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Pharmacy reimbursement rate debate moves to study group

A bill to require pharmacies are reimbursed at least the cost of the drugs they dispense plus a $10.64 fee per prescription died early in the 2024 legislative session, but discussions on the repayment issue will continue.

Rep. Phillip Rigsby’s bill would have made pharmacy benefit managers, third-party groups that manage drug benefits for insurers, reimburse in-network pharmacies their actual acquisition cost for a medication “plus a professional dispensing fee” set by the federal government and used in programs like Medicaid.

Some independent pharmacy owners in March told lawmakers they are reimbursed less than the costs of some drugs and had to eat the difference, putting their businesses in jeopardy.

The bill was approved in a House committee but never got a House floor vote.

The bill was approved in a House committee but never got a House floor vote. Lobbyists and associations worked both sides of the issue. Rigsby said his House colleagues told him they received more calls and emails about this bill than any other this session – even more than the major gambling proposal.

Rigsby on Tuesday said post-session discussion on the issue and possible legislation will continue and include pharmacies, insurers, PBMs and drug manufacturers. 

House Speaker Nathaniel Ledbetter’s office confirmed Tuesday that details are still pending, but a study group was planned this year.

Rigsby previously said the $10.64 helps cover pharmacists’ costs, including staff and utilities. He said without the bill, pharmacies, particularly in rural areas, will close.

Opponents called the fee a tax increase on Alabamians’ medications and said no other business in the state is guaranteed a profit.

“It’s something we got to look at,” Rigsby told Alabama Daily News on Tuesday. “We’ve got pharmacies across the state, especially in our rural areas, that are closing. We have one here in Huntsville that’ll be closing probably in the next month because of this issue. And the contracts that have just come out for 2025 don’t seem to be improving.”

Pharmacies can’t set medication costs. They can only opt not to stock the ones they might lose money on. 

“And so pharmacies are really in a tough spot, they’re having to make a decision of, am I going to carry this medicine and get paid under cost to take care of a patient? Or, am I not gonna carry this medicine?”

Blue Cross and Blue Shield of Alabama, the state’s largest insurer, has its own PBM. Ted Hosp, vice president of governmental affairs for BCBS of Alabama, said it plans to be part of the reimbursement discussions. 

Hosp on Tuesday said pharmacists are critical to health care delivery in the state, often seeing people much more often than primary care providers.

“We are absolutely going to sit down and do everything we can to work something out that protects our local pharmacies and makes sure that they continue to serve their customers,” Hosp said. “That’s incredibly important in rural communities, especially.

“But we also have to safeguard what our customers are paying.”

Pharmacy costs are the most rapid-growing claims within BCBS, Hosp said.

He also said more data is needed about pharmacies’ overall acquisition costs. 

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