Legislators, activists continue push to regulate drug pricing middlemen

Some Georgia legislators and activists are concerned about whether pharmacy benefit managers are transferring discounts on to consumers for drugs they purchase from manufacturers. MUST CREDIT: Photo for The Washington Post by Jessica Tezak

Credit: For The Washington Post

Credit: For The Washington Post

Some Georgia legislators and activists are concerned about whether pharmacy benefit managers are transferring discounts on to consumers for drugs they purchase from manufacturers. MUST CREDIT: Photo for The Washington Post by Jessica Tezak

For the past two years, attempts by the Georgia General Assembly to regulate drug pricing middlemen have faced strong headwinds and powerful lobbying opposition. But that isn’t stopping legislators and activists from planning yet another push next year.

With a hope to curb soaring drug prices, some legislators are targeting pharmacy benefit managers, an industry that controls the transfer of drugs from the manufacturers to the insurers. For two years in a row, the House has passed a bill to regulate pharmacy benefit managers, only to see it stall in the Senate.

These little-known companies purchase drugs from the manufacturers and place them on lists that become the medicines covered by a prescription drug plan or hospital. In exchange for better placement on these coveted lists, manufacturers offer the drugs to pharmacy benefit managers at a discount or a rebate.

By buying drugs in bulk and obtaining discounts, pharmacy benefit managers say they save consumers money. However, patient advocates worry consumers are being charged the original prices for drugs, allowing pharmacy benefit managers to pocket discounts and leave patients with no benefit.

Regulating pharmacy benefit managers in Georgia has been done before. A law passed in 2020 prevented the middlemen from charging insurance companies more for drugs than they cost from a pharmacy, banning cheaper versions of drugs from being covered on policies and requiring patients to obtain prescriptions from specific pharmacies. It did not address the discounts.

It’s not just state lawmakers tackling this issue. Congress this year has taken action in both the House and Senate. U.S. Rep Buddy Carter, R-Pooler, introduced bipartisan legislation in May to curb pharmacy benefit managers’ power, and a bill focused on transparency in the industry made it through a Senate committee in March. “PBMs are the parasites of our health care system and the time for accountability has come,” Carter, a pharmacist, said in a statement. “I expect the 118th Congress to take decisive action towards building a health care system that puts patients first.”

Georgia House Bill 343 seeks to guarantee 50% of the discounts received by pharmacy benefit managers are transferred to the patient when the drug is sold to them. It also would require the companies to report to the state regarding their financial behaviors.

State Rep. Mark Newton, an Augusta Republican and sponsor of the bill, said the proposal builds on the already-existing state law. “PBMs still operate in an essentially black box with no transparency,” he said. “There’s no way to tell how much of the rebate is going to the patient.”

Advocates for Responsible Care is among the groups supporting the bill. Executive Director Dorothy Leone-Glasser said pharmacy benefit managers are tough legislative opponents.

“PBMs have become way too strong as middlemen profiteers,” she said. “They keep skirting transparency, accountability, while leaving patients to suffer ... This is a very strong lobby.”

That lobby was able to stop HB 343 from passing this year. Despite receiving a near-unanimous vote in the state House, it stalled in a Senate committee.

The Pharmacy Care Management Association, the national group that represents pharmacy benefit managers, said in a statement that it supports transparency, but more regulation is not needed. “The legislation is in fact redundant because of previously enacted legislation in Georgia,” the group said, referring to the 2020 law.

Also opposing the legislation is the Georgia branch of the National Federation of Independent Business, a group that represents small businesses. Hunter Loggins, the state director, said his group’s concern is that forcing the discount to be transferred to patients at the point of sale of a drug would limit the ability to use it to lower other prices, such as insurance premiums.

Loggins is also concerned that these regulations wouldn’t apply to state health plans or those of large corporations. “Make it for everybody, rather than singling out,.” he said. It will make small businesses’ benefits plans weaker, he said, making it harder to attract and retain workers.

Glasser and Newton both conceded that premiums may rise slightly as a result of the bill, but they believe the amount consumers will save on drugs will offset that cost.

Newton also added the bill excludes large corporations’ and state health plans because they’re already large enough to negotiate with pharmacy benefit managers. Additionally, large corporations’ plans that cross state lines are regulated at the federal level, not by the state.

Despite this year’s difficulties, Newton is planning on bringing HB 343 back in 2024. And this time, he’s confident supporters will be prepared to persuade senators to get on board.

“We have plenty of time to answer questions and make sure senators understand how important this is while at the same time recognizing the real role of insurance plans and employers and affordable premiums,” he said.

While many states have passed some form of pharmacy benefit manager regulation, only three have passed laws similar to HB 343. It presents an opportunity for Georgia to get ahead of the curve in Glasser’s eyes.

“We’re hoping the policymakers stand up and do the right thing,” she said. “Really, does Georgia always have to be last?”