Illinois is getting its first major regulation on PBMs. Signed by Governor J.B. Pritzker last Friday, House Bill 465 will create a formal appeal process for pharmacies regarding reimbursement cuts by both Medicaid and private insurance, regulate PBMs with additional rules, and save patients money. It is set to take effect on January 1st, 2020.
Why It Matters
The new state law addresses concerns independent pharmacies have had with rising drug costs and unfair payment cuts imposed by PBMs by providing an appeal process that can reverse these cuts. Local pharmacists have protested that the maximum allowable costs set by PBMs — that limit how much they will be reimbursed for a drug — are often less than their acquisition cost.
In addition to changes in reimbursement, the bill will also require disclosure of payment data and additional information on how much money PBMs earn and how much money they save clients. The bill will also eliminate “gag clauses” that keep pharmacists from letting patients know about cheaper drug alternatives for prescription drugs.
With greater PBM oversight, HB 465 is an important step towards transparency. Illinois is now joining 25 other states that are currently scrutinizing PBMs and enforcing similar regulations to limit their influence on the pharmacy industry.
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