March 6, 2019

Community Pharmacists Support Bills to Take Drug Middlemen Out of Medicaid

AUSTIN -- Key legislators are taking steps to save taxpayers tens of millions of dollars per year by making prescription drug benefits in Medicaid more transparent and efficient.

Currently, Medicaid managed care organizations use pharmacy benefit managers (PBMs) to administer prescription drug benefits in Medicaid. PBMs act as middlemen between drug manufacturers and insurers. But a study authorized by the Legislature in 2017 and conducted by Deloitte found Texas could save up to $90 million per year by taking PBMs out of the Medicaid and Children's Health Insurance Program and instead using a single, transparent claims processor. The study also found that managed care organizations inflated state costs by about 6 percent, which led to an overpayment to PBMs of about $215 million.

On Wednesday, Reps. J.D. Sheffield, D.O. (R-Gatesville) and Richard Pena Raymond (D-Laredo) filed similar bills to take PBMs out of Medicaid and move instead to a simpler model based on the use of a pharmacy benefit administrator. Their bills address the concerns
raised in the Deloitte study and would help prevent overpayments to PBMs.

"There is no need for managed care plans and pharmacy benefit managers to exert this kind of control over prescription drug benefits in Medicaid," Rep. Sheffield said. "We have an obligation to taxpayers and patients to deliver these services better and more efficiently.
We have a responsibility to follow up on those findings and move forward with these reforms."

"I am mindful of the compelling interests of patients, providers, and our state taxpayers," said Rep. Raymond. "This important legislation will benefit all three groups by delivering the prescription drug benefit more efficiently with better patient outcomes."

Rep. Sheffield filed House Bill 3388 to address the issue. Rep. Raymond filed House Bill 3401.

"This reform would reduce taxpayer costs and improve prescription drug benefits in Medicaid," said Lee Ann Hampton, President of the Alliance of Independent Pharmacists of Texas and owner of Paris Apothecary. "There is no reason to spend Medicaid resources to pad
the profits of PBMs and managed care companies. Independent pharmacists support this reform because we know there's no need for PBMs in Medicaid."

States across the country have been taking action to rein in PBM abuses. Within the last 18 months, West Virginia, Kentucky, Pennsylvania, and Ohio have all questioned or taken steps to reform the MCO/PBM model.

"The reforms proposed by Reps. Sheffield and Raymond would lead to a more transparent Medicaid program and better continuity of care for patients, taxpayers and pharmacists," Hampton said. "This is a reasonable reform that makes good fiscal sense and will show
support for small businesses throughout Texas."

Texas pharmacists are encouraged to contact their State Representative and encourage them to submit a request to Co-Sponsor H.B. 3401 and H.B. 3388.  You can find contact information for your State Representative by clicking HERE.