Senate public health committee approves bill letting nonprofit hospitals seek retail pharmacy permits with limits

During a meeting of the Senate Public Health, Welfare and Labor Committee, members voted to pass Senate Bill 58 as amended, removing a statutory prohibition on nonprofit, tax-exempt and government-funded hospitals holding retail pharmacy permits and adding limits on where and how many such permits those hospitals may hold.

The amendment adopted during the committee hearing inserts a definition of “hospital campus,” allows hospitals with an existing hospital pharmacy permit to obtain retail pharmacy permits, limits retail permits to locations within 250 yards of the hospital campus, and authorizes one additional retail permit per 100 hospital beds. The amendment also creates exceptions for infusion centers and for hospitals that would serve a defined pharmacy “desert” or meet network adequacy criteria. It requires hospitals to report openings, closures and permit requests to the Arkansas Legislative Council (ALC).

Senator Disman, who presented SB 58 to the committee, said the amendment was intended to balance access and oversight. “I was pretty mad at it and still believe that the cleanest thing for us to done was to strike the prohibition and move forward to allow us to operate as any other states in regards to nonprofit tax exempt or governmentally funded hospitals,” he said, adding that the amendment adds technical guardrails in the retail pharmacy code rather than keeping the complete ban. He told the committee the per-100-bed formula would rely on a reported census number provided to the Department of Health.

Committee members pressed for clarifications about how the caps would affect smaller critical access hospitals, whether out-of-state nonprofit hospital systems could qualify, and how the bill treats satellite facilities. Disman said small hospitals that already hold a hospital pharmacy permit would qualify for at least one retail permit; additional permits would be allocated based on the hospital’s bed census. He said an out-of-state nonprofit would need a physical hospital presence and a hospital pharmacy permit in Arkansas to qualify. He also said satellite clinics that do not hold a hospital pharmacy permit would not count toward a hospital campus for purposes of the 250-yard limit.

Two witnesses who had signed up to speak against the original unamended bill addressed the committee after the amendment was released. Simon Debritzoff of Highlands Oncology Group said he had not received the amendment in advance and waived his objection after hearing the sponsor’s summary; he said he would review the amendment text later. John Vincent, CEO of the Arkansas Pharmacist Association, said the group had reviewed the amendment and appreciated several changes, including the infusion-center exception, the pharmacy-desert provision, the campus-distance limit and the freedom-of-choice language mirrored from nursing-home rules. Vincent said the association planned to review the amendment with its board and monitor implementation, and noted a potential concern about a remaining loophole related to indirect interests that could be strengthened by additional language.

The committee adopted the amendment by voice vote and then voted to pass SB 58 as amended. Committee members speaking in favor said the bill is intended to increase access and improve outcomes while the amendments address prior concerns. Several members said they wanted assurance that lifting the prohibition would result in actual improvements to pharmacy access, rather than only creating the opportunity for hospitals to open retail pharmacies.

The committee chair also announced that Senate Bill 2 would not be heard and instead would be scheduled as a special order of business on a later date. The chair reminded members that scope week is scheduled for Feb. 17–20 and to contact staff to schedule bills.

The bill as amended now moves forward from committee. The amendment and committee action require the Department of Health and the board that issues retail pharmacy permits to implement the new permit rules and to accept and review hospital census figures used to calculate additional permits. The amendment also requires reporting to ALC to track openings, closures and permit activity.