Gov. DeSantis, Florida Cabinet approve of Pharmacy Benefit Manager regulations

by | Sep 19, 2023

  • Gov. Ron DeSantis and the Florida Cabinet have approved new regulations as part of the Prescription Drug Reform Act, imposing restrictions on Pharmacy Benefit Managers (PBMs).
  • PBMs in Florida must obtain approval as insurance administrators by January 1, 2024, or face fines of $10,000 per violation per day. The Office of Insurance Regulation is overseeing compliance.
  • The Department of Business and Professional Regulation is mandating pharmaceutical companies to disclose significant price increases, aiming to enhance transparency in the prescription drug market to lower costs for patients.

Gov. Ron DeSantis and the Florida Cabinet on Monday approved a series of rules as part of the broader Prescription Drug Reform Act (SB 1550), which places new restrictions on pharmacy benefit managers (PBMs).

Under the new regulations, Pharmacy Benefit Managers (PBMs) must secure approval as insurance administrators to continue their operations in Florida past December 31, 2023. Non-compliance after January 1, 2024, will trigger fines of $10,000 per violation per day. The Office of Insurance Regulation (OIR) has further enforced these mandates by formally communicating them to all PBMs currently active in Florida. The OIR has also guided the handling of appeals from network pharmacies and pharmacists, along with outlining compliance procedures for health plans and payors.

Moreover, the Department of Business and Professional Regulation is implementing a requirement for pharmaceutical companies to disclose price increases that lead to a 15 percent surge within a year or a 30 percent escalation within three years.

“We are committed to making Florida’s prescription drug market the most transparent and accountable in the nation,” said DeSantis. “For too long, PBMs and Big Pharma have made extraordinary windfalls by operating behind closed doors — deciding which prescriptions are covered, where they can be purchased, and how much they cost. These rules will continue our efforts to lower prescription costs and make corporations responsible to the patients they serve.”

PBMs serve as intermediaries in the healthcare system, with roles including negotiating drug prices with manufacturers, establishing pharmacy networks, and paying claims, contracting with health insurers, self-insured employers, and governments. Despite the PBM industry’s assertion that it helps lower prescription costs through negotiating rebates with drug manufacturers, independent pharmacies, which are direct competitors, have long called for changes to PBMs, arguing they wield too much leverage in the market.

Earlier this year, the House Health and Human Services Committee paneled a series of pharmacy owners and doctors, where it was stated that just three PBMs control 80 percent of the prescription volume market. Speakers in favor of regulation against PBMs elucidated that consolidation of negotiating power by three large-scale PBMs — OptumRx CVS, Caremark, and Express Scripts — shuts out smaller pharmacies. Looking deeper into the trio of PBMs, Caremark controls 33 percent of the market, Express Scripts 26 percent, and OptumRx CVS 21 percent, with Manufacturer Price Concessions to PBMs reaching $236 billion in 2022.

“There’s been significant consolidation in vertical integration over the last several years, where we hear the promise of increased access and lower costs, but we see the opposite,” Publix Director of Pharmacy Administration Katie Scanlan told the committee. “The PBMs, through the contracting processes, restrict the services that community pharmacies like Publix can offer.”

Last July, DeSantis laid the groundwork for regulatory legislation by issuing an Executive Order directing all executive agencies to include provisions in future contracts with PBMs to prevent spread pricing, prohibit reimbursement clawbacks, and instruct all state agencies to include data transparency and reporting requirements.

A 2020 Florida study found that major healthcare companies using PBMs positioned themselves to pocket millions of dollars from the state’s Medicaid system which was intended to lower costs for millions of low-income Floridians.

The study found that despite processing less than half of one percent of all pharmacy claims, specialty pharmacies affiliated with PBM’s managed to collect 28 percent of the available profit margin from dispensing prescription drugs. According to the study, vertically integrated healthcare companies – companies where the health insurance company and PBM also control their own pharmacies – have a significant advantage in prescription drug pricing and reimbursement rates over smaller pharmacy operations that only focus on dispensing prescription drugs.


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