It has taken the Mississippi House a while to catch up, but a bill passed recently is a necessary beginning to reining in the pricing practices of pharmacy benefit managers — companies that are keeping much of the profits in the prescription drug business and putting independent pharmacies at risk of closing.
The Magnolia Tribune website reported that the bill, if it gets through the Senate and is signed into law, would require pharmacy benefit managers operating in Mississippi to report data to the state Board of Pharmacy to make sure the managers are compliant with state law.
The bill forbids pharmacy benefit managers from charging insurers more for drugs than pharmacists are paid, a practice through which the managers are accused of hoarding profits. It also requires them to report rebates and cost savings that they receive from drug companies, and requires drug manufacturers and health insurers to submit reports on wholesale drug costs.
The bill passed 88-8. That was a healthy majority, but the interesting thing about the vote is that another 13 House members were listed as absent or not voting, and nine other representatives simply voted “present.” That’s an unusually high number of lawmakers who chose not to make a decision.
Also interesting is that an advocate of small pharmacies was not happy with the bill.
The executive director of the Mississippi Independent Pharmacy Association said the bill would allow the state to collect information about pharmacy benefit managers, but not much more.
And through a statement read on the House floor by Rep. Stacey Hobgood-Wilkes, R-Picayune, the state Board of Pharmacy asked for the legislation to be amended to give the board more enforcement authority over pharmacy benefit managers.
The independent pharmacy leader said he supports a bill from Hobgood-Wilkes that would set up a standard pricing model for prescription drugs in the state that is based on national average costs.
House Speaker Jason White, author of the bill that passed, said lawmakers were not ready to approve such a pricing model, and he would vote against the legislation if it got to the floor. That may explain why so many lawmakers were reluctant to take sides.
An obvious comparison with pharmacy benefit managers is what’s happened to so many small businesses that, over the last four decades, got forced out of business by the likes of Wal-Mart, Target, Costco and internet commerce.
But there’s a huge difference between what happened there and what’s happening with pharmacies. In retail, Wal-Mart and other big companies became more efficient and made money selling at lower prices. Pharmacy benefit managers, if the allegations are true, are simply taking advantage of their pricing power as a middleman and refusing to pay independent pharmacies a fair share of the prescription transactions.
Sooner or later the Legislature will need to defend its constituents. Otherwise local pharmacies will start closing, and the public will notice.
