New Idaho law to regulate pharmacy benefit managers. Will it reduce prescription drug costs? • Idaho Capital Sun

Critchfield said Idaho’s bill shares many of the federal legislation’s goals: “to enhance PBM oversight and transparency, strengthen Americans’ access to the pharmacies of their choice, and combat harmful practices that undermine market competition and drive up prescription drug costs.”

Redman told the Sun he worked with Crapo’s office on his Idaho bill. But Critchfield said Crapo was not involved in the Idaho bill. 

“Our office is in contact with state legislators regularly and communicate on shared problems at the state and federal level, but Senator Crapo was not involved in the drafting of the state legislation,” Critchfield said in a statement. 

The Idaho law requires a range of reporting — publicly and to health care entities — and bans and requires certain practices starting Jan. 1, 2025.

Here’s some of what the law will do.

PBMs licensed in Idaho must report the following to the Department of Insurance by Jan. 1:

• The difference between amounts PBMs pay to each pharmacy, on behalf of insurance plans;
• Reasons why any drugs are moved or reassigned formulary tiers with higher costs, copayment, coinsurance, deductibles or lower reimbursement to pharmacies; and
• Differences in reimbursement, fees or other price affiliation that PBMs that own, control or are affiliated with a pharmacy provide to other pharmacies.

The PBMs must:

• Pass through 100% of manufacturer rebates to PBMs, including payments and discounts;
• Include “network adequacy requirements” at or above Medicare Part D standards, including not limiting a network to only affiliated pharmacies or requiring mail-in prescriptions, “unless the prescription drug cannot be acquired at any retail pharmacy in the” PBMs’ “network for the covered person’s pharmacy benefits plan or program.”

To each health insurance plan, payer, and pharmacy that a PBM works with, PBMs must fully disclose:

• Cost, price and reimbursement of prescription drugs;
• Fees, markups and discounts charged or imposed by PBMs; and
• All rebates, discounts, administration fee or other payment or credits PBMs receive from drug manufacturers.

And the law bans “spread pricing,” defined as a practice in which PBMs charge pharmacy benefit plans “a different amount for pharmacist services than the amount the (PBM) reimburses a pharmacy.” 

Though the bill’s fiscal impact didn’t estimate consumer drug cost savings, Redman says it’s likely patients will be passed down savings to the tune of hundreds of millions. 

And he was skeptical about health industry projections that the law would raise costs, noting that there’s often common ownership between insurance companies and PBMs.

“When they’re being forced to provide more data and transparency, as well as pass through that rebate to the patient that is a profit generator for them, they’re going to be unhappy with that, right?” Redman said. “So to say that it’s just a misrepresentation is probably putting it lightly.”

Some of the bill’s provisions might cost the state of Idaho almost $11 million in drug expenses in the first year, and that would grow to $126 million over the next decade, the Pharmaceutical Care Management Association estimates.

“The proposed Idaho legislation will seriously undermine the ability of PBMs to control drug costs and manage their pharmacy networks, and as a result drug spending in Idaho will soar,” the association said, adding that its projection factored in the bill’s provisions on restricting using preferred pharmacy networks, mail-in pharmacies and mandating a dispensing fee.

But the association says that PBMs, over 10 years, will save Idahoans $5.2 billion in all insurance markets. Over 1.6 million Idahoans are covered by PBMs, the association estimates.

Head said no state PBM law has reduced drug costs for consumers. He said Idaho’s bill went “much further than what we typically see in other states.”

Head says the Pharmaceutical Care Management Association, which he said represents over a dozen PBMs, doesn’t oppose transparency. But he questioned the focus on PBMs.

“The focus on prescription drugs in general is the right focus. But I think it’s incredibly short sighted to think that just looking at one entity in the supply chain. And by the way, we have no impact on what pharma charges for a drug,” Head said. “… All we do is try to negotiate them to get a lower cost for the payer.”

Redman, who owns several pharmacies, said he got involved after seeing how PBM practices affected his businesses, and he said he consulted rural pharmacists across the state. In legislative debate, Redman said he disclosed his ownership of pharmacies and said his first-hand experience was helpful.

“I think the beauty of being a citizen Legislature, from folks from all walks of life, … and a part-time Legislature, is that we can kind of come up with things we see in our direct sphere, or what constituents are reaching out to us about,” Redman told the Sun. “… If you’re somewhat of a subject matter expert in a field, you probably have more knowledge and you’re able to inform the whole body better than if you didn’t. It’s the same we see with … cattlemen or dairy farmers bring in legislation.”

Redman anticipates the Idaho Legislature will consider more PBM legislation in the future.

“Because of the complications, and truthfully, how slick the PBMs are — they hire the best lawyers in the world to try to create loopholes in contracts — I think this is going to continue to come back. I think this is like a maintenance bill every year to keep these in check,” Redman said. “But again, at the end of the day, this is big pharma trying to create a monopoly, to squash little guys, to create, again, a one-payer system that they can control completely and drive cost to the moon.”