Inside the battle over prescription drug prices and pharmacies in the Louisiana Legislature

Summary

Pharmacy benefit managers are a little known part of the prescription drug business, but they can have an outsized impact on how much you pay.

Source: NOLA.com

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Q1: What role do pharmacy benefit managers (PBMs) play in the prescription drug market?

A1: Pharmacy benefit managers (PBMs) act as third-party administrators in the prescription drug programs for various health plans. They manage formularies, set up rebate payments, process prescription claims, and operate as intermediaries between pharmacies, drug manufacturers, wholesalers, and health insurance plan companies. As of 2023, PBMs manage pharmacy benefits for 275 million Americans, with the three largest PBMs controlling about 80% of the market.

Q2: How has House Bill 264 proposed to change the role of PBMs in Louisiana?

A2: House Bill 264, introduced in the Louisiana Legislature, aims to ensure that PBMs pass on prescription drug rebates directly to employers or health plan sponsors. The bill seeks to prevent PBMs from absorbing these savings, thus promoting transparency and potentially lowering prescription costs for consumers.

Q3: What are some criticisms of PBMs regarding their impact on drug prices?

A3: PBMs are criticized for pocketing too much of the savings from negotiated drug prices. Critics argue that PBMs use their power to block some drugs from coming to market and that consumers do not receive enough of the negotiated discounts. This has led to lawsuits and bipartisan criticism for unfair business practices.

Q4: What recent legislative actions have been taken to regulate PBMs in Louisiana?

A4: Louisiana has proposed new models for prescription drug management that involve increased transparency in PBM operations. This includes requirements for PBMs to obtain permits from the Board of Pharmacy and to comply with the Louisiana Pharmacy Practice Act, ensuring they administer prescription drug programs fairly.

Q5: What impact could the proposed changes to PBM operations have on consumers in Louisiana?

A5: The proposed changes could affect all Louisiana residents who purchase prescription drugs, especially those needing specialty drugs for conditions like diabetes and neuropathy. By mandating rebate transparency and regulating PBM practices, consumers might experience reduced drug prices and better access to necessary medications.

Q6: How do PBMs justify their role in the healthcare system despite criticisms?

A6: PBMs argue that they secure savings on prescription drugs for employers and patients by negotiating prices and providing a range of options for quality drug coverage. They claim that drug prices set by manufacturers are the real issue, rather than their practices.

Q7: What are some potential benefits of removing PBMs from the drug pricing model, as suggested by some companies?

A7: Companies like Mark Cuban's Cost Plus Drugs suggest that removing PBMs can lower drug prices by eliminating the middlemen and adopting a cost-plus pricing strategy. This approach aims to make generic drugs more affordable by directly negotiating prices with manufacturers and passing savings to consumers.