Kansas Senate Passes Bill to Regulate Pharmacy Benefit Managers

The Kansas state Senate has passed a significant measure aimed at enhancing the regulation of pharmacy benefit managers (PBMs), with bipartisan support. This legislative initiative, known as Senate Bill 360, responds to widespread concerns about the market influence of PBMs, which dominate prescription drug negotiations and face accusations of anti-competitive behavior.

Dominating 80% of the U.S. pharmacy benefits management market, PBMs like CVS Caremark, Express Scripts, and OptumRx are under scrutiny. Critics assert that these entities prioritize profitability over reducing drug costs, negatively impacting both pharmacies and consumers.

Senate Bill 360 empowers the Kansas insurance commissioner with greater regulatory authority over PBMs. It mandates enhanced transparency in pharmacy reimbursements and drug pricing, requiring all Kansas pharmacies to receive reimbursements at or above the National Average Drug Acquisition Cost and implementing dispensing fees to support local and rural pharmacies.

Senator Brenda Dietrich, a key advocate for the bill, highlighted concerns about "spread pricing," where PBMs retain the difference between charges to insurers and payments to pharmacies. She emphasized the need for transparency in financial operations, reflecting broader regulatory compliance requirements.

The bill also addresses auditing practices, allowing greater oversight of PBM activities. Supported by entities like Hy-Vee, Walgreens, and the Kansas Hospital Association, the legislation aims to provide equitable treatment for pharmacies, despite opposition warning of potential increases in insurance costs due to regulatory changes.

Despite opposition, the Senate passed the bill decisively, and further evaluation is expected in the Kansas House. Lawmakers emphasize the necessity of local action in response to federal inaction, aiming to restore competitive balance within the pharmacy market and ensure fair risk management practices.

This legislative effort underscores Kansas’s commitment to tackling the challenges posed by PBMs, aligned with a broader national trend of increasing scrutiny on these healthcare intermediaries. As Senate Bill 360 progresses, its impact on pharmacies and the healthcare marketplace will be closely monitored by industry stakeholders.