Governor Scott signs legislation that targets prescription drug middlemen

pharmacist holding a vial on a syringe
Steven Simpson, the supervising pharmacist at Kinney Drugs in Barre, prepares a syringe with a dose of the Pfizer/BioNTech Covid-19 vaccine. Vermont’s independent pharmacies and hospitals gained traction when Governor Phil Scott signed a bill that targets pharmacy benefits managers. File photo by Mike Dougherty/VTDigger

Vermont’s independent pharmacies and hospitals — particularly UVM Health Network — took the upper hand this week as Governor Phil Scott signed a bill that targets pharmacy benefits managers.

These national intermediary companies negotiate prescription prices with drug manufacturers on behalf of private insurers. Private insurers say pharmacy benefits managers use wholesale discounts to control prescription drug costs. But some regulators — including the Federal Trade Commission — say benefits managers set drug prices based on their own profits.

“What we’ve done is we’ve ripped the band-aid off to actually look at what we’re doing,” Jeff Hochberg, president of Vermont Retail Druggists, said last week. “Now we’re looking down there to see what’s going on. And at the same time, we are establishing a platform through which all other reforms can occur.

With the newly signed H.353, Vermont joins a growing group of regulators who say pharmacy benefit managers are one of the reasons for soaring drug prices.

H.353 began as a bill to make drugs more affordable by regulating negotiations between drug benefit managers and independent pharmacies in Vermont. Revisions to the bill also introduced provisions that virtually guaranteed that prescriptions for specialty drugs given to patients in health care facilities, including high-cost cancer drugs, would be filled at pharmacies in the health care network of the University of Vermont, rather than through mail-order pharmacies that are cheaper than insurers. favorite.

Although the language has been softened somewhat in later revisions, the final version of the bill still gives UVM Health Network an edge when it comes to filling those expensive prescriptions. The health network, for its part, argued that the shipment of specialty drugs puts patients at risk due to medication errors and poor storage in transit.

Specialty prescriptions — a broad category that includes everything from Botox to biologics — are a relatively new addition to a doctor’s arsenal. Patients usually get these drugs at a clinic or other health care facilities through a monthly infusion or injection. Because these drugs can cost thousands of dollars for a dose, insurers dispense them sparingly and only after patients and their doctors have exhausted all other options.

Annie Mackin, spokeswoman for the UVM Health Network, said this week that providers “can now be confident that drugs have been shipped safely before they are prepared and administered to patients at the location where they receive their treatment, without risk of damaging the drug which could harm the patient or delay his care.

The bill could be a financial boon for UVM Health Network. For example, a single dose of Herceptin, a biologic drug to treat esophageal and breast cancers, costs more than $10,000 when dispensed from a hospital pharmacy, according to national insurers group AHIP. The same drug costs about $6,500 at a doctor’s office and $4,600 at a stand-alone pharmacy.

With H.353, hospitals can decide where the drugs come from, meaning that patients receiving specialty drug infusions at a clinic or medical center would almost certainly get their drugs from the most expensive hospital pharmacy.

In most cases, specialty drugs are so expensive that patients peak after one or two infusions. This means that patients are often unaware of the additional expense of refilling a drug from a hospital pharmacy. However, insurers are factoring these extra expenses into next year’s premiums.

Private insurers and drug benefit managers have cited these costs in their opposition to the bill. They argued that the bill could cost some Vermonters hundreds of dollars a year.

Sara Teachout of Vermont’s BlueCross BlueShield reiterated Thursday that H.353 “removes levels to control drug costs” and would ultimately increase premiums.

Earlier this month, BlueCross BlueShield — the state’s largest private insurer — already asked Green Mountain Care Board regulators for a big increase in insurance premiums, citing hospital and drug expenses.

But Jeff Hochberg, president of Vermont Retail Druggists, previously said those concerns were unfounded.

“The only thing that changes is just to say that (pharmacy benefit managers) can’t just cover their own pharmacy,” he said before the bill was signed into law. “They need to make it open and more accessible to consumers.”

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