FL Prescription Drug Reform Act Takes Shot At 'Big Pharma,' Middlemen

FLORIDA — On Monday, Gov. Ron DeSantis and members of the Florida Cabinet approved rules to implement several provisions of the Prescription Drug Reform Act (Senate Bill 1550) intended to prevent prescription drug middlemen from arbitrarily raising drug prices.

The rules approved Monday increase accountability among pharmaceutical middlemen known as pharmacy benefit managers (PBMs). As signed by the Governor earlier this year, SB 1550 institutes the most comprehensive reforms to Florida’s prescription drug market in state history.

“We are committed to making Florida’s prescription drug market the most transparent and accountable in the nation,” said DeSantis. “For too long, PBMs and Big Pharma have made extraordinary windfalls by operating behind closed doors — deciding which prescriptions are covered, where they can be purchased and how much they cost. These rules will continue our efforts to lower prescription costs and make corporations responsible to the patients they serve.”

A pharmacy benefit manager processes and pays prescription drug claims, negotiates rebates with drug manufacturers and establishes networks of pharmacies. PBMs serve over 275 million Americans and over the past decade have merged into large vertically integrated companies that operate in secrecy, according to DeSantis. Three companies control 80 percent of the market.

According to the U.S. Department of Health and Human Services, there were 1,216 drugs whose price increases during the 12-month period from July 2021 to July 2022 exceeded the inflation rate of 8.5 percent. The average price increase for these drugs was 31.6 percent. Some drugs in 2022 increased by more than $20,000 or 500 percent.

Among the HHS's key findings:

• The list price of more than 3,000 drugs increased in January and July 2022.
• The average price increase was nearly $150 per drug (10 percent) in January 2022, and it was $250 (7.8 percent) in July 2022.
• The sharpest percentage price hike (over 1,000 percent) was for fluconazole, an antifungal medication. The wholesale package price increased from $2 to $24 or more.
• The largest list price increase was for two cancer medications, Tecartus and Yescarta. Each saw its wholesale package price climb from $399,000 to $424,000.

According to the HHS, overall spending reached $603 billion in 2021 (before considering any rebates).

“The cost of specialty drugs has continued to grow, totaling $301 billion in 2021, an increase of 43 percent since 2016. Specialty drugs represented 50 percent of total drug spending in 2021,” according to the HHS report.

The highest-priced drugs were Tecartus for leukemia, which increased by $25,000 from 2021 to 2022; Yescarta for lymphomas, which increased by $25,000; Korlym for diabetes, which increased by $7,560; Maci for cartilage damage, which increased by $4,364; and Zevalin for lymphomas, which increased by $4,085.

The top increases by percentage from 2021 to 2022 were Fluconazole for fungal infections, which increased from $2 per package to $28 (1,101 percent), Lisinopril for chronic heart failure, which increased from $20 per package to $129 (539 percent), calcium acetate for renal osteodystrophy, which increased from $140 per package to $300 (114 percent), and Diltiazem for hypertension, which increased from $39 per package to $81 (107 percent).

“Nearly nine in 10 seniors are currently taking prescription medications," said Florida Elder Affairs Secretary Michelle Branham during a roundtable discussion.

She said the legislation will not only reduce the cost of prescription drugs but will give seniors more freedom to choose a pharmacy.

“When you break down what pharmacy benefit managers are really doing — limiting patient choice and reducing access to often lifesaving medications — the time has come to put a stop to it,” said state Rep. Linda Chaney, R-St. Pete Beach. “We won’t back down from exposing and limiting these egregious practices.”

“Pharmacy benefit managers perform practices with innocuous names that do not benefit consumers and instead cost them more money, and this is unacceptable,” said Florida Agency for Health Care Administration Secretary Jason Weida. “Florida is creating an example for the rest of this country of how we can lower prescription drug costs and hold the pharmaceutical industry accountable. Through PBM reform legislation and other health care transparency initiatives, Floridians — especially vulnerable populations like seniors — won’t have to shoulder the burden of rising drug costs.”

DeSantis said the Prescription Drug Reform Act creates a robust regulatory framework for pharmacy benefit managers, which have been allowed to operate virtually unchecked by using such tactics as banning "clawbacks." That's when pharmacy benefit managers assign a price to the prescription claim that is much more expensive than the pharmacy's acquisition charge, then reduce future payments to the pharmacy that takes back a portion of the copay that the pharmacy collected to slightly over the acquisition cost of the medication by the pharmacy.

The law also prohibits mail order mandates in which customers must receive their prescriptions through the mail; banning spread pricing, the PBM practice of charging payers like Medicaid more than they pay the pharmacy for a medication and then the PBM keeps the profit; outlawing steering, a practice employed by PBMs or that channels prescriptions to their own wholly owned retail, mail order or specialty pharmacies; stopping data sharing of information across state lines; and banning affiliate-only networks.

Additionally, the bill requires PBMs to pass through 100 percent of all rebates received from Big Pharma to reduce consumer costs.

Rules approved by the governor and his Cabinet include all application forms for PBMs seeking to operate in Florida after Dec. 31. Any PBM that attempts to continue operating in Florida on or after Jan. 1, that has not been approved as an insurance administrator will be subject to fines totaling $10,000 per violation per day.

Following the Cabinet meeting, the Office of Insurance Regulation formally sent correspondence to all PBMs currently operating in Florida reinforcing the updated requirements of Florida law. OIR also issued additional information to all stakeholders outlining the method by which PBMs must report appeals from network pharmacies and pharmacists and the forms for health plans and payors to annually attest compliance with Florida law.

This summer, the Department of Business and Professional Regulation initiated rulemaking to implement additional provisions of SB 1550 to require Big Pharma to provide notice when increasing the cost of prescription drugs. Prescription drug manufacturers must disclose all price hikes that result in a 15 percent increase within a calendar year or 30 percent increase within a three-year period, both on the effective date of the increase and through an annual cumulative report citing the contributing factor for the reported increases.