Gov. Asa Hutchinson told reporters Monday he will call lawmakers back to the State Capitol shortly after the ongoing fiscal session to pass legislation to address growing concerns on rising health costs associated with so-called PBMs, or pharmacy benefit managers.
Hutchinson is calling the special session after Senate President Pro Tempore Jonathan Dismang, R-Searcy, and Speaker of the House Jeremy Gillam, R-Judsonia, wrote letters Friday (Feb. 16) to the popular Republican governor requesting the extraordinary legislative meeting in March or April to deal with the ongoing issue of rising drug costs with PBMs. After reflecting over the letter from the two legislative leaders over the weekend, Hutchinson said he decided to call the session if Dismang, Gillam and other legislative leaders can reach a two-thirds consensus of the full General Assembly to speedily approve the legislation.
“As I mentioned in my State of the State at the beginning of the fiscal session, I talked about the very important urgent need to find a remedy for our pharmacists that are receiving inadequate reimbursements for their prescriptions. This is a real problem simply because our local and independent pharmacists are in integral and critical part of our health care system in Arkansas,” Hutchinson told reporters at the media availability held at the Governor’s Conference Room at the State Capitol.
Hutchinson added: “If the (pharmacists) are not being reimbursed at the proper rate, then they go out of business. That’s a problem for our state.”
PBMs have become an issue since Jan. 1, when Arkansas Blue Cross and Blue Shield began contracting with CVS Caremark as its pharmacy benefit manager. However, state’s pharmacists claim they are losing money on many transactions and that CVS Caremark, which also contracts with insurance provider Ambetter, has been illegally keeping too much of the insurers’ payments that belong to them. CVS Caremark has said it reimburses pharmacists at competitive rates and provides a cost-effective benefit for its clients.
“The most obviously solution to this as I’ve mentioned is a market-based solution that we are getting closer to resolving,” Hutchinson said. “I know that the (insurance) carriers as well as the PBMs and pharmacists have worked together trying to alleviate this challenge and raise the reimbursement rates. That’s an ongoing process, but I think they are close to having some beneficial results from that.”
SEEKING ‘MARKET-BASED’ SOLUTION
Hutchinson said he urged the different parties to continue negotiations on a remedy, but added that the letter from Dismang and Gillam advised him that there is a growing sentiment in the General Assembly to give the Insurance Department oversight authority over PBMs.
“As a result of this information, I will call a special session of the General Assembly following the fiscal session to address this issue. … And this is subject to a consensus being reached by the (Legislature) on the language of that bill,” Hutchinson said.
Dismang recently said the issue with pharmacy benefit managers (PBMs) has “occupied a lot of our conversations at the Capitol.”
“With all the policy discussion that we’re having, it’s been hard to focus on the appropriations and actual budget matters of the state, and we really feel like we need to refocus the members by giving some assurance that these items would be dealt with,” said the Senate leader.
Hutchinson said he has not yet decided on a date for the two or three-day special session but reiterated he would prefer a “market-based” solution streamline oversight, licensing and regulation of the PBMs under the banner of the state Insurance Department, which already does similar regulatory work.
During the 2015 legislative session, Arkansas lawmakers enacted Act 900 that ended PBMs’ ability to reimburse independent long-term care (LTC) pharmacies and others dramatically less than the actual cost of acquiring and dispensing generic drugs. PBMs are third party entities that oversee the administration of seniors’ Medicare Part D prescription drug benefits and act as middlemen between insurance companies and pharmacies to lower pharmacy payments and drug costs.
Act 900 first requires independent LTC pharmacies and others to be paid at least as much as PBMs’ wholly-owned affiliated entities and, secondly, requires PBMs to update their maximum allowable cost (MAC) drug pricing lists weekly. MAC lists are used to determine LTC pharmacy reimbursement levels. The issue of rapidly escalating generic prices coupled with unduly slow adjustments to MAC lists is a primary causal factor driving reform efforts in several states, including Arkansas, Hutchinson said.
Besides the legislation to regulate PBMs, which would make Arkansas the first state to do so, the special session would also address clean-up legislation on open containers of alcohol in motor vehicles. Before a new law was passed in the 2017 session, it was perfectly legal to drive in Arkansas with an open can of beer or bottle of whiskey sitting in the driver’s cupholder.
Rep. Mat Pitsch, R-Fort Smith, said the legislation did not match federal requirements, though the intent was to do so. Because of that, $11.6 million, or 2.5% of all federal funds the state receives for highways, would have to be dedicated to safety and training expenditures dictated by the federal government. needs. House Resolution 1007 filed last week by Pitsch would give the flexibility to spend that money on other needs.
GOVERNOR: NO GUN LEGISLATION
Hutchinson bristled when asked if the lawmakers will take up legislation during the special session that revisits the controversial “guns on campus” legislation that dominated the 91st General Assembly a year ago.
Resolutions filed at the beginning of the fiscal session last week by Rep. Bob Ballinger of Berryville and Sen. Trent Garner of El Dorado in the House and Senate, respectively, removes the requirement that all instructors and concealed carry courses provide training for enhanced concealed carry endorsements. The clean-up bill also seeks to clarify the cost of training for a concealed carry permit in Arkansas.
In addition, House and Senate resolutions filed by Rep. Greg Leding of Fayetteville and Sen. Will Bond of Little Rock, both Democrats, would prevent a concealed handgun in university dorm rooms or residence halls in Arkansas.
“This special session is not about gun legislation. I don’t expect (those bills) to be on the call,” Hutchinson stressed, later adding that the Ballinger-Garner resolution could be fixed through the Arkansas State Police’s 120-day rulemaking process for Act 562 signed into law in March. That bill, which went into law on Sept. 1, allows for permit holders with enhanced training to have guns on college campuses and an expanded list of public places in Arkansas.
By law, legislators cannot consider non-budget related bills during the fiscal session unless there is a two-thirds vote in favor of a resolution. The deadline for filing appropriation bills and non-appropriation legislation with an identical resolution approved by the legislature is Feb. 26. The ongoing fiscal session that begin on Feb. 12 is expected to end March 13 unless there is a three-fourths vote to extend it an additional 15 days.
After Hutchinson’s press event, Democratic Party Chairman Rep. Michael Gray, D-August, said he believes there is enough support among lawmakers for a special session to approve legislation to regulate PBMs.
“To the governor’s point, I think we want to find a consensus before we go into special (session),” said Gray. “We prefer sometimes only to deal with things during the regular legislative session, but this is too important to small towns and independent business owners in Arkansas for the governor not to address it.
“As many times as I am in disagreement with the governor, this time it is too important not to support,” Gray said.