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Health Committee discusses pharmaceutical rebate reform

From Nancy Royden, LRC

Frankfort, KY - Members of the Interim Joint Committee on Health, Welfare, and Family Services on Tuesday heard from advocates of reducing patient costs through rebate reform.

Before patients can purchase medications, insurers and pharmacy benefit managers (PBMs) negotiate prices with pharmaceutical companies. Those companies provide rebates to reduce the total costs for many medications, according to the Diabetes Patient Advocacy Coalition, which is part of the Patient Pocket Protector Coalition.

A representative of the Patient Pocket Protector Coalition, George Huntley, told legislators at Tuesday's meeting that the savings are not usually passed on to consumers.


"That same consumer has paid a premium to their insurance carrier or their health plan for access to that plan's benefits, but they're not getting that plan benefit," he said. "That premium isn't giving them a return on that investment, if you will, with regard to the drug benefit."

PBMs are licensed entities that provide services on behalf of a health plan, state agency, insurer, managed care organization or other third-party payor, according to the Kentucky Department of Insurance.

"PBMs were created for medical billing of pharmacy transactions," Huntley said. "That was their purpose when originally created. They don't make anything. They don't touch anything. They report only to their shareholders. They don't have a fiduciary responsibility for the health of the patient at all."

Rep. Steve Sheldon, R-Bowling Green, is a pharmacist and owner of Sheldon's Express Pharmacy in Kentucky and Indiana. He sponsored a PBM reform package that passed out of the House this year, but stalled in the Senate.

Sheldon said PBMs used to simply form a connection between the insurance companies and the pharmacies. When they were first established, it only cost 10 cents per transaction, and even was reduced to 4 cents a few years later. He said they have evolved into multiple Fortune 500 companies.

He suggested going back to a fee transaction pass through.

"If they want to charge 10 cents or a quarter, just let us know what you want to charge per transaction, and let's get rid of the rebates because we're just never ever going to reel them in. But this is a good start. I think you'll see some legislation next session that will have to do with all the money going back to the premiums except for a reasonable amount," Sheldon said.

Sen. Ralph Alvarado, R-Winchester, co-chair of the committee, said reform might not come easily, but changes need to be made.

"I've already been told by some of our insurance partners they're going to take us to the mat on this. They're going to fight tooth and nail," he said. "So I'm anticipating a very nasty fight on this. But I think the proof is already in the pudding here in Kentucky on Medicaid. And it's already been shown that it's going to work, and it's going to benefit patients."

Sen. Stephen Meredith, R-Leitchfield, said he has also been in support of reform. He added that employers have been using scare tactics to keep the General Assembly from passing effective legislation.

"No one should make a fortune off the misfortune of others, and that's exactly what's happening. This is really falling on the most vulnerable. Here's a chance to right this wrong," he said.

Huntley said those representing some health plans say they're using rebates to keep plan premiums down for all members, but he doesn't know of anybody who has had their premiums go down.

"But they will even suggest that it would be unfair to do otherwise, to not share them across all plan participants. So they're keeping that pool of money. Now our position, we respectfully disagree with that statement," he said.


This story was posted on 2022-11-17 07:24:51
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