The measure includes a half-dozen restrictions on other PBM practices the smaller pharmacies call anticompetitive.<\/p>\n
Pharmacy benefit managers, employed by health insurers, are powerful intermediaries in the drug-pricing chain. They determine which drugs are covered by health plans, arrange rebates from drugmakers, and dictate payments that pharmacies receive when selling covered drugs.<\/p>\n
The six largest PBMs manage more than 90% of the nation\u2019s drug sales. Most are owned by or affiliated with health insurance giants like UnitedHealth Group, Cigna, Humana, and Aetna.<\/p>\n
About 90 Montanan-owned pharmacies are not affiliated with national companies or PBMs, and 10 have closed in the past year, according to Josh Morris, who owns several small-town pharmacies in the state. Morris said his pharmacies lost $30,000 on underpaid drug claims last year and that they lose money on 90% of the brand-name drugs they dispense.<\/p>\n
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Representatives of independent Montana pharmacies say that without the changes provided by the legislation, more of their ranks will close, because they can\u2019t make ends meet on drug reimbursement prices imposed by what they say are \u201ctake-it-or-leave-it\u201d contracts from PBMs.<\/p>\n
\u201cWe\u2019re filling more prescriptions than ever before, but my employees haven\u2019t had a raise in three years,\u201d Morris said. \u201cOur reimbursements are down 60% since 2019.\u201d<\/p>\n
PBMs are mounting a concerted effort in the Montana Senate to kill House Bill 740, arguing it could throw a huge wrench into drug pricing in Montana that would increase consumer costs.<\/p>\n
\u201cNot only is it going to cost people, it\u2019s going to change fundamentally how prescription drugs are paid for in the state,\u201d said Tonia Sorrell-Neal of the Pharmaceutical Care Management Association, a trade group representing PBMs. \u201cIt takes away the options for employers who are paying for these health plans\u201d to keep drug prices low.<\/p>\n
The bill restricts mail-order options for drugs, limits when PBMs can audit claims, and imposes excessive reimbursements, she said.<\/p>\n
This battle between PBMs and independent pharmacies isn\u2019t playing out just in Montana \u2014 it has roiled statehouses across the country<\/a>, drawn the attention of Congress<\/a>, and could end up before the U.S. Supreme Court.<\/p>\n Last summer, the federal House Oversight and Accountability Committee<\/a> and the Federal Trade Commission<\/a> issued highly critical reports saying PBMs use pricing tactics that keep drug costs high, help pad PBM profits, and harm independent pharmacies.<\/p>\n New federal regulations<\/a> to crack down on PBMs had been included in a 2024 post-election budget bill before Congress but were stripped out at the last minute after a lobbying push by pharmacy benefit managers.<\/p>\n At least 20 states<\/a> have passed laws regulating PBM payments to pharmacies and several other states, including California, are considering legislation this year.<\/p>\n Oklahoma passed one of the most expansive laws in 2019. But PBMs sued and won a federal court ruling<\/a> that said the law does not apply to self-funded health plans, thus removing about two-thirds of the insured population from the law\u2019s jurisdiction.<\/p>\n Oklahoma\u2019s insurance commissioner last year asked the U.S. Supreme Court to overrule the decision, but the court hasn\u2019t decided whether to take the case. Attorneys general<\/a> from 31 states and the District of Columbia have asked the high court to rule in Oklahoma\u2019s favor; Montana\u2019s AG is not one of them.<\/p>\n In Montana, HB 740\u2019s regulations would apply to PBMs managing self-funded plans, said the state insurance commissioner\u2019s office, which so far supports the bill.<\/p>\n The key element of HB 740 is setting requirements on what PBMs must reimburse pharmacies for each prescription they fill, when that prescription is covered by a health plan using the PBM.<\/p>\n It says the reimbursement can be no less than 106% of the National Average Drug Acquisition Cost, or NADAC \u2014 which is determined by a survey of wholesale prices paid by pharmacies \u2014 plus a \u201cdispensing fee\u201d for each prescription.<\/p>\n The dispensing fee would be the same as what Montana\u2019s Medicaid program pays pharmacies \u2014 $12 to $18 per prescription, depending on the size of the pharmacy. The state Medicaid program also pays the 106% minimum reimbursement.<\/p>\n Montana pharmacies say the dispensing fee covers their basic costs and enables them to make a profit on most sales. Under contracts with most PBMs, the pharmacies say they get no dispensing fee.<\/p>\n The bill also requires other changes in PBM business practices that pharmacies say benefit PBMs and make it harder for independent pharmacies to stay in business.<\/p>\n For example, HB 740 says PBMs cannot offer better prices to pharmacies that they own, cannot charge after-the-fact fees that lower reimbursement rates, cannot slow-walk approval of contracts, and cannot lower payments for drugs sold past a \u201csell-by\u201d date imposed by the PBMs.<\/p>\n PBM and health plan lobbyists have attacked the bill for its breadth and detail, saying it\u2019s so extensive that nobody truly knows how it may affect prescription-drug markets and prices in Montana.<\/p>\n \u201cThis bill has too much,\u201d Bruce Spencer<\/a>, an attorney for the Mountain Health Co-Op, told the House Business and Labor Committee at the bill\u2019s first hearing in February. \u201cIt has unintended consequences that are severe in the financial world.\u201d<\/p>\n Laura Shirtliff, a spokesperson for the state auditor\u2019s office, said the bill\u2019s provisions should be narrowed, to target assistance for smaller pharmacies.<\/p>\n PBM lobbyists are telling lawmakers to kill HB 740 and instead pass a bill to study the prescription-drug market in Montana, with an eye toward possible solutions to help rural pharmacies.<\/p>\n \u201cI would say there are a lot of elements and factors that are impacting rural pharmacies\u2019 business,\u201d said Sorrell-Neal of the PBM trade group.<\/p>\n Supporters, however, said HB 740 needs to closely define exactly what\u2019s happening in the field, between PBMs and pharmacies, so those practices can be regulated.<\/p>\n As for waiting two years for a study? Pharmacy owners say that\u2019s too late, and that the time to fix the problem is now.<\/p>\n \u201cThe amount of damage that would be done in two years will never be able to be recovered from, in these communities,\u201d Matovich said. \u201cTen years ago, we maybe lost money on five prescriptions a month. Now, it\u2019s thousands of prescriptions a month.\u201d<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\nUSE OUR CONTENT<\/h3>\n