MONTGOMERY — Legislation aimed at reining in pharmacy benefit managers to save consumers money passed the House 101-0 and now heads to Gov. Kay Ivey.

Senate Bill 73, the Alabama Pharmacy Benefit Managers Licensure and Regulation Act, was sponsored by Sen. Arthur Orr, R-Decatur, and passed the Senate on May 15, 27-0.

The bill makes pharmacy benefit managers register with the Alabama Department of Insurance, outlaws gag clauses for pharmacists, and forbids clawbacks.

"This bill is about protecting the individual consumer, and allowing local pharmacists to inform their customers when it would be cheaper for the customer to buy a prescription drug with cash, out-of-pocket," said Orr.

"You should have transparent pricing in the health care market, and consumers should know which options are most affordable for them and their families."

Pharmacy benefit managers provide claim-processing services or other prescription drug or device services for insurance plans.

A gag clause is a provision of a contract that keeps pharmacists from telling customers whether or not it would be cheaper to pay out-of-pocket for a medication instead of using insurance. Clawbacks are when a pharmacy benefit manager requires a pharmacy to charge more for a medication, and then send the difference back to the manager.

Both practices would be prohibited under Orr's bill. Congress previously outlawed the practice, but state legislation was also needed.

Rep. Kyle South, R-Fayette, sponsored the bill in the House.

"There could be a huge cost savings for people due to being notified that copays are actually higher than the drug costs," he said. "It has been past practice by some PBMs to keep pharmacists from disclosing that information."

The bill states that, effective Jan. 1, 2020, pharmacy benefit managers must be licensed by the commissioner of the Alabama Department of Insurance. This license must be renewed every two years and will cost no more than $500.

Sen. Billy Beasley, D-Clayton, is a pharmacist who helped Orr shepherd the bill through the Legislature. He said stopping gag rules alone will save money for consumers.

"It will mean real savings to the customer. I would say anywhere from 30 to 35% savings on prescriptions, mainly on generics," Beasley said.

The insurance industry supported the legislation.

"The bill reiterates the important role of pharmacists in providing advice and counsel to consumers and follows federal law passed by the Congress last year eliminating 'gag clauses' in contracts," said Koko Mackin, Blue Cross and Blue Shield of Alabama's vice president of corporate communications and community relations.
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