Inside the battle over prescription drug prices and pharmacies in the Louisiana Legislature

Independent pharmacies gained the upper hand Wednesday against pharmacy benefit managers following a behind-the-scenes lobbying battle over what has been one of the biggest unsettled policy issues in the final days of the regular legislative session.

The outcome could affect everyone in Louisiana who buys prescription drugs, especially those who purchase specialty drugs that treat such maladies as diabetes, neuropathy and inattention or hyperactivity.

Pharmacy benefit managers are third-party companies that are supposed to negotiate lower drug prices by acting as middlemen between drug manufacturers, insurance companies and pharmacies. Critics say that pharmacy benefit managers pocket too much of the savings.

A measure passed Wednesday by the Senate Insurance Committee, House Bill 264, favored independent pharmacies by prohibiting pharmacy benefit managers from steering customers to pharmacies they own and by mandating that discounts negotiated by pharmacy benefit managers go to employers and consumers. HB264 also requires pharmacy benefit managers to report more details of their activities to government regulators to ensure that they are following the law.

“Today the balance has shifted away from large corporations and their profits back to independent pharmacies and the consumers,” Sen. Adam Bass, R-Bossier City, said in an interview following the insurance committee hearing.

Gov. Jeff Landry has sided with the independent pharmacies, saying when he opened the legislative session nearly two months ago that he favors “reining in the PBMs who are driving the cost of prescriptions.” Landry pitched his views to Republican senators Monday night in the Senate basement, according to senators.

Lobbyists for pharmacy benefit managers had lobbied against HB264 but accepted the changes as inevitable, legislative sources said, to try to head off Louisiana from following Arkansas and adopting more far-reaching legislation that would prohibit pharmacy benefit managers from also owning and operating pharmacies.

Landry also supports that change, according to his staff.

CVS, the biggest drug store company that owns a pharmacy benefit manager, sued Arkansas a week ago to block the new law there from taking effect. CVS has 23 pharmacies in Arkansas but more than 100 in Louisiana.

The CEO of Caremark, CVS’ pharmacy benefit manager, tried to sway legislators in Louisiana with phone calls, legislators said. The CEO of Optum Rx, another pharmacy benefit manager, came to Baton Rouge to personally lobby lawmakers.

A state website shows that CVS has seven lobbyists working the halls of the State Capitol. They are working in alliance with lobbyists for the Pharmaceutical Care Management Association.

“PBMs secure savings on prescription drugs for Louisiana employers and patients and provide employers with a wide range of choices to offer quality prescription drug coverage,” said Greg Lopes, a spokesperson for the association. “Drug companies set drug prices, and the prices are the problem.”

CVS declined to comment, saying the company is still digesting the last-minute changes to HB264.

The Louisiana Association of Independent Pharmacies and their allies have their own phalanx of lobbyists.

“PBMs shouldn’t be allowed to say one thing and do another behind the scenes,” said Randal Johnson, president of the Louisiana Independent Pharmacies Association. “HB264 attempts to shine a light on rebate flows, bans hidden fees and ensures that what’s paid and what’s reimbursed can actually be traced and reviewed. That’s good policy, and more importantly, it’s pro-patient.”

The heavy lobbying by both sides caught the attention of legislators.

“Every lobbyist here is hired,” said Rep. Dustin Miller, D-Opelousas. “You have CEOs from these companies flying in. There are meetings happening in every room of this building.”

Pharmacy benefit managers have become in vogue only in the past dozen years but have quickly faced questions for their activities.

The New York Times reported in a three-part series last year that pharmacy benefit managers operate in an opaque fashion and “are driving up drug costs for millions of people, employers and the government.”

The Trump administration and Congress are moving to adopt less favorable rules for pharmacy benefit managers.

Wednesday’s action is not the final word in the long-running battle in Louisiana between the independent pharmacies and their allies on one side and the pharmacy benefit managers on the other.

The full Senate still needs to approve House Bill 264, and the House would need to agree to the changes made by the Senate before adjournment on June 12.

In the meantime, a separate House measure, House Bill 358 by Miller, could be amended to institute the change that CVS strongly opposes – a prohibition on pharmacy benefit managers from owning or operating pharmacies. House and Senate negotiators are scheduled to meet in the next several days to decide on the final shape of HB358.

“I support any legislation that will stop the anti-competitive practices that I think PBMs do,” Miller said in an interview.

Rep. Mike Echols, R-Monroe, and the sponsor of HB264, also takes a skeptical view of the pharmacy benefit managers.

“We’re putting money into the hands of consumers, which should lower costs,” he told the Senate Insurance Committee.

Driving HB264 forward has been Bass, a 44-year-old Allstate agent who is the vice chair of the insurance committee. Sen. Kirk Talbot, R-Harahan, the committee chair, deputized Bass to try to fashion a bill that could win legislative approval.

Bass said he concluded that pharmacy benefit managers were using their power to block some drugs from coming to market and that employers and consumers are not receiving enough of the discounts negotiated by pharmacy benefit managers with drug manufacturers.

Bass said he met with lobbyists from all sides and worked until midnight with legislative staff late on Monday and Tuesday night to confect the final language for changes in HB264.

The amendments were not shared with lobbyists and some lawmakers until just before Wednesday’s meeting. Echols was quickly familiarizing himself with the changes to his bill just before he presented it Wednesday.

Once the hearing began, Bass explained the changes. A half hour later, the committee approved the amended bill without objection.

The lobbyists on both sides of the issue got up to depart, leaving behind a nearly empty room as the Senate committee moved onto less controversial measures.