The pharmacy regulations to watch
Here is a quick summary of this edition of the Regulatory Update:
- New federal bill would expand the authority of the Federal Trade Commission over PBMs
- First 10 Medicare Part D drugs selected for price negotiations
- Bill increases access to opioid use disorder drug buprenorphine
- Appeals Court hears case threatening ERISA protections for self-funded plans
- Several states introduce bills expected to adversely impact PBM operations
Federal PBM legislation
The Pharmacy Benefit Manager Transparency Act of 2023 arrived in the Senate on Jan. 26, 2023. This bipartisan bill expands the authority of the Federal Trade Commission (FTC) over PBMs. The bill requires PBMs to choose between spread pricing or 100% rebate pass through. It also creates extensive new reporting rules beyond the existing Consolidated Appropriation Act.
Opponents warn that, if passed, the new law would eliminate or restrict many tools PBMs use to keep drug prices down. They also fear the law would egregiously expand the authority of the FTC by placing it in the middle of private business dealings.
Optum Rx continues to partner with Pharmaceutical Care Management Association. Together, we advocate for client choice and promote competition as the best way to lower prescription drug costs.
Medicare Drug Negotiation
CMS announced in January that the first 10 Medicare Part D drugs selected for price negotiations under the Inflation Reduction Act (IRA) will be made public by Sept. 1, 2023.
Provisions of the IRA require Medicare to negotiate prices for a certain number of high-cost, brand drugs lacking generic or biosimilar competition.
Once the list is published, Medicare will begin talks with drug manufacturers. The process is slated to end by Aug. 1, 2024. The “maximum fair price” for each drug will then be made public by Sept. 1, 2024. The negotiated drug prices will take effect in January 2026.
On March 15, CMS released more information on how it intends to implement the program and is seeking comment from stakeholders on several aspects of Medicare drug negotiation.
Why this matters: CMS continues to release guidance on the specifics of the Medicare Drug Negotiation program, some of which is final and other of which is open for public input.
Buprenorphine restriction lifted
Practitioners no longer need to submit a Notice of Intent (also called an “X waiver”) to prescribe medications for opioid use disorder (OUD) such as buprenorphine. Removal of the federal requirement was part of the Consolidated Appropriations Act of 2023.
Under the new law, all practitioners who have a current DEA registration that includes Schedule III authority may now prescribe buprenorphine for OUD if permitted by applicable state law.
Why this matters: Previous requirements restricted who can prescribe buprenorphine. The elimination of this rule will increase access to buprenorphine for those patients in need. This change did not require any implementation action for Optum Rx. As long as a prescriber had an NPI and valid DEA, there would not have been any edits to check for X waiver status.
Mifepristone in certified pharmacies
Earlier this year, the Food and Drug Administration (FDA) approved a Risk Evaluation and Mitigation Strategy (REMS) program for mifepristone. The REMS includes the definition and requirements for a “certified” pharmacy.
Mifepristone (Mifeprex and one generic) and misoprostol (Cytotec) were approved by the FDA in 2000 to be used together for pregnancy termination. Now that the certification process has been approved, pharmacies can achieve certification by agreeing to a number of requirements.
Why this matters: Mifepristone will become available at some FDA-certified retail pharmacies and covered under the prescription drug benefit, subject to state laws and regulations.
ERISA preemption litigation
PCMA v. Mulready is an important case on appeal to the U.S. Court of Appeals for the Tenth Circuit that could impact protections for ERISA self-funded plans. Congress enacted ERISA to protect beneficiaries. ERISA’s preemption provision is intended to prevent states from interfering with the national administration of ERISA plans and intruding on plan benefit designs.
At issue in the case is an Oklahoma state law that interferes with a health plan’s pharmacy network structure. The provisions in the law:
- Eliminate mail-order-only networks (including specialty networks) by requiring all pharmacy networks to meet certain geographic restrictions
- Require inclusion of any willing pharmacy into a plan’s preferred network
- Prohibit use of cost-sharing discounts to incentivize use of particular pharmacies
- Prohibit terminating a pharmacy’s contract based on whether one of its pharmacists is on probation with the State Board of Pharmacy
The Court of Appeals has requested the U.S. government to file an amicus brief, stating the federal government’s position on ERISA and Part D preemption. Optum Rx, directly and through PCMA and other industry partners, has advocated for the federal government to preserve and protect ERISA preemption.
Why this matters: The outcome of this case could have widespread impact on long-standing protections under ERISA for ERISA self-funded plans to structure their benefit plans in a particular manner.
Key state legislation updates
Colorado state legislators introduced legislation to prohibit health insurers and PBMs from using spread pricing arrangements in contracts for the provision of pharmacy benefits, including for self-funded ERISA plans.
The bill also seeks to impose new reporting requirements on health insurers and PBMs regarding the costs of prescription drugs, drug rebates, and spread pricing arrangements. The proposal is a priority for Gov. Jared Polis (D-CO).
State Sen. Jason Broduer (R-Sanford) introduced Senate Bill 1550 and State Rep. Linda Chaney (R-St. Petersburg) introduced House Bill 1509. The bills prohibit health insurers and PBMs from using spread pricing arrangements in contracts for the provision of pharmacy benefits, including for self-funded ERISA and Medicare Part D plans.
The legislation would also prohibit the use of specialty networks and mandatory mail prescription refills. The legislation has been filed with the support of Gov. Ron DeSantis (R-FL).
Missouri House Bill 197, an anti-PBM omnibus bill, requires PBMs to pay pharmacies their actual acquisition costs for drugs, if those costs are higher than the MAC list reimbursement amount. HB 197 also prohibits a PBM from paying a non-affiliated pharmacy less than an affiliated pharmacy for providing the same pharmacy services.
The proposed legislation also prohibits the use of key PBM tools such as the use of pharmacy accreditation standards and preferred pharmacy networks that help reduce costs for clients and patients.
North Carolina House Bill 246 prohibits spread pricing, pharmacy transaction fees and a PBM deriving any income from a pharmacy or insured. Additionally, the bill requires a minimum pharmacy reimbursement amount based on NADAC rather than MAC list, and reimbursement parity between PBM-affiliated and non-affiliated pharmacies and any willing pharmacy.
The House Insurance Committee advanced House Bill 1843 which would transfer the power to regulate, investigate and enforce pharmacy network access for PBMs from the Insurance Commissioner to the Attorney General.
The House Insurance Committee advanced House Bill 2853. The bill stipulates that PBMs’ traditional pricing arrangements, either directly or through an intermediary, are prohibited. The bill also mandates that a majority of a PBM’s P&T committee consist of practicing physicians and pharmacists licensed in Oklahoma, among other provisions.
The Senate Retirement & Insurance Committee advanced Senate Bill 549. This bill would impose additional regulations on a health plan that utilizes a PBM. These include requiring health plans to electronically submit a network adequacy audit to the Insurance Department on a semiannual basis. It would also require a PBM to adjust the Maximum Allowable Cost list above a pharmacist’s acquisition cost in certain circumstances.
Optum Rx and PCMA have defeated troubling anti-PBM legislation in Mississippi, Virginia and Utah.
- In Mississippi, a comprehensive anti-PBM bill, SB 2484, was defeated. Among other things, the bill banned spread pricing, mandated pharmacy reimbursement levels, prohibited pharmacy fees and included anti-steering measures.
- In Virginia, no major anti-PBM bills will move forward this year. Some of the bills that were defeated included a cap on insulin copay amounts and mandatory point-of-sale rebates. Also defeated was an ERISA bill where those administering self-insured or self-funded employee welfare benefit plans would have been subject to provisions related to pharmacy benefits management. This would have included certain prohibited conduct and recordkeeping requirements.
- In Utah, a bill that would prohibit copay coupon accumulator programs failed to advance for further consideration.
Why this matters: State legislation regulating PBMs can greatly impact Optum Rx practices. Therefore, they can have significant cost impacts on Optum Rx clients and their members. Optum Rx is partnering with PCMA and other industry allies to educate policymakers about how the legislation will have adverse impacts on employers and consumers.