This week is the third week of the 2019 session. The pace of the session is beginning to pick up and we are beginning to hear more substantive bills in committee.
Last week, I presented Senate Bill 83 to the Senate Business and Labor committee. Senate Bill 83 is the first of several bills the Legislature will consider to address conduct by pharmacy benefit managers. A pharmacy benefit manager is a company that administers a drug benefit program for an employer or health insurer. Some of the largest pharmacy benefit managers in the United States are Express Scripts and CVS. Blue Cross/Blue Shield also owns a pharmacy benefit manager.
Senate Bill 83 is designed to stop anti-competitive and unjust practices occurring between pharmacy benefit managers and local pharmacies. The first part of the bill prohibits pharmacy benefit managers from imposing secret fees. As part of the payment process, a pharmacy will submit an invoice to a pharmacy benefit manager. Some pharmacy benefit managers then impose fees, which are not disclosed during the contracting process, to reduce the payment to the pharmacy. According to some testimony, pharmacy benefit managers are charging local pharmacies anywhere from $30,000 to $40,000 a year in secret fees.
The second part of the bill prohibits pharmacy benefit managers from charging patients a co-pay for medicine that is greater than the cost of the medicine. Charging a customer a co-pay greater than the cost of the medicine is nothing more than a way to rip a customer off. In fact, during the hearing, a representative from Blue Cross/Blue Shield said he could not defend the practice.
The third part of the bill prohibits pharmacy benefit managers from using the contracting process to prohibit a pharmacy from telling customers about more affordable drug options and from prohibiting a pharmacy from selling drugs through the mail. Many large pharmacy benefit managers run mail order operations. Pharmacy benefit managers try to prevent local pharmacies from selling drugs through the mail in order to prevent competition.
I am hopeful my legislation will advance out of committee. As a general rule, I do not support legislation that increases government regulation. However, I will support legislation which stops practices that are anti-competitive, hurt small business, and needlessly increase the cost of goods and services. We will take an initial vote on Senate Bill 83 this week. I will give you an update on Senate Bill 83 in my next report.