Senate committee advances bill to change pharmacy reimbursements, adopts amendment excluding most specialty drugs

Senate Bill 252, a measure to change how pharmacy benefit managers (PBMs) reimburse pharmacies, received a favorable committee report Tuesday after the panel adopted an amendment that removes most specialty drugs from the bill.

The bill, sponsored in committee discussion by Senator Beasley, who described himself during testimony as a retired pharmacist, would set reimbursement using an average drug cost plus a dispensing fee modeled on Alabama Medicaid’s payment method. Supporters said the change is needed to prevent community pharmacies from losing money on prescriptions and closing, while opponents said the bill would increase health-care costs for employers and could shift hundreds of millions in payments to a small group of pharmacies.

Senator Beasley said the pharmacy industry once relied on modest discounts and service fees but now faces steep losses under PBM contracts. “This bill will address that you cannot process a claim and be underpaid for the cost of the drug,” he told the committee, adding that pharmacies are incurring losses that threaten their ability to stay open.

Proponents included pharmacists and pharmacy owners who said the bill would preserve local access to services such as immunizations, deliveries, hospice support and medication packaging for homebound patients. Jessica Hung, introduced herself as a pharmacy owner and clinical pharmacist in Semmes, said “Unfair reimbursement and lack of transparency has forced many pharmacies in our state to close their doors,” and offered a specific example of a diabetes medication the pharmacy was losing $300 on.

Several speakers described community impacts if independent pharmacies close. Ginger Baron, a pharmacist at Cornerstone Family Pharmacy in Gadsden, told the committee there are “around 400 pharmacies left in the state” and warned of job losses and reduced access to medications for patients on treatments such as Suboxone and hospice care. Joe Burns, a third-generation pharmacist at Kessler’s Pharmacy in Tarrant, said PBMs are “middlemen that are profiting while pharmacies around the state are closing.”

Opponents focused on cost to employers and private health plans. Robin Stone, representing the Alliance of Alabama Healthcare Consumers, said the bill “reduces the value of a family's health care plan by adding new permanent cost” and criticized a $10.64 dispensing fee included in the draft. Helena Duncan, speaking for the business community, urged a study and alternative solutions rather than what she called a proposal that would “shift the financial burdens from pharmacies to the Alabama employers.”

Committee staff explained the amendment adopted on the floor removes specialty drugs from the bill’s coverage. A committee staff member, Ms. McLean, said the bill defines specialty drugs as those that “require special handling, administration, or monitoring” and that credentialing limited how many pharmacies in the state are currently set up to handle those medications; she also told senators that certain plan protections in the draft prohibit passing the new fee directly to the covered individual at the point of sale.

Senators adopted the amendment (which replaced language at the cited lines in the draft) by roll call; the chair then called for a motion and Senator Livingston moved a favorable report with a second from Senator Coleman. The committee approved the bill for a favorable report by voice consent with no objection.

Supporters said the bill mirrors portions of Medicaid’s model and would not make pharmacies “rich,” but could keep small pharmacies solvent. Opponents urged further study of PBM practices and alternatives that would not increase employer costs or create a private right of action that could expose businesses to immediate litigation, concerns raised by manufacturing representatives during testimony.

The committee’s action sends SB 252 to the next step in the legislative process with the specialty-drug exclusion in place; the committee did not adopt changes that would alter the bill’s prohibition on passing the fee to a covered individual at the counter.

Votes at a glance: - Amendment to remove specialty drugs (motion by Senator Beasley; second by Senator Livingston): Adopted by roll call (ayes recorded during the roll call included Senators Barfoot, Carnley, Coleman, Elliott, Hatcher, Hoebe, Jones, Kitchens, Livingston, Price, Roberts, Singleton, Smitherman, Wagner, Williams, Shellnut). (Outcome: adopted.) - Motion for favorable report on SB 252 (mover: Senator Livingston; second: Senator Coleman): Approved by voice consent; committee reported SB 252 favorably (Outcome: favorable report/no objection).

The committee hearing included seven public speakers identified at the start as three opponents and four proponents. Senators asked clarifying questions about health impacts and patient access before voting. The bill, as amended in committee, will proceed in the Senate with specialty drugs largely excluded and with language the committee staff said prohibits passing the new fee directly to covered individuals at the pharmacy counter.