Pharmacist Wade Irby co-owns Beaverton Pharmacy. (Jaime Valdez/Beaverton Valley Times)

Lawmakers couldn’t find a compromise on a bill to regulate pharmacy benefit managers

 

Oregon lawmakers’ latest attempt to prop up the state’s struggling retail pharmacies by regulating middlemen companies has died amid uncertainty over the legislation’s complexity and pushback from insurance companies.

House Bill 3212’s failure follows more than a decade of legislative attempts to bring additional oversight and transparency to pharmacy benefit managers — previously overlooked intermediary companies that have attracted scrutiny as they’ve taken on an outsized role in the drug supply chain. Pharmacists now warn Oregonians will have a harder time accessing prescription drugs.

The bill was intended to address pharmacists’ complaints that pharmacy benefit managers use their clout to underpay for prescription drugs dispensed by retail pharmacies, causing many to close or reduce services. It would have mandated that pharmacy benefit managers reimburse retail pharmacists for the cost of a drug’s ingredients and pay them “dispensing fees” to help cover their cost of doing business, among other provisions.

But the bill languished in the House Rules Committee.

“We just kind of ran out of time to have a workable solution where we understood the consequences of what it would do to costs for consumers and how much pharmacists would make,” said state Rep. Rob Nosse, D-Portland, the bill’s main sponsor. “It collapsed due to complexity.”

Alarm over pharmacy access in Oregon

The legislation’s failure follows years of bad news for Oregon’s retail pharmacies and as other states as well as the federal government have looked to curb pharmacy benefit managers.

Oregon has the second-fewest retail pharmacies per capita of any state, according to an analysis by the Associated Press published last year. The state has seen more than 200 pharmacies, both independent and chain, close since 2008, according to the Oregon State Pharmacy Association.

The bill’s demise, coupled with news that Rite Aid will close 32 pharmacies in Oregon as the chain goes through bankruptcy, will mean Oregonians’ pharmacy access will worsen, said Brian Mayo, executive director of the Oregon State Pharmacy Association.

“This is going to be terrible,” Mayo said. “Patients have these huge lines and delays. They’re going to have to travel even farther, especially with rural communities. They’re the ones that are going to be hurt the most.”

Opponents of the bill say they tried to compromise. They’ve argued the scope of pharmacy closures have been overstated and broader business pressures or management problems are factors.

Dispensing fees seen as solution

Pharmacy benefit managers work for large employers and health insurers to secure discounts and rebates from drug manufacturers, while also contracting with pharmacies.

Since merging in the 1960s, the companies have become large and vertically integrated with their own pharmacies. Three companies — CVS Caremark, Express Scripts and OptumRx — processed about 80% of prescription claims in 2023, according to one study.

Kim Reisner, who oversees business development at Hi-School Pharmacy, said her company has gone from 32 to 21 locations in less than 10 years. The remaining pharmacies use hardware sales and other revenue to stay open, she said.

Pharmacy benefit managers push “unviable” contracts on pharmacies that force them to operate at a loss, Reisner said.

“Legislative relief is vital,” she said. “This is a race to the bottom,”

State legislatures, including Oregon, have tried to level the playing field for pharmacies. Mayo said reform efforts in Oregon have focused on requiring pharmacy benefit managers to pay dispensing fees, an approach adopted by Alabama and Arkansas. A similar effort failed in Oregon in 2023.

While there is bipartisan support for the fees in Oregon, insurance companies and other opponents argue they would drive up the price of already costly prescription drugs.

“There’s really no way in the commercial market to insulate consumers from an increased effect,” said Mary Anne Cooper, government relations director for Regence BlueCross BlueShield of Oregon. For example, a patient paying $20 for four drugs might suddenly be charged $60 as a result of the bill, she said.

Dispensing fees would mean more patients would have to pay their full copays on generic prescription drugs that previously cost less than their full copay, she said. Patients on high-deductible plans would also have to pay more for prescription drugs until they met their deductible, she said. Over half of employer plans are considered high deductible, according to a state report.

Cooper stressed that she made serious efforts to address the pharmacy association’s concerns about pay and contracting, but they did not reciprocate.

Mayo said it was a “tough battle” against pharmacy benefit managers as well as Oregon insurance companies. He also said he was disappointed that Nosse didn’t push harder for legislation that would have offered some help to pharmacies.

‘Things just kinda collapsed’

Nosse, the chair of the Behavioral Health and Health Care Committee, said two events in March precipitated the bill’s failure.

The first, he said, was when the Legislature’s legal counsel determined the bill would possibly run afoul of the Oregon Constitution because it would have used the federal National Average Drug Acquisition Cost benchmark to determine pharmacy payments, binding state law to a process developed by an outside government.

The second was a state analysis that found that the bill would barely improve payments for pharmacies, he said. Mayo dismissed the analysis, saying pharmacists know what they need to stay in business.

“Things just kinda collapsed,” Nosse said. “It was a hard moment for the pharmacists.”

Bill Head, assistant vice president of state affairs for pharmacy benefit manager trade group Pharmaceutical Care Management Association, said in a statement that his organization is committed to working with pharmacies to preserve access and offered numerous proposals, including a dispensing fee, to the pharmacy association. But he said the pharmacy association stopped responding after the bill was sent to the Rules Committee.

Later in the session, Nosse had two amendments drafted, both of which would have narrowed the bill. By then, he said it was too late in the session and neither were adopted. But he expects the issue to return.

“Insurance plans need pharmacies,” he said. “So we have to figure this out.”

---

This article was originally published by Oregon Capital Chronicle and used with permission. Oregon Capital Chronicle is part of States Newsroom and can be reached at info@oregoncapitalchronicle.com.