PBM-Regulating Legislation In North Dakota Opposed By FTC
This article was originally published in The Pink Sheet Daily
Executive Summary
A bill before the North Dakota state legislature would limit PBMs’ ability to reduce prescription drug costs, Federal Trade Commission staff says in a letter to a state lawmaker. The legislation would regulate PBMs’ contracts with pharmacies and prohibit certain drug substitutions.
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State legislation pending in North Dakota would limit pharmacy benefit managers' ability to reduce prescription drug costs, Federal Trade Commission staff says in a March 8 letter. N.D. House Bill 1332 "may limit a PBM's ability to guide consumers to lower-cost pharmacies and would prohibit switching consumers to certain lower-priced drugs," FTC's letter to state Sen. Richard Brown says. FTC limited its analysis of the legislation to provisions that would restrict PBMs' contracting with pharmacies and prohibit certain drug substitutions. Specifically, those portions of HB 1322 would prohibit PBMs from discriminating on the basis of copayments or days of supply when contracting with pharmacies, FTC said. Those contracts would have to apply the same coinsurance, copayments and deductibles for covered prescription drugs to all pharmacies or pharmacists in a network. Such restrictions would prevent health insurers from designing benefit plans "to encourage participants to use network pharmacies that provide drugs to the plan at a lower cost than other network pharmacies," FTC said. The legislation would allow PBMs to request the substitution of lower-priced therapeutically equivalent drugs, but FTC says it is unclear whether that language refers to pharmaceutically equivalent drugs or those within the same therapeutic class. To the extent the bill adopts the narrower definition of pharmaceutical equivalence, HB 1322 would "prevent a PBM from switching a prescription for one brand-name drug with a less expensive brand-name drug that is designed to have similar therapeutic effects, but that is pharmaceutically distinct, unless the switch was for medical reasons," FTC says. The bill is likely to increase the cost of drugs by making price-reducing substitutions less common, the letter states. FTC took a similar stance on PBM contracting legislation in California; the measure was vetoed by Gov. Arnold Schwarzenegger (R) (1 (Also see "California Bill On PBM Transparency Vetoed By Gov. Schwarzenegger" - Pink Sheet, 30 Sep, 2004.)). - Andrew Dove |