ALBEMARLE — North Carolina House Bill 246, also known as the Revise Pharmacy Benefits Manager “PBM” Provisions bill, was introduced in the state’s General Assembly last month with Stanly County’s N.C. Rep. Wayne Sasser (R-District 67) as a primary sponsor.
Designed to crack down on controversial business practices that have led to the top three PBMs — CVS Caremark, Express Scripts and OptumRx — controlling roughly 80% of the prescription drug market, HB 246 takes aim at the shadowed industry that acts as a contract-negotiating middleman between health policy purchasers and providers via spread pricing and rebates.
Proponents of the PBM industry say the companies perform a net-positive service for Americans by negotiating against the large drug companies that set prices. Additionally, small businesses looking to offer competitive health care benefits to employees and their families often utilize PBMs because of the benefits and cost savings.
However, Sasser, a pharmacist by trade, says he doesn’t understand why PBMs should be a component of the health care system at all.
“None of this benefits the patient or the insurer,” Sasser told SCJ on April 13. “In all 50 states, from deep-red to deep-blue, legislators have introduced bills or passed laws that crack down on anti-competitive PBM practices like spread pricing, retroactive fees, patient steering, mandatory mail order and sweetheart deals for PBM-owned pharmacies.”
“Rebates and spread pricing provide no help to the customer or consumer. They just add to the cost of health care. No business should add $15 billion to the cost of health care without providing a service that improves health.”
Critics of the bill say that PBMs deserve scrutiny — rather than excessive regulations — and that the new proposal would lead to government overreach in dictating how employers and sponsors contract with private businesses for health care, effectively driving up prescription drug costs for families, health care plan sponsors, small businesses and large employers.
In an editorial column in last week’s North State Journal, guest author Travis Groo, chair of the Libertarian Party of Wake County, wrote that HB 246 “limits employers’ and other health care plan sponsors’ ability to use lower-cost pharmacy options,” resulting in “greater out-of-pocket expenses.”
Sasser contends that the current PBM system has evolved past its initial usage, adding that it needs to be modified when just a few companies control such a large portion of the market and that the official numbers don’t always add up.
“Monopolies don’t have competition and the audits show they manipulate the contracts for their profits,” he said. “Originally, they just handled the computer transactions for 10 cents a claim. Then they figured out they could charge rebates and spread pricing to make money.”
Sasser continued: “The PBM has no liability like the insurance company does…In 2021, they collected $20 billion dollars from drug manufacturers. Those rebates had to raise drug costs. Centene, which uses CVS Caremark, has been forced to pay more than 900 million in legal settlements to at least 19 states so far. Centene has decided to sell their $30 billion block of business.”
HB 246 passed its first reading in March and will move to the Health House Standing Committee later this month.