(Photo by Shutterstock)
(Photo by Shutterstock)

Assembly passes new regulations on bipartisan vote to add transparency

Two years ago, Rep. Michael Schraa and his family ran into a problem maintaining coverage for a prescription medication his wife needs for an autoimmune disease. Forced to switch medications, her hair started falling out. 

After some 30 hours on the phone negotiating between the insurance company, her physician and her local pharmacist, she was able to restart her medication, and the insurance company agreed to again cover the cost. 

“It was pretty hard to watch,” said Schraa, R-Oshkosh. “But my wife was lucky. She was able to go back on the original drug. But I know most people are not able to advocate for themselves.”

The more calls his wife made and the more questions he asked, the couple learned the root of the problem stemmed from pharmacy benefit managers.

Little known to consumers but wielding increasing power and wealth in the country’s healthcare system, pharmacy benefit managers, or PBMs, are third-party companies that negotiate prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D and benefits for federal employees. They contract with pharmacies, negotiating discounts and rebates with drug manufacturers, among other things. 

The pharmacy benefit managers decide what medications are included on an insurance company’s list of covered medications, known as the formulary. It was a change to the formulary and the problematic health issues that ensued when his wife was forced to try another medication that led Schraa to educate himself on pharmacy benefit managers.

On Tuesday, the Assembly unanimously passed Assembly Bill 114, a bill Schraa co-authored that now requires the state to regulate and license the PBM industry. Pharmacy benefit managers will have to turn in transparency reports to the state Office of the Commissioner of Insurance. The bill also will allow pharmacists to inform consumers if there is a less-expensive, generic prescription that they could be using to save on the cost of their medications. 

While gridlock is preventing Congress from taking action on even a bipartisan bill to lower prescription drug cost, Wisconsin has now joined 40 states in taking bipartisan steps to add transparency and potentially reduce prices by passing the bill. 

Rep. Debra Kolste, D-Janesville, voting in favor of the bill’s passage, said several small pharmacy owners in her district told her pharmacy benefit managers were “killing their business.”

“The price of medications is never going to come down if we have such opaque industries like pharmacy benefit managers,” Kolste said. “This is a start, I wouldn’t even say it’s a good start but it is a start.”

Schraa said the three largest PBM’s now control roughly 80 percent of the industry’s business. Two of those three companies are listed Fortune 500 companies, he said, with earnings in line with companies like Walmart, Schraa said.

“Pharmacy benefit managers are the fastest-growing group in health insurance. If that doesn’t scare you, I don’t know what will,” Kolste said. “They bring us the formulary (to see) but they are negotiating contracts that we’ll never know about because of trade secrets.”