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Lawmakers across the country can learn from examples in states like Arkansas and Texas.
For tens of millions of Americans, accessing the medications they need at prices they can afford has gotten increasingly difficult over the years. This is largely due to the role of pharmacy benefit managers (PBMs), middlemen who inflate prices without really adding value for patients.
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Most people may not even know what PBMs are, let alone the harmful impact they can have on the lives of patients. Like a fog clouding clarity in the journey of cancer care, they are difficult to navigate and cause increasing difficulties. Formed originally as a way to facilitate access and bring down costs, PBMs are now doing the exact opposite—and their influence over the prescription drug market has reached new heights.
PBMs are more powerful and influential than ever as they become extensions of major health insurers, acquire independent pharmacies, and create new business lines to funnel prescriptions through. Today, the 3 largest PBMs control 80% of the prescription drug market, smothering the competition that is needed to keep oversteps in check.1 The vertical integration in the business of care delivery has fostered alignments in payers, PBMs, and specialty pharmacies that often inflate prices and delay and detour appropriate therapy.
In community oncology, we’ve seen how PBMs have abused their dominance to inflate the cost of medicines for vulnerable cancer patients and squeeze out local pharmacies.2 Worst of all, PBMs’ lack of accountability has emboldened them to implement more authorizations, barriers, and fees.
PBMs’ abusive practices have rightfully earned their spot on Congress’s radar, but so far, federal lawmakers have failed to advance comprehensive PBM reform. Instead, states like Arkansas and Texas are stepping up to the challenge—an effort made possible thanks to the groundbreaking Supreme Court case Rutledge v. PCMA.3
In 2015, when PBMs were still largely flying under the radar for most federal lawmakers, Arkansas passed a first-in-the-nation law that required these groups to reimburse independent pharmacies no less than what pharmacies paid to acquire the prescription medications they filled. The main trade group representing PBMs, the Pharmaceutical Care Management Association (PCMA), fought the law tooth and nail.
PCMA argued that Arkansas was preempted by the federal Employee Retirement Income Security Act of 1974 (ERISA), which governs employee benefits. Fortunately, the Supreme Court unanimously upheld the Arkansas law, opening the door for more states to regulate unfair PBM reimbursement practices.3
Since then, Arkansas has continued to lead on PBM reform through laws like SB 103 and SB 104 to increase PBM transparency. The state also recently passed HB 1150, a first-in-the-nation law to ban PBMs operating in the state from owning retail or mail-order pharmacies. In doing so, the law will prevent PBMs from steering patients to their own higher-cost specialty pharmacies.4 Instead, the law will protect local access to independent pharmacies.
Texas also stands out as a leader in the fight for PBM reform. In 2023, the Texas Legislature passed HB 1919 and HB 1764, legislation that prohibits PBMs from steering patients toward PBM-owned pharmacies, charging retroactive fees, or unfairly reimbursing their own pharmacies at higher rates than what they pay local, independent ones.
Debra Patt, MD, PhD, MBA, is a breast cancer specialist at Texas Oncology, an independent community oncology practice that is part of the US Oncology Network, and currently serves as president of the Community Oncology Alliance.
Jeff Hunnicutt is the CEO of Highlands Oncology.
Just as in Arkansas, PBM industry groups attempted to undercut these critical reforms by arguing that, due to the Employee Retirement Income Security Act of 1974 (ERISA), these laws are not enforceable for self-insured employer plans. Fortunately, Texas Attorney General Ken Paxton cited Rutledge in a decisive opinion earlier this year, stating these PBM reforms are enforceable, even with respect to ERISA plans and out-of-state insurers.5 Now, the hope is for the Texas Department of Insurance to codify Attorney General Paxton’s decision, leaving no room for doubt that Texas can enact PBM reforms that protect patients.
Lawmakers across the country can learn from these examples. Texas and Arkansas have created a solid blueprint for meaningful PBM reform by taking on the industry’s abusive practices head-on and restoring balance and fairness to the system. Until Congress finds the will to act, more states should follow in their footsteps and enact similar PBM reforms that help patients access the care they need when they need it.
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