LITTLE ROCK, Ark. — Gov. Sarah Huckabee Sanders joined Arkansas Insurance Department Commissioner Alan McClain to announce notices of penalties and hearings against four major pharmacy benefit managers (PBMs), Caremark, Magellan, Express Scripts, and MedImpact.
This decision follows a bulletin issued by the Insurance Department on June 28, advising PBMs to stop paying Arkansas pharmacies below the national average drug acquisition cost (NADAC), in violation of state law.
Anne Pace of Kavanaugh Pharmacy in Little Rock said this could shut down her business.
"There are lots of pharmacies just like me and others as well that may not be able to stay in business very long," Pace said. "We are not making what it costs to purchase the drug when we provide prescriptions to people."
When an employer contracts with an insurance company, like Blue Cross Blue Shield, that company contracts a PBM to handle negotiations, like adding pharmacies to a benefit plan.
Employers and insurance companies will pay the PBMs to take care of this, but when the money gets to the pharmacies, they are getting paid less than it costs to buy the medications, which is against Arkansas law.
"That employer never sees who is getting the money," Pace said. They may think they are paying the pharmacies $10 for a prescription, but the pharmacies are only getting 50 cents, and the PBMs are keeping what's in between."
The department seeks a $5,000 fine for each payment made below NADAC pricing.
“PBMs have been allowed to skirt the law for too long, today my administration is taking an important step to holding Big Pharma accountable,” Sanders said. “We must make sure that our most vulnerable populations are protected and that starts with enforcing the law. This action today by the Insurance Department and Commissioner McClain sends a message that Arkansas will protect seniors and rural pharmacies from PBMs taking advantage of them.”
PBM Caremark has allegedly committed 217 violations, Magellan, 50 alleged violations, and Express Scripts, 19 alleged violations. This is the largest pharmaceutical enforcement action in Arkansas history, totaling $1.47 million in possible penalties.
“The Department is committed to tackling PBM abuses. It’s time for them to make fair and reasonable payments to our pharmacies, as required by the law, and we will enforce all elements of payment and PBM licensure statutes that violate state law, no matter the amount,” Arkansas Insurance Commissioner Alan McClain said.