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Bipartisan bill cracks down on Pharmacy Benefit Managers, should result in lower drug costs

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MADISON (WKOW) -- The state Assembly unanimously passed a bill Tuesday to remove Wisconsin from the few remaining states that do not regulate Pharmacy Benefit Managers, commonly known as PBMs, from banning pharmacies from offering cheaper drugs not covered by someone's insurance plan.

The bill, which already cleared the Senate, now heads to Governor Tony Evers who is expected to sign it into law.

PBMs are currently able to operate largely as they wish. Thad Schumacher, owner of Fitchburg Family Pharmacy, said Tuesday the bill would allow him to suggest generic drugs in cases where it would cost less than a customer's co-pay.

"I'm not supposed to be able to share with you alternative pricing either through the pharmacy or another mechanism," Schumacher said. "This bill allows us to have more of a conversation about that."

Schmacher said he's currently in an agreement with a PBM that allows him to only recommend a range of drugs covered by a person's insurance plan.

"It's difficult to practice with the knowledge to know that you can save somebody money and not be able to share that," Schumacher said.

PBMs essentially operate as middlemen between pharmacies and insurers. The bill passed Tuesday would require PBMs operating in Wisconsin to register with the Office of the Commissioner of Insurance.

According to the National Conference of State Legislatures, each of Wisconsin's neighboring states, Iowa, Illinois, Minnesota, and Michigan, already require PBMs to be licensed. Of the four border states, only Michigan has not outlawed the cost-disclosure/"gag order" provision.

"End result of that happening, I believe, is better patient outcomes or, i.e, hopefully lower prescription drug costs," said Rep. Michael Schraa (R-Oshkosh).

Schmacher said he was also glad the bill included language that limits the reasons for which PBMs can audit pharmacies. The Fitchburg pharmacist said, in the past, PBMs were able to clawback payments from pharmacies by using audits to find minor clerical errors.

Schmacher added, while he thought the bill was a good start, the legislature should do more to force transparency from PBMs with regard to whether pharmacies are hitting the metrics that trigger additional payments.

"If there are certain prescriptions we're filling that they would like us to fill differently or fill a different way, could we know what those are so we can change our habits or change our practice to be better for what they want?" Schumacher said.

Schraa said he was aware pharmacies wanted tougher regulations around those payments - known as Direct and Indirect Remunerations (DIRs) - but added this was what the legislature could reasonably pass on this go-round.

"There's language, I don't know that it's gonna make the pharmacies 100 percent happy because of some of the compromises we had to do but there are some things regarding DIR fees that won't go into effect until January 2022," Schraa said.

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A. J. Bayatpour

Capitol Bureau Chief

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