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Minutes for HB2598 - Committee on Insurance
Short Title
Providing for enhanced regulation of pharmacy benefits managers and requiring licensure of such entities rather than registration of such managers.
Minutes Content for Wed, Feb 19, 2020
The Chairperson opened the hearing on HB 2598 for opponent testimony. Eileen Ma, Assistant Revisor of Statutes, briefed the members on the bill (Attachment 2)
Melodie Shrader testified in opposition to the bill. She said PBMs had been around for over 40 years. In the beginning, drugs were not a part of major medical policies. As drugs became more complex, they became more costly. The bill undermined a PBM's ability to negotiate prices and be more competitive. Further, the bill was protectionist in that it protected the smaller pharmacies In addition, parts of the bill were expressly preempted by the Employee Retirement Income Security Act of 1974 (ERISA) (Attachment 3).
Alexander Sommer testified in opposition to the bill. He said their firm was owned by 18 not-for-profit Blue Cross & Blue Shield insurers, subsidiaries and affiliates. He said PMBs didn't set drug prices, the manufacturers did. The transparency mandate in the bill was not meaningful because they had to keep proprietary information confidential. Their goal was not to take money away from pharmacies but to be efficient and the bill took away their ability to manage costs (Attachment 4)
Kandice Sanaie testified in opposition to the bill. She said their concerns involved transparency. The bill sought to obtain propriety information and asked that the language be amended to protect certain contracting elements. In addition, she believed there needed to be transparency from drug manufactures who actually set the drug prices. (Attachment 5).
Kristi Brown testified in opposition to the bill. The said their concern was the bill would not achieve the transparency the legislature wanted. The goal was to make sure their member businesses had competitive prices and believed the bill would increase costs (Attachment 6).
William Sneed testified in opposition to the bill. He said the bill could have unintended consequences and urged the committee to slow down and work together to resolve the issues. He said the goal of a PBM was to reduce costs and related he had never personally had a problem with his pharmacist filling prescriptions (Attachment 7).
Jay McLaren provided written testimony in opposition to the bill (Attachment 8).
The members asked questions of the opponents including: why mail-ordered prescriptions were more expensive than local pharmacies, use of name brand versus generic, rebates and how they worked, transparency issues "behind the curtain," disclosure of contract negotiations, how rebates passed through to the PBMs, A PBM's "claw back" against pharmacies, what other states had done with PBM legislation, the need for transparency about where money went, the ability of employee plans to seek other insurance options, and whether PBMs owning all along the supply chain was the best option for customers.
There being no other conferees or questions, Chairperson Vickrey closed the hearing on HB 2598.
The Chairperson announced the subcommittee (Chairperson Vickrey and Representatives Cox, Neighbor, Bishop and Waggoner) would meet after the meeting to discuss HB 2459.
The meeting adjourned at 5:15 PM.
