Health & Science Politics

Legislature Completes Successful Special Session

Arkansas Senate

View from the Senate

LITTLE ROCK – The legislature completed its special session after addressing all of the issues on its agenda.

The bill that garnered the most attention will require pharmacy benefit managers (PBM) to be licensed by the state Insurance Department.

Pharmacy benefit managers negotiate contracts between health insurance companies and local pharmacies. Since the beginning of the year, local pharmacists have been hit hard by reduced reimbursements from the managers.

Neighborhood pharmacists testified at legislative hearings that in some cases they were not even getting paid enough to cover the cost of filling prescriptions.

Legislators were concerned by reports that pharmacy benefit managers reimbursed independent pharmacists at a lower rate than they reimbursed drugstores with which they had a corporate affiliation. That practice is not allowed, under Act 900 of 2015, and enforcement of the prohibition will be strengthened by passage of the legislation requiring pharmacy benefit managers to be licensed.

Opponents of the legislation pointed out that pharmacy benefits managers are hired to control inflation of the price of prescription drugs. By negotiating volume discounts for health insurance companies, they help to hold down the cost of premiums.

Opponents also said the bill amounted to interference by the government into business transactions carried out between private sector companies. A spokesman for pharmacy benefits managers told the Senate Insurance and Commerce

Committee that the costs of pharmaceuticals accounts for 22 percent of the cost of insurance premiums.

The Senate passed the measure by a 30-to-2 vote. Veteran senators predicted that due to the complexity and financial importance of the bill, it is likely that the legislature will have to tweak it during the 2019 regular session.

Consumers will benefit from the new law because it prohibits pharmacy benefits managers from writing gag rules into their contracts with pharmacists. That means pharmacists will be able to advise customers on how to purchase alternative prescriptions that are equally effective but not as expensive.

According to the National Conference of State Legislatures, six states already prohibit gag clauses in contracts between pharmacies and PBMs, and Arkansas was one of 20 states considering a prohibition of them. When the new Arkansas law regulating PBMs takes effect in September, we will become the first state in the country to regulate them.

Also during the special session, the legislature enacted a law clarifying the legal procedure for contract disputes in which the parties have waived the right to a jury trial. Questions rose last year after a state Supreme Court ruling.

The legislature tightened up the language in current environmental regulations to relieve the concerns of farmers, especially those with large hog and cattle operations. The bill limits the ability of third parties to delay the granting of permits by the Department of Environmental Quality.

Also, a new law will expand tax breaks for families that have set up 529 college savings accounts. Those deductions had been available to parents who drew from the accounts to pay tuition at college, and now they will be allowed for tuition payments for children attending private or religious schools in kindergarten through twelfth grade.

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