Viechnicki/KFSK)

Alaska pharmacists celebrated the passage of a bill making changes to prescription drug benefits and how businesses are reimbursed for that medication.

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House Bill 240 was opposed by health insurers and the companies they hire to oversee pharmacy drug sales. The Senate passed the bill and it awaits the governor’s signature.

After trying with other pharmacists to get it passed for about a decade, Petersburg Rexall Drug Store pharmacist Cate Kowalski is elated.

The change will give the state the authority to decide appeals on the reimbursement that pharmacies receive for medication impacts her business the most.

“We’ve been getting squeezed and squeezed for years,” Kowalski said. “To the point where it’s not covering the cost of what we pay for these drugs. When you try to appeal them we had no recourse. We would send things in. They would say, ‘Oh yes this is how you do it,’ but we would never get anything back.”

Insurance providers hire pharmacy benefit managers, or companies that provide oversight of the medication reimbursement. The managers have the authority to negotiate drug prices between insurers and pharmacies and decide appeals.

HB 240 creates a more transparent appeal process for pharmacies disputing reimbursement, and also gives the state’s Division of Insurance final say in disputes.

Express Scripts is  a national pharmacy benefit management company headquartered in St. Louis. Senior Director Cindy Laubacher testified April 20 before the Senate Finance Committee.

Laubacher outlined multiple problems she saw in the legislation. Turning over appeal authority to the state was a huge concern.

“We have appeals processes,” Laubacher told the committee. “We are happy to sit down and talk about creating an appeals process in statute that makes sense, that is fair for everyone but we would say that handing the state the authority to make, taking that authority away from our clients and giving it to the state to make reimbursement decisions is hugely problematic for us and for our clients.”

Laubacher explained her company was not trying to put community pharmacies out of business.

Small independent businesses say they are being forced to close, though.

Alaska Pharmacists Association legislative co-chairman Barry Christensen of Ketchikan told the committee the group has seen a 25 percent decrease in independently owned community pharmacies. He said pharmacy benefit management companies played a big role in those closures.

Alaska Pharmacists Association supported the legislation, as did the state’s Board of Pharmacy.

Legislators were convinced to make changes in the pricing practices.

On the Senate floor, Anchorage Republican Cathy Giessel gave the example of Tamiflu, used to treat influenza.

“Wholesale distributors in this example last year was selling Tamiflu for about $58 for a prescription,” Giessel said. “But the PBMs were reimbursing the pharmacy $20 for that prescription. Every time a pharmacy dispensed Tamiflu they were losing $38. There’s not many businesses that can stay in business with that kind of loss Mr. President.”

Supporters of the bill said benefit managers prohibit pharmacies from mailing prescription medication to rural parts of the state.

They’ve also not allowed a pharmacist to tell a customer when there’s a less expensive option for medication if a customer opts to pay out of pocket.

The legislation prohibits the mailing restriction and the so-called “gag rule” for cheaper options in contracts between benefit managers and pharmacies.

It also seeks to create more reasonable procedures for PBMs auditing pharmacies and it requires PBMs to register with the state.

The bill was opposed by America’s Health Insurance Plans, a trade association that wrote it will increase the cost of medication.

Insurance companies say benefit managers help prevent fraud and keep medication costs down.

Health insurer Aetna opposed it.

The bill was sponsored by Fairbanks Democrat David Guttenberg and had legislators signing on as sponsors from both sides of the aisle.

The bill passed the House unanimously in April and the Senate earlier this month and goes next to the governor for his signature.

(Editor’s note: Petersburg Rexall Drug is an underwriter of KFSK in Petersburg.)