Florida lawmakers approve restrictions on pharmacy benefit managers

Targeting an important — and controversial — part of the health care system, Florida lawmakers Tuesday gave final approval to a plan that would increase regulations on pharmacy benefit managers.

The House and Senate unanimously passed the bill (SB 1550), which drew heavy lobbying and could affect a wide range of interests, including patients, pharmacies, health insurers, drug manufacturers and employers.

Pharmacy benefit managers, or PBMs, act as something of middlemen in the health care system. They contract with health insurers, self-insured employers and governments to play roles including negotiating drug prices with manufacturers, establishing pharmacy networks and paying claims.

The bill is ready to go to Gov. Ron DeSantis, who during his annual State of the State address in March called for making PBM changes. In his prepared remarks, DeSantis said Floridians “are harmed by inflation when it comes to the prices of prescription drugs, especially due to pharmacy middlemen. We must bring transparency to the system so that Floridians can save money on their drugs. We need reform of the PBMs.”

Groups such as independent pharmacies have long called for the state to make changes related to PBMs, which they contend have too much leverage in the market. But the PBM industry has argued it helps lower prescription costs through such things as negotiating rebates with drug manufacturers and discounts from pharmacies.

Under current law, PBMs are required to register with the state Office of Insurance Regulation, and contracts between PBMs and insurers and health-maintenance organizations need to include limits on patient cost-sharing for drugs, according to the House staff analysis.

But the bill passed Tuesday would go much further. It includes:

• Increasing the Office of Insurance Regulation’s authority over PBMs, making them subject to regulation as what are known as insurance “administrators.”
• Largely preventing a practice known as “spread pricing,” which involves PBMs getting reimbursed a certain price for a drug by an insurer or employer but paying pharmacies a lower price to dispense the drug.
• Placing restrictions on PBMs that have affiliated pharmacy businesses. The bill would prevent such PBMs from only having affiliated pharmacies in their pharmacy networks.
• Preventing PBMs from requiring patients to receive prescriptions by mail.

Supporters have argued the changes would help provide more transparency about PBMs, with House sponsor Linda Chaney, R-St. Pete Beach, on Tuesday likening their operations to a “black box.”

Chaney also said the bill would address PBMs doing business with affiliated companies, which she said can lead to conflicts of interest.

“Today, we stood firm and clearly said ‘enough is enough’ to powerful PBMs, putting patients with cancer, diabetes, Parkinson’s disease and other chronic illnesses above profit,” Chaney said in a prepared statement. “It’s as simple as it sounds, and yet it will be truly life-changing for some of our sickest, most vulnerable Floridians and their families.”

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