Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Pharmacy Policy topic
No spam. Unsubscribe anytime.
Committee approves bill beefing up insurance department enforcement of pharmacy benefit managers
Summary
SB 544 would add enforcement tools for the Arkansas Insurance Department against PBMs, including probation authority and a penalty mechanism tied to underpayments; pharmacy and insurance stakeholders debated the size and form of the penalty.
The House Insurance and Commerce Committee on Tuesday approved Senate Bill 544, a measure to expand the Arkansas Insurance Department’s enforcement authority over pharmacy benefit managers (PBMs).
State Rep. Jimmy Gazzaway presented the bill with John Benson, chief executive of the Arkansas Pharmacists Association. Gazzaway said the bill would give the insurance commissioner new tools — including probation, stiffer penalty authority and clearer contract‑definition language — to pursue PBMs that violate state law and to protect independent pharmacies from harmful contracting and reimbursement practices.
Key provisions include clearer definitions of opt‑out contracts, language to require PBM contracts to include Arkansas‑specific compliance terms, and a penalty structure tied to underpayments. The bill uses a penalty described in committee as “12% interest per month” on identified underpayments; that formulation prompted multiple questions from lawmakers about whether the provision would be treated as usury and whether it would remain enforceable.
Daniel Holland, PBM general counsel at the Insurance Department, told the committee the department views the 12% provision as a statutory penalty, not as interest on a loan; the department said similar language is used in other areas of medical‑claims enforcement and is not treated as usurious in that context. Committee members asked for clarification of how the penalty would be calculated; sponsors said the penalty applies to the underpayment amount, not to the full claim cost, and that the department has existing authority to penalize violations and to collect small penalties now.
Supporters said the measure clarifies enforcement pathways and addresses longstanding complaints from independent community pharmacies. Opponents did not appear at the committee; lawmakers pushed the Insurance Department to provide further detail on implementation mechanics. Representative Wooten moved the do‑pass motion; the committee approved SB 544 on a voice vote.
