Colorado passed House Bill 1227 earlier this year, which requires pharmacy benefit managers to register with the Division of Insurance (DOI) and abide by a number of patient protection and price transparency regulations. The division is authorized to enforce punitive measures for spread pricing, pharmacy anti-competitiveness practices, and other patient protection violations.
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DOI told State of Reform this week that it is working to implement various pieces of HB 1227 but has yet to adopt or issue any regulations.
PBMs are third-party administrators of prescription drug programs for payers, such as private insurers, that dictate which drugs are covered under plans without incurring additional out-of-pocket costs through preferred formularies and exclusion lists. PBMs leverage exclusive access to their formularies to negotiate rebates and discounts from drug manufacturers.
Market analysts estimate the PBM market to reach $622 billion in 2025 with a compound annual growth rate of 6.12% since 2020.
The Colorado Pharmacists Society (CPS) told State of Reform that it and other pharmacy stakeholders would be reaching out to DOI in the coming days regarding the implementation.
“CPS has recognized the deleterious impact of many PBM policies on the ability of Colorado pharmacists and pharmacies to effectively and proactively take care of their patients. Certain unfair policies of PBMs have had substantial negative impacts leading to decreased hours, staffing, and resources, and have drawn pharmacists away from taking care of patients.
Certain actions and practices continue to threaten the viability of these healthcare access points in many of Colorado’s rural and underserved communities. The passage of HB 1227 has created a means for Colorado to engage PBMs formally with the state and more effectively enforce already existing bipartisan laws that have been passed to address some of these issues. The DOI will be given specific resources and staff because of HB 1227, and the expected result will be a more concise and transparent process for PBMs to operate and for feedback from pharmacies to occur.”
— Emily Zadvorny, PharmD, executive director of CPS
Priscilla VanderVeer, vice president of public affairs at PhRMA, said the legislation fails to account for the fact that prescription drugs are already regulated at the federal level in terms of pricing and coverage under health plans. PhRMA was publicly opposed to HB 1227 and the state’s review of prescription drug affordability.
“When the government decides the price of medicines and the value of medicine—what medicines should [and should not] be paid for—that creates a system where the government is deciding what treatment the patient can and can’t get.
What remains unclear about this type of legislation at the state level is exactly how [officials] plan to implement [affordability reviews] in a way that will not impact or harm patients’ ability to get the medicines they need—that can be the medicines around now, but it could also be medicines that can be developed for the future.”
Over 50% of every $1 spent on brand medications goes back to the supply chain: insurance companies, governments, hospitals, distributors, and PBMs, according to VanderVeer.
She said policies should take actionable steps to reform issues within the prescription drug supply chain rather than regulating practices that impact the pharmaceutical industry’s ability to innovate and develop new medications.