Bipartisanship is alive and well in the halls of the Wisconsin State Capitol. Thanks to the efforts of Senator Mary Felzkowski and Representative Michael Schraa, patients and taxpayers in Wisconsin will see real relief in the way of lower prescription drug costs. Senate Bill 3 passed both houses of the legislature with overwhelming bipartisan support. It is now headed to Governor Tony Evers’s desk for signing.
The bill addresses cost inefficiencies created by pharmacy benefit managers (PBMs) which were originally created to reduce administrative costs for insurers. PBMs function as middlemen between prescription drug manufacturers and payers.
Pharmacy benefit reform will allow health plan payers to know amounts paid to pharmacies, which in turn allows the health plan to know the percentage paid to Pharmacy Benefit Managers. Studies conducted in several states including Michigan, Kentucky, Ohio, New York, West Virginia, and Illinois have shown PBMs have charged states between $224 - $300 million in spread above the cost of prescriptions dispensed. Spread pricing transparency allows the health plan payer to know the facts behind their prescription drug costs.
SB 3 will also remove contractual “gag clauses” so patients have affordable options. When pharmacists are free to openly share information with patients about the availability of lower-cost alternatives to a prescribed medication - or to disclose when the patient’s copay is more expensive than the cash price of the drug - the patient’s end cost is substantially decreased.
The bill ensures that manufacturer rebates on pharmaceuticals will actually be passed on to consumers and health plans. SB 3 reforms the current “pay to play” system which incentivizes manufacturers to pay higher rebates to PBMs for exclusive placement on a plan’s formulary. As a result, much of the savings from rebates are not passed along. An increase in transparency encourages PBMs to pass rebates from manufacturers to patients.
Pharmacy benefit reform will lead to increased competition among in-network pharmacies. As the pharmaceutical plan designers, marketers and managers, PBMs have a financial interest in designing plans that can restrict pharmacy options and limit competitive market forces. Current law allows PBMs to design plans, require patients to use their pharmacies, and charge plan sponsors without having to disclose the price difference between competing pharmacies. By modifying the current system, consumers will have more control over their prescription drug costs.
Wisconsin pharmacies, patients and taxpayers deserve a transparent pricing structure that will afford patients flexibility in their prescription drug plans and provide an improved understanding of pharmaceutical costs, resulting in increased consumer choice and freer markets. It is time for Governor Evers to sign SB 3 into law and provide much needed relief to Wisconsin citizens.