February 25, 2022
By: Kathleen Stoll
Here’s a story of money trying to buy power. Over the last couple weeks our state has been flooded with social media posts and ads that ask consumers to oppose House Bill 4112.
HB 4112 helps protect consumers and health care providers by strengthening regulation of the prescription drug supply chain middlemen called Pharmacy Benefit Managers.
The posts and ads took me to a website that wraps opposition to HB 4112 in misleading pro- consumer language. The posts are paid for by “West Virginians for Affordable Rx.”
By gosh that name sure sounds familiar. I work with a group named “West Virginians for Affordable Health Care,” a legitimate West Virginia-based 501©(3) non-profit organization in operation for 20 years. The latter group educates and advocates for consumer access to quality, affordable healthcare. Is the similarity of names just coincidental?
So what is really going on? This Rx campaign is an “Astro-turf” campaign – as in fake grassroots – get it? In this case, it appears that the national association of the Pharmacy Benefits Managers has come into our state to try to look like a legitimate grassroots consumer group. And they have the big bucks to do it.
To stop the confusion caused by the similar names, my colleagues have legally registered the name “West Virginians for Affordable Rx” with the West Virginia Secretary of State. But the posts and ads can’t be stopped immediately.
It makes me furious to see this kind of Astro-turf campaign mislead West Virginians. But here’s the thing: try to manipulate West Virginians with big corporate out-of-state money
and you make us mad as hell. And the Astro-turf campaign may back-fire in your face.
If you want to understand HB 4112, please stay with me for a short lesson on prescription drug profits, pharmacy benefit managers, and the U.S. pharmaceutical supply chain.
There is no single price for a prescription drug. Organizations called Pharmacy Benefits Managers (PBMs) serve as the middlemen between insurance companies and drug manufacturers. The concept is that PBMs secure rebates for insurers on the drugs their enrollees use by leveraging buying power and negotiation.
PBMs make profits by keeping some of the rebates or paying pharmacies less for a drug than what they tell the insurer they paid the pharmacy. There’s a lot of money in drug rebates and managing the pharmacy benefit for millions of insured people — with very little transparency in the process.
The PBMs have become very powerful and they use a wide range of tactics to maximize their profits.
The whole prescription drug supply chain is uber-complicated. Under Medicare Part D (drug benefit) the government is legally prohibited from being involved in any rebate negotiations. In contrast, under Medicaid, drug manufacturers must pay legally defined rebates to state Medicaid programs.
There is more complexity. Section 340B of the federal Public Health Service Act requires pharmaceutical manufacturers to sell outpatient drugs at deeply discounted prices to health care facilities that serve many uninsured and low-income patients (including community health centers and hospitals). 340B helps these providers stretch limited federal resources to reduce the price of outpatient pharmaceuticals for patients and expand health services to low income or underinsured patients.
Whew. Hang with me. Today about half of the pharmacy industry — 31,000 pharmacy locations – have a contract with a 340B entity that is also a Medicaid participating provider. Which means the PBMs can’t make money by grabbing a piece of the discounts or rebates.
Guess what? PBMs don’t like these arrangements. So PBMs try to keep these 340B pharmacies out of the networks of the insurance companies they work for. They do this by making these pharmacies meet special requirements and certifications. The impact on consumers with a prescription is that they find the door to their local pharmacy is not open to them. And that local pharmacy may be the only one in a small rural community.
Enter West Virginia HB 4112. This bill would regulate these PBM practices. The bill passed the full House. Thank you to House Health and Human Resources Committee Chair Rohrbach (R- Cabell) and the Committee.
This game played on Astro-turf should not stop passage of HB 4112 in the Senate.
Kathleen Stoll, of Berkeley Springs, serves as the Policy Director for West Virginians for Affordable Health Care (wvahc.org) and operates a policy and economic consulting business, Kat Consulting.
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