Arkansas officials on Tuesday ordered four nationwide pharmacy benefit managers (PBMs) to stop paying Arkansas pharmacies below the legally required amount for prescription drugs and to pay a cumulative $1.47 million in fines for having done so, according to a news release from Gov. Sarah Huckabee Sanders’ office.
PBMs are companies that serve as middlemen to negotiate prescription benefits among manufacturers, distributors, pharmacies and health insurance providers. The companies rank prescription drugs, with the highest-tiered products costing consumers the lowest out-of-pocket costs.
A 2015 Arkansas law required PBMs to pay pharmacies at least as much as the national average of what drugstores pay wholesalers for the drugs. The law was challenged in federal court upon its passage, and the U.S. Supreme Court reviewed the law in 2020.
Arkansas Insurance Department Commissioner Alan McClain is seeking a $5,000 fine for each of the PBMs’ payments below the national average drug acquisition cost (NADAC) according to the news release.
The four PBMs in question are:
- CVS Caremark with approximately 217 alleged violations
- Magellan with 50 alleged violations
- Express Scripts with 19 alleged violations
- MedImpact with an undisclosed number of alleged violations
“PBMs have been allowed to skirt the law for too long,” Sanders said in the news release. “Today my administration is taking an important step to holding Big Pharma accountable. We must make sure that our most vulnerable populations are protected and that starts with enforcing the law.”
Express Scripts and Caremark are two of the three largest PBMs in the nation, with OptumRX being the third.
On June 24, Attorney General Tim Griffin filed a Pulaski County Circuit Court lawsuit against Express Scripts and OptumRX, alleging that they used data from drug manufacturers and distributors to maximize their financial gain instead of using it to mitigate the opioid addiction epidemic.
In May 2022, the state sued the drug manufacturers Novo Nordisk, Sanofi and Eli Lilly, accusing them of conspiring with Caremark, OptumRX and Express Scripts to inflate the cost of insulin. The case is still pending in Pulaski County Circuit Judge Mackie Pierce’s court.
PBMs have long been a source of frustration for local pharmacies nationwide. Express Scripts, Caremark and OptumRX are owned by much larger corporations that each also own a top-10 health insurer, and the Federal Trade Commission released an interim report in July saying these conglomerates are eliminating competition and increasing drug prices at the expense of patients.
Despite state regulations, independent pharmacies “continue to see take-it-or-leave-it contracts and cuts in reimbursement,” Blake Torres, owner of West Side Pharmacy in Benton, told the Legislature’s Joint Performance Review Committee in August 2023.
John Vinson, CEO of the Arkansas Pharmacists Association, told the Joint Insurance and Commerce Committee on June 5 that PBMs still overcompensate themselves and need to be regulated further.
At the same meeting, Insurance Department general counsel Booth Rand said the department was receiving 1,500 complaints per month about PBMs illegally paying pharmacies below NADAC prices. He also said the department planned to start fining PBMs $5,000 per violation.
“Even if it’s 19 cents [below NADAC], they’re going to get fined,” Rand said.
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