Alabama Senate committee hears hours of testimony on PBM reform bills SB93 and SB99

Senator Jones opened a public hearing on Senate Bill 93 and Senate Bill 99, telling the Senate committee that independent pharmacies across Alabama are closing ‘‘at an alarming rate’’ and that the bills would change how pharmacy benefit managers (PBMs) reimburse pharmacies.

The hearing drew more than a dozen speakers and a mix of testimony. Proponents — largely independent pharmacists and pharmacy trade groups — said current PBM practices force pharmacies to fill prescriptions at a loss. Opponents, including employers, business associations and a major insurer, said state-imposed dispensing fees and reimbursement rules would drive up health‑care costs for employers and consumers.

Why it matters: The bills address how PBMs reimburse pharmacies and whether PBM rebate practices and incentives should be restricted. Sponsors and many witnesses said changes are needed to preserve local access to pharmacy services, especially in rural areas. Opponents said the proposals could raise employer and consumer costs and urged more targeted solutions and enforcement of existing rules.

Senator Jones, the floor sponsor, summarized SB93 as a measure that would set pharmacy reimbursement at the drug cost plus an Alabama average acquisition cost and a dispensing fee (the Alabama Medicaid dispensing fee of $10.64 was cited repeatedly). He said the bill also bans gag clauses that prevent pharmacists from telling patients about lower‑cost alternatives and permits a pharmacist to refuse to fill prescriptions that would put the pharmacy ‘‘underwater.’’

Speakers for the bills described widespread, measurable losses. Bobby Giles of the Alabama Pharmacy Association said, ‘‘A pharmacy cannot sell a medication at or below cost and continue to serve patients.’’ Anna Nugent, a second‑generation community pharmacist, said her business recorded ‘‘over 40,000 prescriptions last year’’ filled below acquisition cost and warned many independent pharmacies will close without legislative relief.

Owners and operators described tactics they attribute to PBMs and PBM‑owned pharmacies: steering patients to mail‑order or vertically integrated PBM pharmacies, large markups on certain medications, and differential contract terms that disadvantage independents. Josh Harden, owner of Mills Pharmacy, said PBM practices ‘‘are forcing independent pharmacy extinction’’ and urged support for SB99, which proponents say has stronger enforcement language.

Opponents argued the bills would raise overall prescription spending. Robin Stone, director of the Alliance of Alabama Healthcare Consumers, said a $10.64 dispensing fee applied to every prescription ‘‘would be paid to pharmacy owners by PBMs that would then pass on those fees to Alabama employers, insurers and consumers’’ and cited an industry estimate that the change could add about $347 million in first‑year prescription spending in Alabama. Caroline Franklin, representing broader business interests, estimated roughly $430 million annually using older Kaiser Family Foundation prescription volume data.

Blue Cross Blue Shield of Alabama, represented by Ted Haas, said most prescriptions are reimbursed above cost and estimated 10–15% of claims may be ‘‘underwater’’ in any given pharmacy; he encouraged targeting that segment while avoiding a legislated fee that applies to every prescription.

Several witnesses pointed to other states. Trent McLemore, director of pharmacy for Star Discount Pharmacy, said Tennessee’s law has allowed some pharmacies there to be reimbursed at cost plus a modest fee and that his company has used an out‑of‑state pharmacy model in the interim to avoid turning patients away. Proponents also cited West Virginia and Kentucky as states reporting budgetary savings after similar reforms, and multiple speakers referenced the Rutledge v. PCMA U.S. Supreme Court decision when discussing state authority to regulate PBM reimbursements.

Committee members asked about cost impacts, passthrough of fees to employers, and whether the bills protect pharmacies in rural areas. Senator Smitherman expressed concern about unintended consequences for small rural pharmacies and urged caution. Senator Stutz and others argued rebates and formulary design — specifically, routing rebates back to employers and restricting formulary steering — are mechanisms in SB99 that could lower net drug spending.

The hearing concluded with no committee vote; senators said they were still gathering information and would continue negotiations. Sponsors indicated continuing efforts to reconcile the two bills: SB93 uses an Alabama average acquisition cost plus the $10.64 dispensing fee, while SB99 proponents said their draft uses a national average plus the dispensing fee and additional adjustments that they say strengthen enforcement and rebate transparency.

The committee chair said numerous stakeholders had registered and that while time limits prevented everyone from speaking, offices remain available for follow‑up meetings.

For now, both bills are at the public‑hearing stage; committee action (a favorably reported motion or amendment) is still pending.