Mike Burns was diagnosed with cancer about six years ago. He needed radiation and chemotherapy and was prescribed the drug capecitabine. 

Burns, a pharmacist and owner of AuBurn Pharmacy, went to fill his prescription at his pharmacy when his claim was rejected. He was told the medication required a specialty pharmacy — even though his pharmacy had the drug on the shelf. 

The medication at his pharmacy would have cost $2,300 for six months. But insurance paid $15,300 to the PBM.

“I don’t have to explain how wrong this is,” Burns told lawmakers in January. “This is happening thousands of times daily across our country and right here in Kansas.” 

Burns was one of many pharmacists who spoke in favor of a bill cracking down on pharmacy benefit managers, or PBMs. Pharmacists and their lobbying groups told The Beacon that these benefit managers have created a monopoly in Kansas that is leading to sky-high prescription drug prices. 

PBMs act as the middlemen for prescription drugs. They don’t make the drugs, they don’t ship them and they don’t hand them out. They do negotiate prices for medications and run their own pharmacies. 

That means these middlemen are setting prices for how much they’ll pay their pharmacies and how much they’ll pay their competitors. 

Lawmakers pass reform 

Will Anderson, owner of Orchards Drug in Lawrence, supports a bill that passed at the end of session that regulates PBMs. Pharmacists say PBMs are setting prescription drug prices with little transparency. Drug prices end up higher than they should be and these companies don’t explain why. 

Groups who represent PBMs spoke with lawmakers in January. They say they favor transparency around pricing, but the additional regulations in the legislation will make it harder to negotiate better prices for the customer. One opponent of the bill said PBMs serve 289 million Americans and are among the few groups dedicated to lowering health care costs. 

The legislation would require regular reporting to the Kansas insurance commissioner and use national averages of drug costs as a point of reference for the prescription prices. The bill does a lot of different things, but supporters  say it makes these agencies show their math on how they came to these prices. 

It also gives state officials the ability to push back on unfair pricing. The legislation also adds audit protections for pharmacies. 

Joel Kurzman, director of state government affairs at the National Community Pharmacists Association, said PBMs can order audits of pharmacies. He said audits have been weaponized because pharmacies will complain about PBM practices and soon have an auditor at their location, sometimes the very next day. 

“It’s really uncanny how that happens,” Kurzman said. 

The bill passed with bipartisan support in both chambers. The proposed legislation almost didn’t pass, though. Speaker of the House Dan Hawkins, a Wichita Republican, originally planned to block the bill from passing. It eventually did pass, but not without pushback from PBMs and insurance companies arguing the legislation will increase the cost to consumers. 

One main frustration was a $10.50 charge to fill prescriptions. 

The $10.50 charge 

Supporters of the bill say the $10.50 fee helps reimburse pharmacists. Anderson said 83% of prescriptions are reimbursed below cost. There’s the cost of the prescription, but also the cost of refrigeration, labor and rent at the business. 

Anderson said this would reimburse pharmacies more fairly. Opponents of the bill say that charge will be passed on to the customer. 

“A ‘pill tax’ renamed as a ‘dispensing fee’ may make it through the Legislature but it won’t be so well accepted by the consumer who will be forced to pay this charge on each and every prescription regardless of cost of the underlying drug,” said Whitney Damron, with the Pharmaceutical Care Management Association — the national association of PBMs. “Where else in state law do we require minimum fees, surcharges, or guaranteed profits for a private sector entity or business?”

The legislation heads to the governors desk 

Kurzman, with the National Community Pharmacists Association, said PBM legislation has been debated in virtually every state. Three hundred bills this year were introduced to regulate the companies. 

Kansas is not alone in its issues, and Kurzman said that while it is not leading the charge, the state is a fast follower of reform. 

Bills in other states have shown some success. 

West Virginia passed a similar bill, and while some insurance plans did rise, they didn’t rise as much as they could have. Some plans were 5.5% lower because of PBM reform, state officials say. 

Anderson said he’d be surprised if prescription co-pays dropped right away. But the savings will come in when insurance premiums drop. 

“This is a systematic issue,” he said. “The prescription reimbursement system that we have was completely designed by these companies.”