NCPA Analysis Sinks Broken-Record Argument Against PBM Regulations

Wait, what? Premiums grew slower in states that cracked down on PBMs

NCPA March 14, 2022

ALEXANDRIA, Va. (March 14, 2022) – “Premiums will go up! Premiums will go up!” It’s what pharmacy benefit manager lobbyists squeal every time there’s a bill to regulate PBMs. According to a new analysis by the National Community Pharmacists Association, however, the theory doesn’t hold up in states that have adopted laws protecting patients and local pharmacies.

“All state lawmakers are sensitive to higher premiums because of the burden on employers, consumers and taxpayers,” said Anne Cassity, NCPA Vice President of Federal and State Policy. “It’s a very compelling argument, except that it’s completely wrong based on the facts.”

Cassity and her team compared premiums for prescription drug programs in states that have regulated PBMs to the national average. They found slower premium growth – and in some cases premium reductions – after lawmakers enacted laws that PBM lobbyists warned would send premiums skyrocketing.

In Hawaii, for example, lawmakers passed a law barring PBMs from requiring patients to use mail-order pharmacies. The premium there was smaller than the national average after the law took effect. They found similar results in California and West Virginia, which passed similar laws. In Georgia, premiums went down substantially after the state banned forced mail-order.

“In all these cases, the PBMs predicted higher premiums as a direct result of the regulations. That’s just not the way it turned out,” said Matt Magner, NCPA Director of State Government Affairs. “In fact, the number shows the exact opposite.”

The largest PBMs also own pharmacies, and it’s common for them to pay their own pharmacies more than they reimburse competitors. It’s flatly unfair to employers, local independent pharmacies and the patients who use them, and many states are trying to end the practice. In Louisiana and Tennessee, where lawmakers have already outlawed it, prescription drug prices actually went down, while the national average increased.

“PBM regulation is a relatively new frontier. They’ve had very little oversight for a very long time,” said Cassity. “More and more states are seeing how they behave, and how patients, taxpayers and local small businesses are affected, and they’re taking action. Based on what we can see in states that have pioneered PBM regulation, there’s no real connection between regulation and higher premiums. It’s a false argument, and it shouldn’t deter lawmakers from protecting their states from predatory PBMs.”

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Founded in 1898, the National Community Pharmacists Association is the voice for the community pharmacist, representing nearly 19,400 pharmacies that employ approximately 215,000 individuals nationwide. Community pharmacies are rooted in the communities where they are located and are among America’s most accessible health care providers. To learn more, visit www.ncpa.org.

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