Pharmacy `Clawbacks’ Focus of Newest State Law on PBMs

Published by Bloomberg Gov

A new law in Connecticut would close a drug price loophole that’s been the subject of more than a dozen lawsuits around the U.S., taking aim at a practice by pharmacy benefit managers called pharmacy clawbacks.

The law, which takes effect in January, will allow pharmacists to tell patients about the cheapest way to pay for prescription drugs they pick up at the pharmacy counter. It was passed in response to a pharmacy benefit management industry practice called clawbacks.

Clawbacks happen when a patient goes to pick up a drug at the pharmacy, handing over a co-payment set by their pharmacy benefit manager that’s bigger than the actual cash cost of the drug. The pharmacy benefit manager ultimately pockets the difference. Most patients never realize there’s a cheaper cash price because of clauses in contracts between pharmacies and PBMs that bar the drugstore from from telling people there’s a cheaper way to pay.

Connecticut Governor Dan Malloy, a Democrat, signed the bill on Monday. In a letter to lawmakers he said he supports its “real consumer protections.”

Suits over the clawbacks have been filed against UnitedHealth Group Inc., which runs the PBM OptumRx; Cigna Corp., which contracts with OptumRx; and Humana Inc. They allege that the PBMs defrauded consumers and violated insurance laws. OptumRx and Cigna declined to comment, while Humana didn’t respond to a request for comment.

PBM Business

The Pharmaceutical Care Management Association, the Washington-based lobby group for PBMs, said in an emailed statement that “we support the patient paying the lowest price available at the pharmacy counter for the prescribed drug.”

Pharmacy benefit managers process prescriptions for insurers and large employers, and also determine which drugs are covered or whether they will carry a co-pay when the patient picks up the drug. They also work to bargain down prices with drugmakers, excluding some drugs and preferring others in return for discounts.

Connecticut joins Louisiana, Georgia, North Dakota and Maine, which have also passed legislation aimed at stopping the clawbacks, a growing concern amid high prescription costs and a national debate over drug prices. Several other states have introduced legislation related to clawbacks, which have prompted at least 16 lawsuits since October.

“Connecticut has now joined a number of states that have outlawed these secret clawback schemes since they were first exposed last year,” said Connecticut lawyer Craig Raabe, who represents people accusing companies of defrauding them. “Consumers will benefit from these overcharge bans because they should not pay more than an insurance company actually pays for a prescription medicine.”

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