The Government Accountability Office put several states’ regulations around pharmacy benefit managers under a microscope, finding that states favor broad authority over PBMs, in a new report published Monday.
Looking at five states that have enacted substantial PBM reforms — Arkansas, California, Louisiana, Maine, and New York — the GAO interviewed each state’s health plan association, pharmacy association and regulators to glean information on how the reforms were implemented. The report found that four out of the five states preferred granting regulators broad authority to regulate PBMs over specific statutory requirements, with one state saying that it allowed them to more quickly respond to issues as they come up.
Several regulators emphasized the need for effective penalties so they can enforce PBM regulations. Clear reporting requirements and definitions would help to enforce PBM regulations, several regulators told the GAO.
Though the states took different approaches, the GAO found that four out of the five states imposed some level of duty of care on PBMs to the health plans that contract to them. All five states enacted some reforms relating to drug pricing and pharmacy payments, including laws to rein in spread pricing, or the practice of charging more for a drug than what the PBM reimburses to the pharmacy.
All five states require that PBMs obtain a license to operate or register in the state as a PBM, or both. All five states also had laws regulating pharmacy networks and patient access, including legislation to ban discrimination against unaffiliated pharmacies and to limit patient copays charged by PBMs.
The report comes as Congress is weighing a wide range of PBM changes aimed at bringing more transparency to how they negotiate drug prices, and include or exclude certain drugs. It remains unknown when lawmakers could get any legislation over the finish line, but some experts are pointing to after the elections next fall.
The GAO underscored that US spending on prescription drugs reached $152 billion in 2021, accounting for 13% of total private healthcare spending.
While total prescription drug spending went up by about 13% between 2016 and 2021, total prescription drug use only went up by about 6%, reflecting a spike in spending on high-cost specialty drugs, the report says.