Legal Ease: A Navitus Government Affairs Update

In an ever-changing legislative landscape, we want to help our clients and partners stay informed of the latest happenings and how proposed policies could impact their business. The current focus at both the state and federal level on healthcare costs, transparency and rebate practices has us all curious of what actions will affect the management and administration of pharmacy benefits. Below is an overview of a few key pieces of legislative activity that has occurred since May of this year.

Important State Legislative Updates

FL SB 1550: Prescription Drug Reform Act

On May 3, 2023, Governor Ron DeSantis signed into law Florida’s most comprehensive PBM legislation, the Prescription Drug Reform Act. This bill is designed to address the transparency in manufacturer prescription drug pricing and the relationships between pharmacy benefit managers, pharmacy benefits plans and programs, and pharmacy providers for delivering pharmacy services to covered persons.

Under this new law, PBMs may not:

• Require a pharmacy to meet requirements for participation in a specialty network beyond those necessary to demonstrate the pharmacy’s ability to dispense the drug with FDA-approved manufacturer labeling.
• Require a covered person to receive a prescription drug by mandatory mail order unless the prescription drug cannot be acquired at any retail pharmacy in the PBMs network for the covered person’s pharmacy benefits plan/program. However, opt-in mail order programs are allowed.
• Engage in financial clawbacks, reconciliation offsets, or offsets to adjudicated claims.

Applicability of the law is broad and applies to commercial health plans, government-funded plans, such as Florida’s Medicaid Managed Care Program. Based upon the language of the bill, it appears to apply to self-funded ERISA plans domiciled in the state of Florida as well as self-funded ERISA plans domiciled outside of the state, with more than 100 members residing in Florida.

The new law was effective July 1, 2023, and its requirements must be implemented by January 1, 2024. It is expected that Florida will issue further guidance on the implementation of this new law. Navitus is compliant with all applicable rules and regulations of this new law and will continue to monitor any new guidance provided.

Federal Legislative Overview

On July 27, 2023, Congress adjourned for August recess. The Senate will return on September 5, and the House will return on September 12. During this time, staff and interested parties are discussing several PBM proposals affecting all lines of health care coverage. Therefore, we expect to see elements of these bills in an omnibus package potentially proposed in September after the recess.

Navitus has a successful and sustainable transparent, pass-through business model, and we continue to advocate for transparency across the industry. Below is a brief summary of the federal committees and legislation to watch, supported on a bipartisan basis.

Senate Commerce Committee 127: Pharmacy Benefit Manager Transparency Act

This legislation:

• Prohibits PBMs from arbitrarily, unfairly, or deceptively clawing back reimbursement payments or negatively impacting pharmacy reimbursement to pharmacies to offset changes to federally funded health plans; unless the PBM is 100% rebate pass-through and discloses costs, prices, markups, discounts, and aggregate payments received.
• Permits the Federal Trade Commission to regulate PBMs.

Senate Finance Committee Modernizing and Ensuring PBM Accountability Act

This legislation focuses on Medicaid and Medicare and contains the following provisions:

• PBMs providing service to Medicare Part D plans may only be compensated based upon a bona fide service fee, including a full rebate pass-through; and
• Spread pricing is banned from Medicaid programs.

Senate HELP Committee 1339: Pharmacy Benefit Manager Reform Act

This legislation applies broadly across commercial plans. Key provisions include:

• Annual reporting by PBMs to plan sponsors;
• 100% pass-through of rebates by PBMs to plan sponsors;
• A prohibition where PBMs and TPAs cannot restrict plan sponsors from sharing reporting data with advisors; and
• Provides an exception to STEP Therapy requirements.

House Energy and Commerce Committee PATIENT Act of 2023

Under this legislation:

• Medicaid contracts must be 100% pass-through pricing model;
• Spread pricing is prohibited;
• Reporting to HHS related to Medicare Part D compensation, expenses, etc. for PBMs; and
• Annual reporting to plan sponsors and distribution of the reports to plan sponsor advisors/consultants/brokers may not be restricted.

House Education and the Workforce

HB 4507: Transparency in Coverage Act

This bill requires quarterly reporting by PBMs to plan sponsors on compensation, reimbursement of pharmacies, drug costs and compensation to advisors/brokers/consultants, etc. Further, this codifies the October 2020 Transparency in Coverage rule requiring plans to disclose price and cost sharing information to consumers.

HB 4508: Hidden Fee Disclosure Act

This bill requires annual reporting by PBMs to plan sponsors to include rebates, costs, discounts, and other information as determined by the Secretary of HHS.

NAVITUS CAN HELP

Please reach out to [email protected] if you have specific questions or concerns.

WRITTEN BY ROBYN CROSSON

As Vice President, Government Relations at Navitus, Robyn provides strategic direction on Government Relations thought-leadership initiatives. She oversees building external relationships with state and federal governments, lobbyists and stakeholders. Her team focuses on legislation and proposed rules/regulations concerning the pharmaceutical, PBM and health care industries.