NCPA Endorses Kansas Legislation to Reduce Costs of Prescription Drug Middlemen

Published Online: Thursday, March 13, 2014
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Alexandria, Va. Mar. 13, 2014 - The National Community Pharmacists Association (NCPA) sent a letter of endorsement of HB 2734 to State Rep. Scott Schwab (R – Olathe), Chairman of the House Insurance Committee. If enacted, this legislation would create a fiduciary duty for pharmacy benefit managers (PBMs) to act in the best interest of their clients—in this case, the state-sponsored and taxpayer-funded plans—without changing the current relationship between pharmacies and the PBMs.

The letter notes, "NCPA has long championed the need for both federal and state oversight of PBMs due to the problems our members and their patients continue to face in dealing with these largely unregulated entities. PBMs have been permitted to operate virtually unchecked since their inception."

The letter continues, "The provisions of HB 2734 would simply require that PBMs act as a fiduciary for the health plan and as such, act in the best financial interest of the state—rather than utilizing the health plan's drug spend for their own financial gain."

Too often the PBMs put their own corporate profits over the best interest of their clients. In fact in many cases, as illustrated on, the PBMs charge the health plan one price for a prescription while reimbursing the dispensing pharmacy at a lower rate and pocket the difference, also known as the "spread." This practice drives up costs to plan sponsors. Further, an article in Fortune magazine demonstrates the lack of PBM transparency often leads to higher costs to plan sponsors. HB 2734 would address this problem by increasing transparency between the state and its contracted PBM. This bill does nothing more than ensure the state is being provided with the most cost effective service possible in relation to its prescription drug benefits.

"NCPA has consistently supported state efforts to address problems in the PBM industry," said NCPA CEO B. Douglas Hoey, RPh, MBA. "We are proud to continue to support the legislative efforts in Kansas. We do not doubt that the PBMs will vigorously oppose these efforts and make claims that the bill will increase costs. We urge legislators to look past the rhetoric and focus on the facts. The bill's fiduciary duties can be accomplished discreetly without public disclosure, and the transparency requirements are for the benefit of the plan sponsors—the state of Kansas."

Hoey continued, "This bill goes a long way to reducing health care costs and protecting patients. No longer will PBMs be able to switch a patient's prescribed medication to a similar medication to increase profits, and no longer will deals made with manufacturers be a secret."

NCPA urges the quick passage of this bill and for other states to consider it as a model.
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