Recently, Wisconsin law makers introduced new legislation to reform issues involving Pharmacy Benefit Mangers (“PBMs”) in Wisconsin. Wisconsin joins several other states across the country, which have implemented new laws, rules, and regulations to regulate PBMs. PBMs act as middlemen between pharmacies and patients and have come under scrutiny in the last several years. In response many states, including Wisconsin, are working to address some of the most problematic business practices by PBMs and promote greater transparency for prescription medications.
Wisconsin’s new bill, coined “Cole’s Act,” is named in memory of 22 year old Cole Schmidtknecht who died from an asthma attack after the out-of-pocket cost of his asthma inhaler jumped from $66 to over $500, making the inhaler unaffordable. Not only have Cole’s parents filed a lawsuit against OptumRx (one of the three biggest PBMs in the country), but Wisconsin legislators also introduced new legislation targeting the most troublesome pricing and reimbursement practices by PBMs. Senate President Mary Felzkowski, R-Tomahawk and State Representative Todd Novak, R-Dodgeville introduced the Bill. The goal of this legislation is to not only protect patients, but also to support independent pharmacies.
Summary of Current Wisconsin Regulations on PBMs
A. Current PBM Regulations in Wisconsin
Although Cole’s Act will enhance Wisconsin’s PBM regulations, Wisconsin’s Office of the Commissioner of Insurance (“OCI”) already currently regulates PBMs. Under current regulations, PBMs must obtain a license from OCI before operating in Wisconsin. In addition, PBMs must submit annual reports that include the aggregate rebate amount the PBM received from all pharmaceutical manufacturers, and the aggregate rebate amount retained by the PBM and not returned to the plan sponsors. Current regulations also limit the amount an insured must pay at the point of sale to either (1) the lower of the cost-sharing amount for the prescription drug under the terms of the plan or policy or (2) the amount the enrollee or insured would pay without using any health plan of health insurance coverage. While enhancements appear to be on the horizon, Wisconsin’s current regulations already contain many beneficial protections.
B. Prohibitions on PBMs’ Control Over Pharmacy Networks
The new proposed regulations under Cole’s Act also include limitations on PBMs’ control over participation in a pharmacy network. More specifically, under the new proposed regulations contained in Cole’s Act, PBMs must allow patients to use any licensed pharmacy in the state without penalizing the patient. The legislation will also require PBMs to pay pharmacies a dispensing fee that is at least equal to what the state pays through its Medicaid program. In addition, the bill requires PBMs to reimburse pharmacies within 30 days to cut down on delays for drug reimbursement. This enhancement to Wisconsin’s PBM regulations is intended to level the playing field for independent pharmacies that are often not treated equally to PBM affiliated pharmacies.
C. Promoting Fair Reimbursement
Wisconsin’s proposed regulations also seek to increase PBM accountability as it relates to reimbursement practices. Specifically, the bill aims to prohibit PBMs from changing their drug formulary coverage outside of the coverage renewal period to prohibit the practice of reimbursing independent pharmacies below the cost it takes to fill the prescriptions. The intended result of Cole’s Act is to not only support independent pharmacies, but also to lower out-of-pocket costs for patients like Cole.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies across the United States in challenging unfair and aggressive PBM practices, as well as in understanding new legislation. Contact us to speak with an attorney about how your pharmacy can leverage the protections afforded by the Pharmacy Benefit Reform Law and other laws governing PBMs. Independent pharmacies should familiarize themselves with the Law and consider hiring qualified legal counsel to ensure they are maximizing the protections and legal rights afforded to independent pharmacies throughout the country.
