Rep. Jeremiah Moore, R-Clarendon (at podium), promotes House Bill 1150 at a press conference in the Capitol rotunda on Thursday, January 16, 2025. The bill would forbid pharmacy benefit managers (PBMs) from holding or acquiring interest in retail pharmacy permits. (Tess Vrbin/Arkansas Advocate)
A proposed Arkansas law would forbid pharmacy benefit managers (PBMs) from holding or acquiring interest in retail pharmacy permits, the latest effort from state officials to crack down on the companies said to be bleeding pharmacies dry nationwide.
Lawmakers and pharmacy advocates promoted the newly filed House Bill 1150 at a press conference in the Capitol rotunda Thursday. They said the policy would eliminate “anticompetitive” business practices by PBMs, which negotiate prescription benefits among drug manufacturers, distributors, pharmacies and health insurance providers.
“For far too long, pharmacy benefit managers have rigged the system to enrich their own interest at the expense of the nation,” said Rep. Jeremiah Moore, R-Clarendon, the bill’s lead sponsor.
PBMs rank prescription drugs, with the highest-tiered products costing consumers the lowest out-of-pocket costs. The Federal Trade Commission released an interim report in July 2024 saying these conglomerates are eliminating competition and increasing drug prices at the expense of patients.
OptumRX, Express Scripts and CVS Caremark — the three largest PBMs — are each owned by much larger corporations that each also own a top-10 health insurer. Together they control about 80% of the U.S. prescription market, according to last year’s FTC report.
Republican Rep. Brandon Achor and his wife are independent pharmacy owners in Maumelle and have both received cancer treatment in the past two years. He said Thursday that the drugs that treat his wife’s cancer are among those which the FTC report said PBMs unfairly raise prices.
Federal regulator: Pharmacy middlemen appear to be raising prices, hurting patients
“I see and I feel the abuse of vertically integrated health care on a daily basis,” Achor said at the press conference. “…The tangible threat to Arkansas patients, Arkansas businesses and Arkansas families ends now, and I am honored to be a part of the team here to tip the first domino in what will be a series of sweeping [prescription drug] reforms.”
PBMs routinely force patients to use their affiliate pharmacies rather than their competitors, locally-owned independent pharmacies, Moore and John Vinson, CEO of the Arkansas Pharmacists Association, both said.
The companies also have historically reimbursed their affiliates at a higher rate than non-affiliates, Vinson said. This practice is prohibited in Arkansas by Act 1 and Act 3 of 2018, which became law after a special legislative session.
House Bill 1150 would “close the loopholes where the Insurance Department doesn’t have authority” currently, Vinson said in an interview.
“It should improve the market where [PBMs] would have to fairly contract with their market competitors, because they no longer would be a market competitor,” he said.
Several PBMs are affiliated with interstate mail-order pharmacy operations, and House Bill 1150 includes mail-order pharmacy permits among those that PBMs would be prohibited from holding. Vinson said some PBMs force consumers to receive their medications via mail, which costs more than receiving them over the counter.
House Bill 1150 would go into effect Jan. 1, 2026, if it receives approval from the Legislature and is signed by Gov. Sarah Huckabee Sanders.
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Past regulation attempts
Act 900 of 2015 required PBMs to pay pharmacies at least as much as the national average of what drugstores pay wholesalers for drugs. Despite this, pharmacies sent the Arkansas Insurance Department (AID) roughly 3,000 complaints in 2024, claiming PBMs either illegally paid them below this national average or paid them at or just above this amount, AID’s general counsel told lawmakers last year. Independent pharmacists made similar claims in September, saying they were struggling to stay open in rural areas with limited healthcare resources.
After more than a century serving Benton, Smith-Caldwell Drug Store closed in August 2023 due to financial insolvency and transferred its clients to Walgreens, a national chain.
Republican Sen. Kim Hammer, who represents Benton and is co-sponsoring House Bill 1150, said Thursday that the closure is proof the issues facing pharmacies aren’t exclusive to rural areas.
Brad Lawson, a Little Rock-based healthcare supervisor for Walgreens, agreed when he told lawmakers in December that unfair PBM reimbursements have forced the company to close several locations and plan further closures nationwide.
Lawson and Vinson supported a new AID rule that requires PBMs to include dispensing fees in their reimbursements for prescription drugs. Lawmakers spent hours debating the rule last month, and some agreed with representatives of PBMs and insurance providers that the cost would fall on consumers instead of the drug middlemen.
Arkansas lawmakers debate dispensing fees for pharmacy benefit managers in five-hour hearing
The Arkansas Legislative Council approved the rule a day after its Administrative Rules subcommittee rejected it.
The Pharmaceutical Care Management Association, which opposed the rule, challenged Act 900 of 2015 in federal court upon its passage. The U.S. Supreme Court reviewed and upheld the law in 2020.
Attorney General Tim Griffin expressed support for House Bill 1150 at Thursday’s press conference and said he will defend it in court if need be. He also said he hopes Congress will introduce and pass the same legislation on the federal level.
In June 2024, Griffin sued two of the nation’s three largest PBMs, Express Scripts and OptumRX. The suit alleges that the companies used data from drug manufacturers and distributors to maximize their financial gain instead of using it to mitigate the opioid addiction epidemic.
In August, AID fined Caremark, Express Scripts, Magellan and MedImpact $5,000 per violation of Act 900, which totaled $1.47 million across the four companies.