Kentucky pharmacists are hailing a decision by Attorney General Russell Coleman they say greenlights the state’s ability to fully enforce a new law meant to more tightly regulate prescription drug industry middlemen known as pharmacy benefit managers, or PBMs.
“It’s a positive thing allowing them to keep their doors open,” said Benjamin P. Mudd, executive director of the Kentucky Pharmacists Association.
“Definitely a win,” said Rosemary Smith, an Eastern Kentucky pharmacist and co-founder of the Kentucky Independent Pharmacy Alliance.
Now Mudd and Smith are calling on the administration of Gov. Andy Beshear to act on Coleman’s opinion of Sept. 24 and fully enforce the law meant to rein in what they say are predatory practices of PBMs that squeeze revenue from drugstores through processing prescription claims.
“We need help,” said Smith, who operates six community drugstores in Eastern Kentucky with her husband, Luther.
Enforcement has stalled amid questions from the Beshear administration about possible conflicts with federal insurance law.
But so far, the state Department of Insurance has not provided information about how it plans to respond to Coleman’s decision that the law is fully enforceable. It did not respond to several requests from the Kentucky Lantern.
Smith said she’s heard nothing since Coleman’s opinion.
“It’s been dead silence since that came out,” she said.
She and Mudd sent a letter Sept. 25 to Sharon Clark, Kentucky’s commissioner of insurance, requesting information within 15 days on how the state plans to respond to Coleman’s decision but have not received a response, they said.
Smith said more than 100 community pharmacies in Kentucky have closed in the last several years, in part because of the financial pressures of PBMs — some owned by national pharmacy chains such as CVS — that control much of the processing and payment of prescription drug claims.
“Our patients see these stores closing and they’re devastated,” she said.
Kentucky has about 950 pharmacies, about half of them independent.
The PBM industry claims it saves consumers money through better drug prices and more efficient processing of claims, according to information on the website of its association, the Pharmaceutical Care Management Association.
But critics argue otherwise.
The industry has come under fire from consumer advocates at the state and federal level. Last year, the Federal Trade Commission released a scathing report suggesting that PBMs are “profiting by inflating drug costs and squeezing Main Street pharmacies.”
Senate Bill 188, sponsored by Sen. Max Wise, R-Campbellsville, was meant to address complaints about PBMs in Kentucky through tighter regulation of their role in commercial health plans. A previous law, Senate Bill 50, sponsored by Wise in 2020, cut PBMs out of the state’s substantial Medicaid prescription drug market, a move officials have said saved Kentucky millions of dollars.
SB 188 passed overwhelmingly last year and was signed by Beshear, taking effect Jan. 1
Yet enforcement soon stalled amid questions about possible conflict with federal law
The state insurance department said it can enforce a provision of the law that sets a baseline for payment of claims, which pharmacists say has provided some financial relief.
But the department decided other parts of the law were preempted by the federal Employee Retirement Income Security Act, or ERISA, that sets minimum standards for private retirement and health plans.
In particular, Kentucky insurance officials said in a June 30 bulletin that the department was barred from enforcing “anti-steering” provisions to restrict PBMs from steering business to their own drugstores, a practice that critics say is common. Kentucky officials also said the insurance department was limited in how it could enforce the law against the national PBMs based in other states.
But Coleman’s opinion rejected both of those claims, saying that based in part on a U.S. Supreme Court ruling in a similar Arkansas case, Kentucky is free to enforce all provisions of the law.
Wise, who sought the opinion, said he is pleased that it upholds the PBM law he sponsored. But he said he’s still waiting to hear from Kentucky officials how they plan to respond.
“It’s basically been very much silent,” he said.
Mudd, the director of the pharmacists’ association, said the state needs to adopt a clear plan for enforcement and stick to it.
Lack of enforcement “allows PBMs to manipulate the system and find loopholes,” he said.
Wise said the ultimate solution is federal law regulating the industry in all 50 states. Currently, individual states struggle to enact reforms, he said, adding:
“Often it’s a game of whack-a-mole.”
This article was originally published by the Kentucky Lantern.
