Summer is fast approaching, and although temperatures are warming outside, the temperatures in most state capitols are cooling as sessions are ending and legislators are heading home for the balance of the year. That also means it is a good time to step back and take stock of where things stand. As the season winds down, it is important to remember that this is the first year of a two-year session for most states. That means that even if a bill did not make it over the finish line this year, there is still hope for success next year. With that in mind, it is time to look at some of our key wins and losses from this year so far.
Key PBM Reforms
From Capitol Hill to your local state house, pharmacy benefit managers (PBMs) continue to be a favorite punching bag of legislators. States continue to look at ways to regulate some of what is seen as bad behavior in the PBM space.
This year there was a spate of bills seeking to require rebates to be “passed through.” This simply means that PBMs would be required by law to pass through a certain percentage of a rebate to the patient and/or plan sponsor. Most bills being considered this session require anywhere from a 70–100% pass through. Unfortunately, the legislation did not survive in several states, such as Georgia and Virginia.
However, there were a few significant wins as well. Arkansas approved legislation (HB 1481) that requires a patient’s cost-sharing responsibility at the point of sale be reduced by an amount equal to 100% of the rebates that are received or expected to be received by a PBM. Indiana also passed rebate pass-through legislation (SB 8). This bill requires a patient’s cost-sharing responsibility to be reduced by at least 85% of the amount of the expected rebate at the point of sale. It also requires 100% of the rebates to pass through to the plan sponsor.
Although these are potentially significant wins for patients, we must monitor the implementation process. There are some potential unintended consequences to these reforms, such as rebate amounts lower than was anticipated at the time of sale or the discontinuation of a rebate after a drug has been purchased by a patient. This could lead PBMs to claw back funds from patients with surprise bills for pharmaceuticals they already purchased and used. Existing claw-back bans only apply to pharmacies, so patients are vulnerable to a new claw-back scheme.
Florida passed a sweeping drug-pricing reform package. It is the most ambitious state level PBM reform package in recent years. The Florida legislation also included a 100% rebate pass-through provision and banned pharmacy claw backs, pharmacy steering, payer-mandated online pharmacy ordering and spread pricing. What makes the Florida legislation so unique is its regulation of manufacturers. Under the new requirements, pharmaceutical manufacturers will be required to submit reports to the state if the wholesale acquisition cost increases by 15% over the previous 12 months, or by 30% over the previous three years. Reports will have to include some justification for the price increases, and the information will be shared publicly.
The Florida legislation could mark a shift in the drug-pricing conversation. PBMs are and will likely remain a target of state and federal legislators for the foreseeable future. However, this could signal the beginning of a more holistic evaluation of the drug supply chain. Although that is yet to be determined, we can be sure that states will continue to seek innovative approaches to address the drug-pricing problem, especially if reform efforts in Washington, D.C., continue to stall.
Copay Accumulators
The issue of copay accumulators is a confounding one. It is an issue that seems primed to move, especially because it can immediately improve patients’ ability to afford their medicines. We have tracked 16 bills being considered in 13 states. So far, only Colorado (SB 195) and New Mexico (SB 51) have passed legislation, and the Colorado legislation has not yet been signed by the governor. Pending a signature on the Colorado bill, that will bring us to 16 states and Puerto Rico with accumulator legislation.
Although there are some potential wins on this issue that could still come later in the year, the progress on copay accumulator ban legislation remains surprisingly slow. There are a lot of reasons for this slow rate of progress. The most likely is that payers, and in some cases plan sponsors, have gotten better at defending the programs. Also, the uncertain fiscal environment makes legislators less inclined to approve legislation that might impact the bottom line of companies operating in their state.
Despite the slow rate of progress, the ACR remains committed to the issue at a federal and state level. The legislative process is typically a long slog, not a quick sprint, even on issues that seem like they should move fast. Even experienced advocates forget this from time to time. The process can take years, and sometimes we get excited for what could be quick and easy wins on important issues. We must remind ourselves that rarely happens and settle back into our marathon mentality. The wins will continue to come, but like many of our other issues, they will take time and persistence.
Utilization Management
This has been a slow legislative session for utilization management issues. This is in part due to the success of step therapy and prior authorization reform efforts over the past several years. The one issue we had hoped for movement on is prior authorization gold card legislation.
Gold card legislation requires payers and PBMs to exempt providers from prior authorization requirements for a period of time, typically six months or a year, if they have an approval rate at or above a benchmark, typically 80–90%, for a given procedure or prescription. Texas was the first state to approve this kind of legislation. There was a lot of excitement among the provider community about this concept, but the difficulty in implementing the program for prescriptions became immediately apparent. The challenge for insurers and providers to keep track of what they have a gold card for has emerged as the primary pain point for making this concept workable.
A recent survey by the Coalition of State Rheumatology Organizations bore this out. They found that 88% of rheumatologists in Texas had not yet qualified for a gold card. There was a reported decrease in administrative burden with prior authorizations for procedures. The takeaway is that gold card programs are a work in progress. Being the first at anything is never easy. Advocates in Texas can certainly tell you a list of things they wish they had done differently. We hope to apply those lessons to state and federal gold card legislation moving forward so that the concept evolves into something more workable and more impactful for rheumatology practices.
Wrapping Up
This progress report may make this legislative session sound relatively inactive, which may be true compared to recent legislative sessions. However, recent action on our previous key issues means that many of the current high-priority issues are newer. These will take time to gain momentum.
We are also monitoring emerging issues, such as biomarker testing and post-public health emergency telehealth reforms. It might seem like legislative action is slower, but there is a strong argument that state-level policy innovation is more robust than it has ever been. Prior authorization gold cards, rebate pass-through reform, manufacturer drug price reporting requirements, biomarker testing coverage requirements and copay accumulator reform were only wishful thinking a few short years ago. Now in 2023, they are becoming reality. We might hope for faster movement, but the wheels of progress turn at their own speed. At least for now, they are slowly moving in the direction we want.
Joseph Cantrell, JD, is the ACR’s director of state affairs and community relations.
