Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Pharmacy Regulation topic
No spam. Unsubscribe anytime.
Committee advances two measures targeting pharmacy benefit managers and service administrators
Summary
Lawmakers voted to advance legislation giving the Insurance Department broader enforcement authority over pharmacy benefit managers (PBMs) and a separate bill to register pharmacy service administrative organizations (PSAOs). Sponsors said both bills aim to curb underpayments and contract practices that harm independent pharmacies.
State Representative Jimmy Gazzaway and John Benson, CEO of the Arkansas Pharmacists Association, described Senate Bill 544 as strengthening enforcement tools for the Arkansas Insurance Department against pharmacy benefit managers (PBMs). The bill clarifies definitions, requires Arkansas-specific contract terms, strengthens prohibited-practice language, and authorizes penalties and enforcement remedies, including a financial penalty described in the bill as 12% interest per month on underpayment amounts.
Mr. Benson and Representative Gazzaway said the bill responds to persistent complaints from independent pharmacies about underpayments, abrupt contract changes, and steering of patients. The committee discussed whether the 12%-per-month penalty could be construed as usury. Insurance Department counsel Daniel Holland said the department treats the amount as a penalty for violations, consistent with similar medical-insurance enforcement provisions, and not a loan subject to usury statutes.
Representative Jonathan Dismang presented Senate Bill 475, a registration and licensing framework for pharmacy service administrative organizations (PSAOs), which oversee contracting between PBMs and independent pharmacies. Dismang said PSAOs often execute contracts on behalf of pharmacies but that many pharmacists reported limited PSAO support enforcing contract terms. The bill would require PSAOs to register and meet transparency and accountability standards.
Pharmacist and insurance stakeholders testified in favor of stronger enforcement tools. The Insurance Department said it has increased PBM-related staffing and is prepared to process large numbers of complaints; department counsel said the department already has penalties of up to $5,000 under some statutes and expects more tools would help enforcement.
The committee passed motions to advance both measures on voice votes. Supporters said the bills provide insurance regulators with clearer statutory authority and penalties to address underpayments; opponents raised questions about penalty constructs and urged clarifying language.
Ending: Both bills advance to further legislative consideration; the Insurance Department will coordinate on enforcement detail if measures become law.
