LANSING – Sen. Bruce Caswell said Wednesday that the health care industry is complicated, but he’s hoping his bill allowing pharmacists to receive up to three national drug codes from pharmaceutical benefits managers could bring some clarity to the industry’s drug pricing.

“The core issue here was to create, for pharmacies across the state, the ability to find drugs at a price for which they can then sell it and make somewhat of a profit,” Caswell (R-Hillsdale) told members of the Senate Reforms, Restructuring and Reinventing Committee. “And in some cases today – not all – that’s been very difficult, particularly with independent pharmacies, many of which you find across rural Michigan.”

His legislation, SB 656 , would only deal with generic drugs as they pertain to the Department of Community Health’s pharmaceutical benefits manager (PBM), Magellan, as well as PBMs for Medicaid health plans. Caswell said some pharmacists and PBMs already practice what he is trying to put into law, though not all, hence the need for legislation.

Caswell explained to the committee that the way the system currently works is a pharmacy sells a certain drug, and that pharmacy’s pharmaceutical benefits manager goes to the market to establish a maximum allowable price for the drug. The PBM reports that information back to the pharmacy, while giving it a reimbursement rate. But pharmacies also contract with certain drug wholesalers or manufacturers, so the pharmacy is left to purchase that drug through those entities, ideally at that price.

“So what this bill requires is that when the pharmacy comes back to the PBM and says we can’t find it for (a certain price), then the PBM will be required to give the pharmacy three national drug codes (for the drug), if there are three available,” Caswell said.

After that action has been completed within the 10-day timeframe mandated by SB 656, the role of the PBM is done, Caswell said. It would then be up to the pharmacists to determine the best course of action that is in the best interest of their pharmacy.

Caswell said he had a lot of requests from various interested parties to include more in the legislation, but he decided against doing so, and urged the committee to keep that in mind going forward.

Still, Sen. Mark Jansen (R-Gaines Township), the committee chair, said he would be “a little hesitant” about moving forward with the bill if there is no penalizing language if a PBM does not comply with the pharmacy’s request for the drug codes. Mr. Caswell said he had enough faith in the system and the parties involved that it would work, but if it doesn’t, he’d rather visit that issue at a later time, he said.

The Michigan Association of Health Plans said Wednesday that it was neutral on the bill. While it supported the concept and the intent of the bill, the neutrality stemmed from the historic position of the association to oppose certain regulations in the industry (which this bill could be viewed as in some light).

And the Michigan Pharmacists Association said it supported the bill not only because it puts pharmacists in the hunt for the best possible price, minimalizing the risk involved with making certain drug purchases, but also because the outcome could benefit the patient through helping maintain some price consistency on certain drugs.

Blue Cross Blue Shield of Michigan opposed the bill from a somewhat technical perspective in that it had hoped for some clearer language regarding the PBM only giving three options that are actually available to the PBM. Otherwise, it said, the company basically engages in this kind of pharmacist-PBM relationship already, and it is illegal in Michigan to charge a health plan more than what a pharmacy paid for the drug anyway.

The committee did not vote on the bill, and there was no indication as to when it may do so.

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