Sen. Ujifusa introduces bills to lower prescription drug and Medicaid costs

State House – Sen. Linda Ujifusa is taking aim at the high cost of prescription drugs with two bills that protect Rhode Island patients and taxpayers from the harmful activities of pharmacy benefit managers (PBMs), private corporations that work on behalf of insurers and make enormous revenues in the complex, nontransparent system that gets drugs from manufacturers to patients.

PBMs, which provide no actual health care, claim to save consumers money, but the National Community Pharmacists Association estimates that PBMs are adding about 30 cents per dollar to the price consumers pay for prescriptions.

There has been a huge uptick in the number of states enacting new laws to control PBMs. According to the National Conference of State Legislators, in 2023, one-quarter of state bills to rein in prescription drug prices were aimed at PBMs. Between 2017 and 2023, laws regulating PBMs accounted for more than half of all prescription drug legislation enacted by states.

“Other states are doing a much better job monitoring and overseeing PBMs and have saved consumers and taxpayers hundreds of millions of dollars,” said Senator Ujifusa, (D-Dist. 11, Portsmouth, Bristol). “Rhode Island should follow their lead.”

The first bill (2024-S 2385) would prohibit PBMs from engaging in several of their current practices that harm consumers and taxpayers. The bill would prohibit “rebates,” or legal kickbacks that PBMs get from manufacturers. Rebates incentivize PBMs to put on their covered or preferred lists the drugs that get them the highest rebates, not those that are the least expensive or most effective for patients.

The bill would also ban a practice known as “spread pricing” wherein PBMs charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy — and then keep the difference or “spread.” According to the Wall Street Journal, Ohio found this spread came to $5.70 per prescription and the state could have saved roughly $4 per prescription by eliminating spread pricing.

In addition, the bill restricts PBM “utilization management” techniques that prevent patients from getting drugs prescribed by their physicians in a timely manner. For example, PBMs routinely impose “prior authorizations” that require patients and their care providers to get third-party approval before getting prescribed medicines. PBMs also require patients to start with or switch to lower-priced medications before being approved for medications their physicians originally prescribed. PBMs can also essentially force patients off their current therapies by increasing out-of-pocket costs or terminating coverage of particular drugs. Multiple states are acting to restrict these PBM practices.

Rep. John J. Lombardi (D-Dist. 8, Providence) has introduced similar legislation (2024-H 7139) in the House. The legislation is supported by the Rhode Island Medical Society, Rhode Island Society of Health-System Pharmacists, American Pharmacists Association, National Community Pharmacists Association and other groups.

The second bill (2024-S 2387) would require that any Managed Care Organizations (MCOs) contracted to manage Medicaid health insurance for Rhode Islanders include limits on the practices of any PBMs subcontracted by the MCO.

Under the bill, any such subcontract with a PBM would have to include prohibitions on spread pricing and similar practices; require that the PBM use pass-through pricing; prohibit discriminatory treatment of non-affiliated pharmacies and pharmacists by the PBM; prohibit utilization management that delays or prevents medically necessary care; and require that the PBM provide information to permit effective oversight and enforcement. These requirements are currently contained in a model contract that has been included with the

Request for Proposals issued by the Department of Health as it seeks new MCO contracts this year. In addition, the bill requires developing and implementing a plan for a single MCO PBM, as permitted by the model contract.

Companion legislation (2024-H 7898) is sponsored in the House by Rep. Jennifer Stewart (D-Dist. 59, Pawtucket).

“Ohio required its MCOs to contract with a single PBM,” said Senator Ujifusa, “and estimated its savings at $150 to $200 million per year. Many other states are also restricting PBMs in their MCO contracts to save patients and taxpayers money.”

PBM conglomerates rank fourth (UnitedHealth Group), fifth (CVS) and 15th (Cigna) on the Fortune 500 list ranking largest corporations by revenue. Their revenues exceed those of the largest pharmaceutical manufacturers that are actually making the drugs. CVS makes about 45% of its revenue from its PBM business.
“The bottom line is that consumers face unaffordable prescription costs, taxpayers support an enormous Medicaid budget and actual health care providers are leaving or shuttering due to under-reimbursements,” said Senator Ujifusa. “We must protect our citizens from middlemen PBMs who are raking in billions of dollars at the expense of the public and to the detriment of public health.”