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Life Health > Health Insurance > Life Insurance Strategies

Carriers Block NCOIL PBM Model

By Jim Connolly

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Members of a committee here at the National Conference of Insurance Legislators have postponed indefinitely consideration of a model act that would have set standards for pharmacy benefits managers.

A representative for health insurers told state legislators here for the spring meeting of NCOIL, Troy, N.Y., that the PBMs do not have a problem that needs to be fixed and that the proposed model would interfere with efforts to deliver lower cost prescription drugs to employees.

PBMs are companies that manage prescription drug benefits for insurers, self-insured employer health plans and other payers.

One member of NCOIL’s Health, Long Term Care and Health Retirement Issues Committee, state Rep. Virginia Milkey of Vermont, disagreed with the decision to postpone consideration of the PBM model.

The model would require a PBM to:

- Disclose any financial arrangements, including industry rebates.

- Tell the covered entity the cost of both drugs when one drug is substituted for another; transfer any directed or indirect benefit to the covered entity; get the original prescriber to approve the substitution; and notify the covered individual and pharmacist of the prescriber’s approval of the substitution.

Randi Reichel, who represented America’s Health Insurance Plans, Washington, said the model would limit health providers’ ability to contract with PBMs.

The proposed model would be “very destructive to the free-market framework in our country,” said state Rep. Shirley Bowler of Louisiana.

The bill would “add costs to the consumer that we can’t anticipate,” Bowler said.

State Rep. George Keiser of North Dakota said a model that worked in Massachusetts might not work in North Dakota, a state with a population of 652,000 in which 83% of premium revenue is controlled by a Blue Cross and Blue Shield plan. In North Dakota, he said, the dominant carrier is also a part owner of a PBM.

Milkey maintained that the model is needed because “the pharmaceutical industry is robbing us blind as it reaps huge profits.”

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