ANNAPOLIS – Pharmacy owner Tom Connelly is tired of people blaming him for rising prescription drug costs — it’s the fault of pharmacy benefit managers.
Connelly, from Cecil County, often sells medications in bulk to these firms, who then sell them to businesses and government agencies. These pharmacy benefit managers take advantage of the free market, he said last week, manipulating such transactions to maximize profits at the expense of consumers.
To curb this activity, the General Assembly is considering a plan to regulate them. A bill, sponsored by Cecil County Democrat David Rudolph, chairman of the House subcommittee on pharmaceuticals, passed the House and was heard by the Senate Finance Committee Wednesday.
Rudolph’s bill would require these firms to confidentially share their business deals with the Maryland Insurance Administration and forbid them from providing pricier drugs when generic ones are available, unless a consumer’s medical concerns dictate it.
If it passes, Rudolph said, it could significantly cut Marylanders’ prescription drug costs.
“PBM’s are running amok in our country,” Rudolph said. “It’s just wrong…They have a tremendous influence on the costs of health care and they aren’t regulated.”
Such firms supply prescription drugs to about 200 million Americans by acting as the Costco of the drug industry and sometimes operating mail-order plans.
They have saved employers and states on drug costs, according to a 2003 study by the U.S. General Accounting Office, which said federal employees saved 18 percent on brand-name drugs. But some lawmakers said the companies could boost savings significantly if they cleaned up their act.
In the last decade, they have been accused of unnecessarily substituting more expensive drugs, defrauding Medicare and Medicaid and profiting from a “spread”: negotiating separate deals with retail pharmacies and employers and hiding those deals from the other.
Hence, Rudolph’s bill “would be a very useful piece of legislation,” Connelly said. “Even used car salesmen have transparency.”
The insurance administration supports the bill, spokeswoman Karen Barrow said, because it calls for “the appropriate amount of oversight and consumer protection.”
Two states and the District have passed similar bills and others, including Pennsylvania and California, are considering them in part because of 31 recent legal actions against the firms that have exposed shady business practices.
But 10 states have defeated bills similar to Rudolph’s, said Phil Blando, vice president of the Pharmaceutical Care Management Association.
The proposed regulation would extend government too far into the private sector, Blando said, allowing transaction details to be leaked. Blando likened transparency to “requiring PBMs to play poker with the cards up and everyone else’s hidden.”
The bill would ultimately drive drug costs up — not down, he said.
Bob Enton, a Maryland lobbyist for CareMark, a leading pharmacy benefit manager, cited a Federal Trade Commission report that a California bill similar to Maryland’s would do just that.
“Public disclosure, which sounds good in concept,” Blando said, “is a horrible idea in practice.”
Delegate A. Wade Kach, R-Baltimore County, said he worries that Rudolph’s bill would compound the state’s health care problems instead of help solve them. He called for the federal government to intervene in another fashion.
“I am concerned with some of the profits these companies are making,” said Kach, one of four delegates to vote against the bill March 17. But “drug companies have been very innovative with new drugs…If you begin to have government stick its nose in their business, what’s going to happen to the research component?”
Charles County Democrat Thomas Middleton, chairman of the Senate Finance Committee, suggested Maryland should ask for transparency in its next contract with the firms as an alternative to regulation.
Otherwise, he said, the Senate may need more time to review the bill. The legislative session ends Monday but Middleton has called for a work group soon.
“Obviously the House is way in front of the Senate with this bill,” Middleton said.
Rudolph urged them to catch up.
“You could easily say there’s not enough time to do this bill,” Rudolph said. “But we cannot wait another year.”