House Passes Kennedy Bill that Regulates Business Relationships Between Pharmacies, Insurers

The House of Representatives has passed legislation aimed at regulating the business relationship between pharmacy services providers and group health insurers with Department of Health oversight.
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The bill (2016-H 7438A), introduced by Rep. Brian Patrick Kennedy (D-Dist. 38, Hopkinton, Westerly), would streamline the process that pharmacy benefit managers use to update pricing information for prescription drugs.

“Pharmacy benefit managers use a list of maximum allowable costs for nationally available drugs,” explained Representative Kennedy, chairman of the House Corporations Committee. “When the market conditions are such that the price goes up dramatically, pharmacies may get under-reimbursed when the pharmacy benefit managers don’t keep up-to-date with price changes.”

The legislation, which requires pharmacy benefit managers to update pricing information every 10 days, would also include an appeal process for pharmacies to resolve pricing disputes. The appeal, which would be limited to 15 days following the initial claim, would be overseen by the Rhode Island Department of Health.

“This bill will really eliminate the problem of under-reimbursements for pharmacies and give pharmacies a more level playing field and a fairer appeals process,” said Representative Kennedy. “This is especially important to the small, independent pharmacies that operate in our state.”

One lawsuit involving a large pharmacy chain and a pharmacy benefit manager in Minnesota estimates that the chain was losing up to $19 million due to under-reimbursements. It is estimated that small, independent pharmacies may be losing up to $40 to 50,000 a year.

The measure, which is cosponsored by Representatives Samuel A. Azzinaro (D-Dist. 37, Westerly), Cale P. Keable (D-Dist. 47, Burrillville, Glocester), Thomas Winfield (D-Dist. 53, Smithfield, Glocester) and K. Joseph Shekarchi (D-Dist. 23, Warwick), passed the House 72 to 0. It now heads to the Senate, where similar legislation (2016-S 2467) has been introduced by Sen. William A. Walaska (D-Dist. 30, Warwick).