Vermontβs independent pharmacies and hospitals β particularly UVM Health Network β gained the upper hand this week as Gov. Phil Scott signed a bill that takes aim at pharmacy benefits managers.
These go-between national companies negotiate prescription prices with drugmakers on behalf of private insurers. Private insurers say that pharmacy benefits managers use bulk discounts to keep prescription drug costs in check. But some regulators β including the Federal Trade Commission β say benefits managers set drug prices with an eye toward their own profits.
βWhat weβve done is weβve ripped off the Band-Aid to actually look at what weβre doing,β Jeff Hochberg, president of Vermont Retail Druggists, said last week. βNow weβre looking under there to see whatβs going on. And at the same time, weβre establishing a platform through which all other reform can happen.β
With the newly signed H.353, Vermont joins a growing group of regulators who say pharmacy benefit managers are one reason for soaring drug prices.
H.353 started out as a bill to make drugs more affordable by regulating negotiations between pharmacy benefits managers and independent pharmacies in Vermont. Revisions in the bill also introduced provisions that all but guaranteed that specialty drug prescriptions given to patients in health care settings, including expensive cancer medications, would be filled at the University of Vermont Health Networkβs pharmacies, rather than through cheaper mail-order pharmacies that insurers prefer.
Though the language was softened somewhat in subsequent revisions, the final version of the bill still gives UVM Health Network an advantage when it comes to filling those expensive prescriptions. The health network, for its part, argued that shipping specialty drugs put patients at risk because of medication errors and improper storage in transit.
Specialty prescriptions β a broad category that includes anything from Botox to biological drugs β are a relatively new addition to a doctor’s arsenal. Patients typically get these drugs at a clinic or other health care settings through a monthly infusion or injection. Because these drugs can cost thousands of dollars for one dose, insurers dispense them sparingly and only after patients and their doctors have exhausted all other options.
Annie Mackin, a UVM Health Network spokesperson, said this week that providers βcan now be sure that medication was shipped safely before being prepared and administered to patients at the location where they are receiving their treatment, without the potential for damage to the medication that could harm the patient or delay their care.β
The bill could be a financial boon to UVM Health Network. For example, a single dose of Herceptin, a biological drug to treat esophageal and breast cancers, costs more than $10,000 when dispensed at a hospital pharmacy, according to national insurer trade group AHIP. The same drug costs roughly $6,500 at a physicianβs office and $4,600 at a standalone pharmacy.
With H.353, hospitals can decide where the drugs come from, meaning that patients who get specialty drug infusions at a clinic or medical center would almost certainly get their drugs from the more expensive hospital pharmacy.
In most cases, specialty drugs are so expensive that patients hit their out-of-pocket maximum after one or two infusions. That means that patients often arenβt aware of the added expense of filling a drug at a hospital pharmacy. Insurers, however, build this additional spending into next yearβs premiums.
Private insurers and pharmacy benefits managers cited those costs in their opposition to the bill. Theyβve argued that the bill could cost some Vermonters hundreds of dollars a year.
Sara Teachout, of BlueCross BlueShield of Vermont, reiterated on Thursday that H.353 βremoves levels to control drug costs,β and ultimately would raise premiums.
Earlier this month, BlueCross BlueShield β the largest private insurer in the state β already asked regulators at the Green Mountain Care Board for a hefty increase to insurance premiums, citing hospital and drug spending.
But Jeff Hochberg, president of Vermont Retail Druggists, said previously those concerns are unfounded.
βThe only thing thatβs changing is just saying that (pharmacy benefits managers) canβt only cover their own pharmacy,β he said before the bill was signed into law. βThey have to make it open and more accessible to consumers.β