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Hearing features horror stories of prescription drug middlemen

Empower Wisconsin | Feb. 7,  2020

By M.D. Kittle

MADISON — Independent pharmacists, representatives from health care coalitions and patients were among scores of people who turned out Wednesday to testify in support of Assembly Bill 114, a “compromise” measure its proponents say will begin to bring transparency to Pharmacy Benefit Managers’ (PBMs) practices.

Many had a horror story to tell about the prescription drug middlemen with the power to determine the medicines patients take and how much they cost.

The bill, watered down from its original form in response to pressure from the health plan and PBM lobby, requires the benefits managers to be licensed with the state Office of the Commissioner of Insurance and demands clearer consumer language on drug formularies (approved medication lists). It implements “equitable” standards for PBM assessments and fees on pharmacies. And the bill codifies a federal law recently signed by President Trump that ends PBM “gag orders” on pharmacies, nondisclosure agreements that have driven up costs for consumers.

PBMs are third-party administrators of prescription drug coverage for insurers and employers. Pharmacy Benefit Managers earn a fee for the services they provide, including developing and maintaining prescription drug lists (formularies), processing claims and negotiating discounts and rebates.

They have become extraordinarily powerful, with some 80 percent of the massive marketplace controlled by just three health-related corporations.

Public support for the legislation was overwhelming at the Assembly Health Committee hearing, reflecting the bi-partisan buy-in from lawmakers. As of Wednesday, the bill had 98 co-signers, about three-quarters of the Legislature.

But representatives from the Wisconsin Association of Health Plans did show up to warn lawmakers not to go too far or prescription drug prices would climb, a lobbyist “scare tactic,” according to AB 114 backers.

Tim Lundquist, director of Government and Public Affairs for the association , said the “bill as introduced would have raised drug costs for Wisconsin consumers.” He said any regulation needs to be done without raising prices, a point acknowledged by Health Committee Chair, Rep. Joe Sanfelippo (R-New Berlin).

Some of the more compelling testimony came from the authors of the bill and their families.

“We shouldn’t have to worry about a 3,220 percent increase in our medications. We shouldn’t have to be denied three or four times before there is an approval of medications … And people should not be forced to choose between life-saving medications and food to live on,” Christine Schraa, the wife of AB 114 co-author Michael Schraa (R-Oshkosh), told the committee.

The Schraas’ 18-year-old daughter Annie has Lupus and, according to Christine, was forced to take a plan-required medicine that made her seriously ill before the PBM finally relented. By that time, she said the drug cost had risen from $5 to $162 — more than 3,000 percent.

Rep. Debra Kolste (D-Janesville), another author of the bill, shared a similar story. Her son, who suffers form ulcerative colitis, was taken off the medication that he had successfully taken for years and ordered by the benefit manager to go on a different drug. He instantly had a flare up and required a number of follow-up medical procedures, the lawmaker said.

Dan Tafaro, a 62-year-old diabetic with a heart condition, said a PBM ordered him to take a generic of the medication he had been successfully taking to ward off stroke. There is no generic equivalent, Tafaro said. When he paid out-of-pocket to a pharmacy for a 30-day supply of the prescription drug he had been taking, the PBM billed him “for the costs involved” and said he had to accept a 90-day supply of another drug. When Tafaro questioned a manager, he was told the PBM couldn’t “share with patients” their reasoning for forcing him on to a generic drug that didn’t exist.

Rep. Mary Felzkowski (R-Irma), said she has heard from constituents whose doctors have prescribed a generic only to be denied by a PBM that stood to make more money — “kickbacks” —  through manufacturer brand deals.

“How do you justify that to the people sitting up here, to my constituents?” Felzkowski, a Health Committee member, grilled the insurance lobby.

Several pharmacists testified that PBMs and their incessant fees and unreasonable demands are driving independent pharmacies out of business.

“These powerful forces took control of health care away from us and as providers,” said James Englemeier, of Whitefish Bay. He’s been a pharmacist for nearly 50 years. “Under the ruse of keeping health care affordable, they use manufacturer kickback formularies, mail-order and restricted provider networks, along with lowball and negative reimbursement to pad their bottom lines.”

Matthew Magner, director of State Government Affairs for the National Community Pharmacy Association, said there are 272 independent pharmacies in Wisconsin today, down 36 percent in just eight years.

“This bill will control drug costs in Wisconsin, provide greater protections for patients regarding their prescription drug benefits program and establish greater oversight of the Pharmacy Benefit managers,” he said

But many voiced concerns the amended bill is a diminished version of what it once was, thanks in large part to the lobbying muscle of lobbyists for insurers and PBMs. Most, however, agreed a “bite at the apple” of reform was better than nothing at all.

Sanfelippo said he thinks the health plan and PBM lobby see more oversight as inevitable. Some 40 states have some kind of transparency law in place, and President Trump touched upon PBM regulation in his State of the Union address this week. 

“I think they recognize the party is over,” Sanfelippo said. “It’s an industry that operates largely under the radar. When you don’t know what’s going on and someone fights to keep you from knowing what’s going on, it raises suspicion.”

Sanfelippo said he expects the bill will be ready for a vote in in the Committee on Health’s executive committee on Thursday, with an Assembly floor vote by the end of the month.   

Rep. Schraa said he’s confident the bill will pass both houses. 

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