State Laws Requiring PBM Transparency See Some Gains, Some Losses

By Sipkoff, Martin | Drug Topics, August 11, 2008 | Go to article overview

State Laws Requiring PBM Transparency See Some Gains, Some Losses


Sipkoff, Martin, Drug Topics


The battle by pharmacy benefit management (PBM) companies to limit fiduciary disclosure laws continues, with its trade group, the Pharmaceutical Care Management Association (PCMA), scoring a recent victory in the District of Columbia. But new laws in Maryland and a recent $9.5 million settlement between Express Scripts and 28 states means the ground may be shifting toward increased transparency.

"The Express Scripts settlement is the third of its kind. It marks movement," John Rector, senior vice president and general counsel for the National Community Pharmacists Association (NCPA), said. "The behavior of the PBMs over transparency is the major aspect of all three, as it is in the Maryland laws. And that law also directly affects the issue of audits, which is itself a big deal."

The issue of whether PBMs must function as fiduciaries for their clients has been addressed recently by at least 13 state legislatures and the District of Columbia, according to the National Conference of State Legislatures (NCSL). But PCMA officials said that, since 2003, 31 states have rejected such legislation, "realizing these proposals would provide drug manufacturers the opportunity to charge consumers and employers higher drug prices," according to Mark Merritt, PCMA president and CEO.

PCMA spokesman Charles Coté claims that "knowing that pricing would become public would make it much more unlikely for the manufacturers to provide the discounts that allow our members to save their clients money."

Maine's 2003 PBM fiduciary disclosure law, the Unfair Prescription Drug Practices Act, requires PBMs to pass on the volume-based discounts they get from drugmakers to their clients. It also requires a PBM who switches a prescribed drug to get physician approval for the switch tell the individual and the health insurance provider the cost of both drugs, and reveal payment the PBM is receiving to make the switch.

In 2005 the federal First Circuit Court of Appeals ruled that Maine has the authority to regulate PBMs, rejecting the PCMA claim that the federal Employee Retirement Income Security Act (ERISA) exempted PBMs from state laws. In 2005 the U.S. Supreme Court refused to hear a PCMA challenge to the First Circuit's decision.

The District of Columbia passed a similar law in 2004, known as the AccessRx Act. …

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State Laws Requiring PBM Transparency See Some Gains, Some Losses
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