The pathway a prescription drug takes from a manufacturer to a pharmacy to a patient’s hands — and how its cost is determined along the way — is often an opaque and confusing one.
Vermont’s state treasurer, backed by some health care-focused lawmakers, wants to make that process more transparent and make the drugs more affordable by introducing a bulk buying prescription card.
Treasurer Mike Pieciak’s proposed plan would have Vermont join five other states in an ArrayRx prescription discount card program. The program, which began in and is administered through the state of Oregon, aims to pool states’ purchasing power to negotiate lower prices from drug companies.
Lawmakers in support of the bill say it is a win-win for Vermont since insurers and patients both save money under the program.
The state’s independent pharmacists say it’s not that simple.
H.577, introduced by Rep. Alyssa Black, D-Essex Town, and Rep. Daisy Berbeco, D-Winooski, would allow anyone with a Vermont address to register for a free prescription card from ArrayRX. At the pharmacy, an individual can choose to use the prescription card for the agreed-upon bulk price of a drug or to use their insurance, if that yields a better deal.
On Feb. 5, the House Health Care Committee voted unanimously to advance the bill, which later received approval from the House Ways and Means Committee as well. H.577 now goes to the House Appropriations Committee.
Crediting Costs
As the bill worked its way through the House Health Care Committee, much of the discussion centered on whether someone paying out of pocket for a drug, using the ArrayRX price, would be able to apply that to their insurance deductible.
The current version of the bill makes clear that an insurer can attribute this out-of-pocket prescription spending to a person’s deductible.
“I think what’s important for you to take away is that when a consumer uses a discount card, they’re not using their (health insurance) plan’s prescription drug benefit, and therefore the (insurer) doesn’t pay for the drug,” said Sebastian Arduengo, assistant general counsel for the Vermont Department of Financial Regulation, in testimony to the House Health Care Committee last month.
That process brings down the cost of what an insurer pays out, he explained. When an individual buys a drug with the insurer’s pharmacy benefit managers, the insurer is the one footing the bill.
Courtney Harness, a lobbyist for BlueCross BlueShield of Vermont, told lawmakers the insurer supports the bill.
“Vermonters need some relief at the point of sale, at the point of service,” he said. “We believe that ArrayRx accomplishes that goal for Vermonters.”
Pieciak said he originally envisioned the program’s benefit for those who do not have insurance but is glad that the Legislature has expanded the umbrella of consumers who can take advantage of lower costs and get credit toward their insurance deductibles.
“We were pretty excited about it when we announced the program back in January, and I would say that that’s only grown,” he said.
He estimates that Vermonters could stand to save $18 million a year paying less for prescription drugs.
Who loses?
If patients and insurers support the bulk purchasing, who, then, is losing out, Black, the health care committee’s chair, asked her colleagues.
Currently, there is no cost to the state to join the coalition participating in ArrayRx — which includes Arizona, Connecticut, Nevada, Oregon and Washington. The bill appropriates $50,000 so the Treasurer’s Office can implement the program, but the office would not be responsible for negotiating prices, administering cards, customer service or data management. All of those administrative tasks would fall to ArrayRx.
Still, some pharmacists argue the concept would do little to change the true cost of drugs. Particularly, some pharmacists worry that the program could add an administrative fee baked into the price of each prescription.
Black pushed back on that: “That fee is essentially the cost to run the program. It wasn’t yours to begin with,” she told VTDigger, comparing it to a sales tax.
However, the independent pharmacies maintain that they will be the ones holding the bag on these administrative fees taken out of each prescription through ArrayRx.
In an email to VTDigger, Lauren Bode, a lobbyist for the Vermont Pharmacists Association, said the organization is still seeking more information about the program, but with what she knows now, it seems like pharmacies could have to dispense medication at a loss.
“It does not drive the cost down for me and my pharmacy locations,” Jeff Hochberg, who runs the Rutland Pharmacy, told the House Health Care Committee last month. “All it does is squeeze my margin potential.”
The bill doesn’t change the cost of the drug to wholesalers or the cost to pharmacies, he said. It doesn’t mean that it’s not worthwhile for the state to pursue, but it’s more like a Band-Aid on a gaping wound, he explained to VTDigger.
Pooling states’ market power to bring costs down is a step in the right direction, if Vermont can leverage that group power carefully and smartly, Hochberg suggested.
“Pharmacies (are) the frontlines between capitalism and social welfare,” he told the Health Care Committee. “This just fails because it doesn’t actually negotiate or change anything with the negotiation structures with manufacturers. All it does is set the price and price limits at the retailer.”
Bode, in her comment to VTDigger, echoed the need for deeper, structural change that this bill does not address. “Even under the most favorable assumptions, ArrayRx is a temporary measure within a broader system that is deeply flawed,” she wrote.
“Pharmacy benefit managers have created a structure in which patients, pharmacies, insurers, and employers are often disadvantaged while (pharmacy benefit managers) profit. Any new program operating within this framework should be carefully evaluated to ensure that its potential benefits outweigh any unintended consequences,” Bode added. She remains optimistic though, about ongoing conversations with the Treasurer’s office she hopes can do just that.
In testimony, Black dismissed the critiques, saying that systemwide reform is beyond the scope of the bill.
“Ultimately this is a system that is not working for patients. Here we’re trying to help patients,” she said.
In an interview with VTDigger, Black acknowledged that independent pharmacists may be left shortchanged by this program. She said she knows it doesn’t change the status quo of drug prices on the whole, but it’s a worthwhile tradeoff for the benefits individual consumers stand to receive at the pharmacy counter.
Pieciak said that those who stand to lose the most are those outside Vermont: drug manufacturers and for-profit prescription drug cards, like GoodRx, that Vermonters may be using.
He’s optimistic that joining the collaborative could be a launch point for broader change to bring costs down. “Oregon has a lot of energy and vision behind what this could turn into, and how there could be opportunities to build on the discount card program to actually bring down the cost of manufacturing some of these drugs or the cost to purchase them,” Pieciak added.
Connecticut’s state comptroller, Sean Scanlon, who runs his state’s 2023 adoption of the prescription card program, said that it’s taken some time for people to learn about its availability and for the state to work out some details.
The same is likely to be true for Vermont.
“It’s a good thing,” Black told VTDigger. “We very rarely get to do things that are just good for Vermonters.”
