Pharmacy Benefit Managers

S.849 seeks to regulate the duties of pharmacy benefit managers (PBMs). PBMs are defined as entities who contract with pharmacies on behalf of insurers, third party administrators or the South Carolina Public Employee Benefit Authority to: process claims for prescription drugs, pay pharmacies for prescription drugs, or negotiate rebates with manufacturers for drugs.

PBMs would be required to maintain a maximum allowable cost (a list which gives the maximum amount they will reimburse a pharmacist for a generic drug) and make that list and the sources that determine its makeup available to every pharmacist who is in the network of the entity on whose behalf the benefit manager is negotiating. PBMs would also have to establish a process by which contracted pharmacies can appeal a provider’s reimbursement rate for a drug.

This is another unwarranted regulatory intrusion into the healthcare market. If individual pharmacies wish to only work with PBMs who behave in the ways outlined in this bill they are currently free to do so. But legally requiring PBMs to make available information and appeals processes to pharmacies is an attempt to shift the balance of power between PBMs and pharmacies by government fiat. The state should not be favoring either industry.

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