SB 432 – Lots of Treats for Pharmacists – and Bad News for Consumers

August 27, 2019

Anti-Pharmacy Benefit Manager (PBM) legislation has been pushed by big pharma this year, and for an obvious reason – their bottom line. HB 534, the “Pharmacy Benefits Manager Licensure Act” would have massively hampered the ability for your insurer’s PBM to negotiate the price of drugs.  This would have resulted in higher costs of medication, which in turn would mean higher health insurance premiums.

It was the kind of bill that would have hit North Carolina’s families and businesses - already struggling with rising health care costs - hard.

What is a PBM? A Pharmacy Benefit Manager (PBM) is a company hired by health insurance providers to run the prescription drug part of your health insurance benefits. PBMs negotiate prices of medicines with drug companies, prices of medicines and services with pharmacies, submit prescription claims to your health plan, help make sure medicines are used correctly, and may operate pharmacies to fill prescriptions.  PBMs use the buying power of all their customers put together along with other services they provide to play a vital role in controlling the runaway prices for prescription drugs.

A new iteration, SB 432, is designed to make pharmacists happy by including language that protects pharmacies - even low-quality ones - from penalties imposed by PBMs related to their performance.  It also includes other protections that would make it more difficult for PBMs to remove underperforming pharmacies from their networks.


URGENT: HB 432, which will enable Big Pharma to raise drug costs even higher, just moved one step closer to passing. 


But most concerning to consumers are provisions designed to weaken the ability of PBMs to conduct oversight of cost, safety and quality. 

One of the things PBMs can do when they negotiate on your behalf right now is to protect you from pharmacists who want to add extra fees for their services, like shipping and handling charges. With SB 432, that protection would be a thing of the past:

The above sub-section is, ironically, in the section entitled “Consumer Protections.”

In another section, the pharmacist is guaranteed the right to dispense any drug allowed under its license. That sounds logical, but eliminates crucial safety, quality, and cost checks the PBM can currently provide. The PBM would no longer be able to insist pharmacies dispensing specialized medicines for chronic or complex conditions have special training for their pharmacists.

This would be like going to your family practice doctor for a highly specialized disease like multiple sclerosis, cancer, or rheumatoid arthritis. Sure, the doctor was taught about these diseases in medical school and their medical license technically allows them to manage the disease, but they do not focus all day or have in-depth training on that specific condition. This bill allows pharmacies to get around the specialization PBMs now require for pharmacies to dispense specialty medicines and limits the PBM’s quality oversight.

It is also a backwards way of thinking about reimbursement. As the rest of the health care system is moving toward paying for value of care, the pharmacists want to still be reimbursed on a fee-for-service basis – regardless of the quality or outcome of that service.

Worse, the bill guarantees that pharmacists be reimbursed the net cost of the drugs they distribute – no matter the price they pay. This takes away any market driven incentive the pharmacist has to find the lowest price for the drugs they dispense. Pharmaceutical manufacturers benefit from this by having one less check on their prices, and we all pay for it in the form of higher premiums.  

Taken as a whole, this bill is nowhere near as bad for costs as HB 534 would have been, but it still includes a lot of the same language and is generally unfriendly to consumers.  Those shipping and handling fees are likely to be small potatoes in the greater scheme of our rising health care costs, but most consumers will find them unwelcome on top of the cost of their medication.

The bill is loaded with gifts to pharmacists. It would be nice to see our legislature put similar effort into providing relief to patients struggling with the rising price of drugs.

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Action Needed

Tell your representative to say "no" to higher drug costs

We’ve told you about big Pharma’s brazen attempt to gut the last remaining protection for patients against runaway drug prices.

Now the most profitable industry in the world is quietly pushing a bill through the state legislature that would cripple pharmacy benefit managers (PBMs), which negotiate lower drug costs for North Carolinians.

We cannot let big pharma use the law to eliminate our only advocate in price negotiations.


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