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Pharmacists Can Share Lower, Generic Drug Costs Under Senate-Passed Bill

February 22, 2022

Pharmacies would be prohibited from participating in contracts that bar them from disclosing prescription drug costs and the price tags of similar products, under legislation that unanimously passed the Senate. 

In 2017, the state of Michigan reported 32% of residents aged 19 to 64 years-old stopped taking their medication as prescribed due to the costs. Simultaneously, a pharmacy could be enwrapped in a contract with a pharmacy benefit manager (PBM) with a preference for a specific drug product, based on the negotiations they conducted behind the scenes. 

To kick off 2022, the Senate Health Policy and Human Services Committee prioritized PBM reform, with aspirations of reducing drug expenses and delivering more transparency on how the price sticker on a medication product comes to be. 

PBMs are responsible for setting up arrangements with drug manufacturers and pharmacies. Nationally, they have been placed into a negative limelight. A 2020 report found more than half of the total spending on brand-named drug products were infused into the supply chain, which includes PBMs instead of the manufacturers. 

The state’s Prescription Drug Task Force – which was initiated by Gov. Gretchen Whitmer’s office – has recommended authorizing pharmacists to talk about cheaper generic drug options with consumers. 

Additionally, the U.S. Food and Drug Administration illustrated that, on average, generic medications can cost up to 85% less than their brand-named counterparts. Those supporting the legislation argue that HB 4351, by Rep. Karen Whitsett (D-Detroit), and HB 4352, by Rep. Sue Allor (R-Wolverine), could offer relief as out-patient prescription costs are projected to jump by 8.5% this year – including specialty medications. 

“I find the practice of these contractual clauses abhorrent to a patient-centered system of care,” said Director Andrew Sebolt of HomeTown Apothecare. “While we do not engage in these clauses at Apothecare, I thank the committee for working on a bill that seeks to remove them. A pharmacist has the inherent right and duty to take care of his or her patients, and this includes educating them on a medically appropriate and less expensive drug.” 

Sebolt, a general manager of an Oceana County pharmacy, submitted a letter to the Senate committee, warning that the lawmakers should make sure PBMs are also outlawed from creating anti-disclosure contracts as a safety measure for pharmacies and their abilities to compete. 

The legislation as passed in the Senate would additionally: 

– Prohibit a PBM from obligating a patient to pay a copay that was greater than the selling cost of the drug dispensed to the patient;

– Ban PBMs from charging pharmacies differently based on whether or not one is a 340B entity, meaning they can be flexible with federal resources and provide to more eligible patients. 

“It doesn’t matter who you represent – if it’s the Upper Peninsula or it’s the city of Detroit — this is affecting all,” said Senate Health Policy and Human Services Committee Chair Curtis VanderWall (R-Ludington) in a January interview. “What we’re looking at now is the continued cost of healthcare and the fear of – number one – the state of what the pandemic has done…and some of these bills reel in the way PBMs themselves have accountability.” 

On Tuesday, the Senate unanimously passed HB 4348, mandating PBMs file a yearly transparency report with the Michigan Department of Insurance and Financial Services (DIFS). The department would later compile the reports and submit them to the Legislature. The process is estimated to require three extra DIFS employees to serve a full-time operation. 

“This bipartisan legislation will help us lower the cost of prescription drugs for Michigan families,” Whitmer said in an official statement. “We must continue working together to improve transparency in health care, hold accountable people and corporations profiting from skyrocketing prices and make life-saving, essential medication like insulin affordable for every Michigander who needs it.” 

The Governor said she looks forward to signing the PBM legislation.

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