Washington is poised to impose new regulations on pharmacy benefit managers (PBMs) following the passage of Senate Bill 5213.
SB 5213 was approved in both the House and the Senate, following the Senate’s approval of the House’s amendments to the bill Monday. It will now need to be enrolled, then sent to the governor’s office. PBMs were created in the 1960s to perform the administrative transaction of processing prescription claims between insurers and pharmacies. They also set reimbursement rates for pharmacies.
The bill was discussed during a House Appropriations Committee meeting on Feb. 23. Jim Morishima, committee staff, said SB 5213 provides regulatory changes for healthcare benefit managers—entities that administer parts of insurance contracts for health carriers or public employees benefits programs—including PBMs.
SB 5213 prohibits a PBM from reimbursing pharmacies in an amount less than a contracted price with the insurer; requiring a consumer to pay more for medications than is authorized by law at the point of sale; requiring or coercing a patient to use PBM-affiliated pharmacies; and imposing different utilization management and other conditions across the PBM’s network, Morishima said.
“The bill prohibits retaliation against a pharmacy from participating in public proceedings, disclosing information on alleged illegal activity, or making complaints to or against a PBM,” Morishima said. “The bill also makes changes regarding mail-order pharmacies, including requiring a prior authorization before filling prescriptions via mail-order pharmacies.”
Jane Beyer, senior health policy advisor at the Washington State Office of the Insurance Commissioner (OIC), testified in support of SB 5213.
“The bill promotes greater transparency around PBM costs and fees by limiting spread pricing,” Beyer said.
Carolyn Logue testified in support of SB 5213 on behalf of the Washington Food Industry Association.
“We are always having to fight PBMs in terms of trying to keep the costs we get reimbursed for at a level where we aren’t operating at a loss when it comes to saving a particular patient. It’s important that we’re providing that level of transparency, that we’re making sure mail-order is not something that’s forced on someone that may need to come into one of our pharmacists, and actually talk about what they’re taking in person in order to make sure they’re taking it correctly. It’s very important to keep a pharmacy network available in the state.”
— Logue
Tonia Sorrell-Neal, senior director of state affairs at PCMA (which manages prescription drug benefits for more than six million Washingtonians), testified in opposition to SB 5213.
“The bill’s strict oversight and restriction on PBM operations will reduce efficiency and increase administrative costs, affecting consumers through higher premiums and out-of-pocket expenses for medication,” Sorrell-Neal said. “Furthermore, the bill’s specific reimbursement model will hinder PBMs’ ability to negotiate effectively with drug manufacturers, the entity that sets the price of drugs.”
Sorrell-Neal said SB 5213 disassembles the work the legislature did in 2020 when it passed comprehensive PBM reform.
“(It) moves it into the healthcare benefit manager’s chapter. The state will have the expense related to moving those chapters when that chapter was created with care. The fiscal note only looks at the impact, not the inclusion of (Public Employees Benefits Board and School Employees Benefit Board programs) regarding the scope and provision of this bill, which will increase costs to the state. Time should be given to ask the state PBM for those cost estimates.”
— Sorrell-Neal
Jennifer Ziegler testified in opposition to SB 5213 on behalf of the Association of Washington Health Care Plans.
“As drafted, the legislation would require mail-order pharmacies that typically charge less [for drugs] to charge the same amount to consumers as other pharmacies,” Ziegler said. “We fundamentally believe that this will ultimately drive costs for consumers.”
Dr. Jenny Arnold, CEO of the Washington State Pharmacy Association, noted that many pharmacies are closing in Washington while testifying in support of the bill.
“We have an urgent need to preserve patient access to pharmacies,” Arnold said. “In addition to the loss of healthcare access, these closures also represent the loss of jobs in our community and a loss of tax revenue as patients are left with no other choice but to use out-of-state, mail-order pharmacies. The PBM license fees offset the cost of managing this program within the OIC.”