Legislature, Beshear pass law to protect independent pharmacies in Kentucky from commercial pharmacy benefit managers
By Melissa Patrick
Kentucky Health News
A bill to address an unfair playing field between commercial pharmacy-benefit managers and independent pharmacists has been signed into law and will take effect Jan. 1, 2025.
As the final vote for Senate Bill 188 was made late on March 28, Rosemary Smith, co-founder of the Kentucky Independent Pharmacist Alliance, said she received at least 100 texts while watching it unfold on Kentucky Educational Television, many from pharmacists saying they were crying tears of joy and relief.
“They were in tears for their businesses, for their patients and for, you know, their profession. . . . We were fighting for pharmacy,” she said. “It was a huge victory. . . Our legislators listened to the truth and they voted. And it was just amazing.”
Pharmacy benefit managers deal between insurance companies and drug manufacturers; they determine what drugs are offered, how much someone pays for the drug, and how much the pharmacists are paid.
Smith, who owns six independent pharmacies in Eastern Kentucky with her husband, Luther, said getting SB 188 passed was the “fight of the century.”
“It was so much harder to get through than Senate Bill 50” in 2020, she said. “It was in the Senate for 48 days. . . . I mean, they fought us with everything,” she said of the pharmacy benefit managers’ lobby.
Both bills were sponsored by Sen. Max Wise, a Republican from Campbellsville. SB 50 required the state to hire a single PBM for the state’s Medicaid program, resulting in savings of $282 million.
SB 188 addresses commercial PBM reform. It sets a minimum dispensing fee of $10.64 per prescription for the state’s independent pharmacies until a study of dispensing costs is completed by the Kentucky Department of Insurance. This “gap-fill payment floor” will not be available to chain pharmacies.
“That’s huge,” Smith said, “because right now we’re getting sometimes a 15 cents dispensing fee and it (can) cost more than $10.64 to fill a prescription. They are paying us below our costs, so you can’t stay in business.”
The bill’s opponents told Senate and House committees that the legislation will cause insurance premiums to increase and its mandates in the bill won’t allow businesses to capitalize on savings that PBMs provide.
Smith called Medicaid PBM reform a “game changer” for many independent pharmacists, but said it is not enough on its own to save local pharmacies because Medicaid only makes up about a third of most pharmacy’s business, with commercial insurance taking up another third and Medicare Part D the final third.
Smith said West Virginia, Tennessee and Arkansas are the only other states that have done such commercial PBM reform and “Ours is the most comprehensive.”
“I think it’s the strongest commercial PBM reform bill in the country and I think it will be the model for a lot of other states,” she said.
Wise said, “I’m very proud of this bill. I’ve carried some pharmacy bills in the past; this was the toughest one I’ve ever dealt with before. I’m hoping it will solve a lot of the issues.”
But he added that it’s time for Congress to tackle the issue on a federal level. To his point, Smith said, “We still have work to do on the federal level and we are going to be involved in that.”