Indiana State House Rejects Bill Amendment to Lower Prescription Drug Prices

Correction: We originally said House Bill 1042 was authored by State Rep. Ryan Hatfield, but that was incorrect. The Bill was written by State Rep. Steve Davisson (R-Salem). Hatfield had proposed an amendment to the bill on the second reading, and it was his amendment that was voted down on January 30th, not the full bill itself.

Earlier this week, State Rep. Ryan Hatfield (D-Evansville) proposed an amendment to House Bill 1042, authored by State Rep. Steve Davisson (R-Salem), that would have helped lower the price of prescription drugs for Hoosiers across the state.

The proposed amendment would take on the role that PBM’s play when using insurance to pay for prescription drugs at a pharmacy. A PBM is a Pharmacy Benefit Manager, which Ruth D. Williams, MD with the American Academy of Ophthamology describes as someone who is tasked to “actively manage the drug benefits for health plans, create formularies, and negotiate discounts and rebates on behalf of the insurance companies.” Dr. Williams says PBM’s “were conceived to relieve the burden of processing claims for insurance com­panies.” They were used to negotiate drug prices between these insurance companies and pharmacies.

However, Dr. Williams believes that PBM’s have taken on too much power. As of today, three giants run 85% of the market — CVS/Caremark, Optum­Rx, and Express Scripts. Williams explains that one of the biggest problems is that, while it seems like PBM’s would save money for consumers, it’s actually the insurance companies that reap the benefits of their negotiations.

She continues by saying “while it’s the net price—after rebates—that determines the cost to insurers, it’s the list price that often determines out-of-pocket payments for many Amer­icans,” and the list price is almost always more expensive. Of course, with consumers having to pay the list price, they often either can’t afford to fill their prescriptions, or they go into debt paying for their drugs.

The amendment proposed in the Indiana State House by State Rep. Hatfield would have put restrictions on what PBM’s could and could not do in the state.

Hatfield’s amendment would have denied PBM’s the ability to “implement spread pricing techniques, deny previously accepted claims, reduce payment to a pharmacy for pharmacist services, or pay a pharmacy or pharmacist less than the national average drug acquisition cost for the prescription drug provided.”

Hatfield recently referred to PBM’s as “the middle men between manufacturers and pharmacies,” and claimed that a lack of regulation has meant higher drug prices all across Indiana.

The amendment was brought up for a vote on January 30th, but it failed to pass, with 30 yeas and 61 nays.

Here is a breakdown of how each representative voted:

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