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Iowa House Committee Holds Hearing on PBMs

Iowa House Government Oversight Committee held a hearing to gather information on billing discrepancies and abuses by PBMs in publicly funded health plans and public entities.

On April 18, the Iowa House Government Oversight Committee held a hearing to look in to possible billing discrepancies and abuses by PBMs in public entities. The hearing was in response to efforts from Rep. John Forbes (D-Urbandale) and the Iowa Pharmacy Association. The hearing drew a crowd and had to be moved to a larger room.
IPA's executive vice president and CEO, Kate Gainer, was the first to testify, beginning her remarks with an overview of PBM practices and the lack of regulation and transparency. She then outlined how other states were opening the “black box” and looking into their dealings with PBMs and discovering millions of dollars in overcharges. In addition, she revealed recent issues with CVS/Caremark, including the severe cuts in reimbursements and simultaneously offering to purchase stressed pharmacies. She concluded by outlining what the profession hoped the committee would look into – are state dollars for prescription drugs being spent appropriately and do PBMs keep costs low or are they contributing the rapidly escalating costs of prescription drugs?
Following Kate's testimony was Mark Frahm, RPh, from South Side Drug in Ottumwa, whose research into claims from the county jail served as linchpin for the hearing. Mark explained how he discovered severe discrepancies in what he was reimbursed for prescriptions filled for the county jail and what the jail was then charged by the PBM. Mark provided a visual of the individual prescriptions with the most glaring examples of the spread. In one month, the PBM charged the jail $5,000 but only reimbursed the pharmacy $1,000.
Frahm's testimony also triggered questions on spread pricing in Medicaid from Rep. Dave Heaton. Forbes explained how Medicaid in Iowa is shielded from the spread because of the statutorily established reimbursement formula but stated that he had already begun the process with Iowa Medicaid Enterprise to look into it.
Frahm was followed by Jerry Parker from the Wapello County Board of Supervisors, the public entity that oversees the county jail. Parker noted that since discovering the discrepancies, the jail has dealt directly with the pharmacy, saving the county thousands. Parker noted that the board doesn't have the expertise to check all prescriptions to see where the county might be “taken.” Parker thanked Frahm for discovering the discrepancies and asked the committee to, “help us, who can't necessarily in these positions, help ourselves.”
Randy McDonough was next, evoking Iowa pharmacy legend and former state legislator Bob Osterhaus' quote, “If it's good for the patient, it's good for the pharmacist.” McDonough provided insight into the relationship between pharmacies and PBMs. In addition to underwater reimbursements and DIR fees, he focused on the barriers PBMs create to treating his patients through mail order and specialty pharmacy. McDonough's testimony, which was emotional at times, sparked several questions by committee members, with Rep. Vicki Lensing (D-Iowa City) raising concerns over the loss of patient relationships with their pharmacists and the fragmentation of care.
Then it was CVS/Caremark's turn. Their representative, Ron Ponesse didn't deny spread pricing, or narrow networks. He was emphatic that the plan sponsors choose the networks and pricing plans. Ponesse explained several was the company provide services to patients. Rep. Forbes pressed, to put it mildly, Ponesse on the spread, repeatedly asking him to justify it. During an emotional exchange, Forbes ask why appeals were ignored and prices were never adjusted.
The hearing then concluded with committee chair Bobby Kaufamann (R-Wilson) stating that the committee would discuss the information provided at the hearing and communicate and next steps. 
Watch the recorded livestream HERE.


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