Supreme Court ruling gives Texas momentum to pursue greater PBM oversight

Arkansas’ right to regulate pharmacy benefit managers (PBMs) was upheld in a unanimous U.S. Supreme Court ruling in December. This long-disputed issue about the breadth of control held by PBMs has been a point of contention in several states, including Texas. This landmark ruling is just the fuel that Texas, and other states, need to rein in the unfair and predatory PBM practices that hamper patient choice and strain local community pharmacies. Senate Bill 2195, filed by Sen. Lois Kolkhorst, R-Brenham, would do just that, and we urge the Texas Legislature to pass this legislation before adjourning this session.

Never has the role of community pharmacists been more important than during the current public health crisis. Pharmacists are the most accessible healthcare providers in the state, and are vaccinating thousands of Texans each day. And their impact goes far beyond fighting COVID-19: Pharmacists provide ongoing care for immunizations, health screenings, diabetes and several other common ailments that help Texans avoid costly hospitalizations and medical expenses.

PBMs — the middlemen between patients, pharmacies and insurance companies — were intended to facilitate the electronic processing of claims when pharmacies dispensed medications. But PBMs are no longer third parties. Many PBMs own or are owned by insurance companies, and PBMs themselves own their own pharmacies. These muddled lines have created a system in which insurance companies control medication access and steer patients to their owned and controlled pharmacies.

Texans are unaware that their right to freely choose how and where they access their medications is being infringed upon by PBMs, which have been allowed to operate with little to no oversight. This lack of transparency has created a breeding ground for devious practices, such as self-dealing and clawbacks.

These practices, among others, are at the core of the need for greater PBM oversight.

“Self-dealing” is a major problem among PBMs. The term encompasses several different PBM actions, but generally refers to the abuse of power that allows PBMs to steer patients to their own pharmacies by restricting access to medications.

Clawbacks are direct financial controls exercised by PBMs that reduce reimbursements and compensation to community pharmacists. This practice puts pharmacists — many of whom are small business owners — in the untenable position of struggling to operate with little financial security and on razor-thin margins, while PBM-owned pharmacies benefit from the wealth of their health plan owners.

These underhanded actions culminate in limitations to patient access and choice — a dangerous standard when it comes to life-saving medications. Community pharmacies are suffering too, as predatory PBM practices continue to drive patients away and control their purse strings. PBM overreach goes against Texas’ principles, which value competition and the rights of citizens to make the best decisions for themselves.

Legislation such as Sen. Kolkhorst’s SB 2195 will help us ensure that PBMs do not slip through the legislative session unscathed, by passing thoughtful and fair regulation. This important legislation will prevent unfair PBM clawbacks from pharmacies, ensure patient choice and prevent PBM self-dealing.

“This is more complicated than I described, but not as complicated as the PBMs want you to think it is,” Kolkhorst said. Enacting reasonable protections for patients and pharmacies should not be a complicated decision for Texas legislators.