Austin successfully amends bill to require more transparency from pharmacy benefit managers

INDIANAPOLIS – State Rep. Terri Austin (D-Anderson) successfully passed four amendments to Senate Bill 241 that will require more transparency by pharmacy benefit managers and improve the rights of Hoosiers who purchase prescription drugs. 

SB 241 establishes various requirements for pharmacy benefit managers (PBMs), who act as the middle man between the pharmacy and the insurance provider. PBMs have come under scrutiny in many states, including Indiana, as a result of their business practices. 

Austin's first two amendments would require that health insurance providers and health maintenance organizations (HMOs) give their client at least 60 days notice if a name brand drug is going to be removed from their formulary list and a generic version substituted. They also provide for an appeal process if a patient and their physician believe the substitution is not in the best medical interest of the patient.

“Current Indiana law permits a pharmacist to offer a lower priced alternative drug to patients should one be available,” said Austin. “In addition, biologic drugs, like Humira, have protections within current Indiana law that require specific steps be taken, including notification to the provider, before a substitution can be made. Sometimes the change isn’t always in the patient’s best interest, sometimes it is. This is about ensuring that Hoosiers know exactly what’s happening before those changes are made.”

Amendment 3 would require that a PBM under the Medicaid program provide equal treatment to all pharmacies that are members of a network through which the PBM manages prescription drug benefits.

“Because there is no legislation in place to prevent this, PBMs have been paying some pharmacies less than the ones they are affiliated with for the same drugs and programs,” Austin added. “Surprisingly, Walmart, Kroger and Meijer are among those pharmacies.”

Amendment 4 would require that a PBM act in the best interest of the health benefit plan, state agency, insurer, managed care organization or another third-party payer. 

“You might be surprised that the three largest PBMs in the country provide 95 percent all Americans with prescription drug coverage, which is about 200 million people,” Austin explained. “Prescription drug costs are out of control and represent 20 percent of the total cost of health care. By amending this bill, I want to ensure they are acting in the best interest of their clients over and above their own interests.” 

All four amendments passed through the House unanimously yesterday (March 1).