General Assembly Moves in Unison to Protect Consumers, Local Businesses, from Excessive Pharmaceutical Costs

Expanded oversight of Pharmacy Benefits Managers possible

Legislation to further regulate the Pharmacy Benefits Manager industry was passed by the General Assembly in late June and sent to the Governor with unanimous bipartisan support.

HB 219, sponsored by Rep. Andria Bennett, Sen. Spiros Mantzavinos, Senate President Pro Tempore Dave Sokola, and Rep. Mike Smith, would bring Delaware’s oversight of the multi-billion-dollar industry on par with other states. Insurance Commissioner Trinidad Navarro and the Delaware Department of Insurance were proud to work with the sponsors on this bill and share their goals of ensuring access to affordable pharmaceuticals and protecting local pharmacies.

A Pharmacy Benefits Manager (PBM) acts as an intermediary for prescription drug plans, influencing what pharmaceuticals will be covered, and the consumer and pharmacy costs of those drugs. These companies hold massive power and bring in billions through manufacturer rebates, limiting generic drug offerings, and retaining negotiated savings while costs for consumers continue to rise. The largest PBMs operate their own pharmacy chains, and their consolidated market power allows them to pay unaffiliated pharmacies unsustainably low reimbursement rates – rates lower than it costs the pharmacy to dispense the drug to a consumer. PBMs’ move toward monopolization has contributed to waves of pharmacy closures across the nation, especially in rural, inner city, and under-served areas – areas that already crave equity and access.

HB 219 aims to solve many of these issues through efforts such as required use of the National Average Drug Acquisition Cost for pharmacy reimbursement, prohibiting inequal payments to unaffiliated pharmacies, and providing the Department of Insurance the ability to investigate PBMs, enforce consumer protection measures, and incentivize corrections through increased regulatory authority.

“With more consumers and local pharmacies facing dire financial situations, and more PBM wrongdoing coming to light, we must act with urgency in reining in this industry. In a developed nation, it is unconscionable that a mother would have to go hundreds of miles to get her child’s medication affordably, and no pharmacy should have to fight for months on end for the right to provide their clients needed pharmaceuticals without going bankrupt,” said Insurance Commissioner Trinidad Navarro, referencing passionate resident testimony provided at the bill’s legislative committee hearings.

“We need the authority to enforce consumer protections, to require price transparency and cost containment, and to ensure that these big corporations can’t exclude the small businesses and local pharmacies that have served our community for decades. I’m so thankful for the sponsors of HB 219 for working so hard on this needed legislation, and I am grateful that every single member of the General Assembly supported the effort.”

“For too long, pharmacy benefit managers’ egregious predatory practices have put profits above consumers. With this legislation, we are implementing critical reforms that will improve the oversight of this murky industry and ensure everyday Delawareans are not taken advantage of in such a vulnerable way,” shared Rep. Andria Bennett, the prime sponsor of HB 219 and chair of the Pharmacy Reimbursement Task Force. “I’m grateful for the outpouring of support this legislation has received both in the General Assembly and from individuals and small businesses throughout our state. We owe it to residents to fight for their best interests by increasing affordability and access to needed medication. That’s exactly what we’re doing with HB 219.”

“I served alongside Rep. Bennett on the Pharmacy Reimbursement Task Force and have seen firsthand how the middlemen between drug makers and pharmacies can drive up costs for consumers and even threaten the financial viability of independent pharmacies throughout our state,” said Senate President Pro Tempore Dave Sokola. “HB 219 will give Delaware the tools it needs to properly regulate this industry to ensure we’re controlling the costs of life-saving medication and protect the pharmacies who serve them.”

Rep. Mike Smith stated, “I was proud to co-sponsor this measure and help shepherd it through the House. This is ultimately a consumer protection bill with the intended goal of ensuring citizens have affordable access to prescription drugs. It is my hope that the Governor will sign this legislation without further delay.”

“Reducing prescription drug prices is one of the most important things we can do to help improve the health and welfare of our neighbors,” said Sen. Spiros Mantzavinos, the Senate prime sponsor of HB 219. “I am proud to have helped champion this legislation that will provide greater oversight of pharmacy benefit managers, a little-known industry that has a huge impact on whether you can get the medication you need and at what cost. I want to thank Rep. Bennett for her hard work on this legislation and I look forward to it being signed into law soon.”

The legislative effort was supported by consumers and independent pharmacists throughout the state, and the Delaware Pharmacist Society, who spoke passionately about the need to regulate PBMs.

“Not only have PBMs failed to manage the cost of prescription medications, which is the reason they were created, but they have artificially inflated medication prices, causing patients to struggle to afford their medication, while they continue to line their pockets. And, while Independent pharmacy strives to find ways to assist patients with chronic diseases, those who are underserved and vulnerable populations, PBMs put profits over patient care and have created barriers for patients to utilize our services, while forcing them to utilize more cumbersome and costly options,” explained Kevin Musto, R.Ph., FAPhA, Independent pharmacist.

“The Delaware Pharmacist Society is elated that patients as well as pharmacists may soon be able to appeal inadequate prescription drug reimbursement, and that unregulated PBMs would have to answer to the Insurance Commissioner’s office on their business practices,” said Dr. Kim Robbins, Executive Director of the Delaware Pharmacist Society. “Pharmacists have tried to fight PBMs individually and have been unsuccessful. PBM reform will allow the Insurance Commissioner’s office to protect consumers.”


Advances in Primary Care Reform Made Possible by Legislature

General Assembly sent key bill to the Governor

The Delaware General Assembly passed legislation to increase Delawareans’ access to high quality, affordable health care through a series of reforms that will refocus Delaware’s healthcare system on primary care and improvements in value.

Senate Substitute 1 for Senate Bill 120 requires commercial health insurance companies to make meaningful increases in their primary care investment, limits price increases for hospital and other non-professional services, and compels health insurance companies and health systems to work together to improve healthcare value. By implementing these reforms simultaneously, models show that the increases in primary care investment do not result in unsustainable increases in total cost of care.

“Informed by data and the perspectives of Delaware consumers, physicians, employers, health insurance companies and hospitals, the Delaware Department of Insurance created a road map aimed at ensuring residents have access to high-quality, affordable health care, and that the primary care provider community would be strengthened in the process,” stated Insurance Commissioner Trinidad Navarro. “Through this legislation, the General Assembly has put these plans into action. We look forward to working with those stakeholders and the General Assembly to implement this important legislation that will improve the health and wellbeing of Delawareans while bending the healthcare cost curve.”

The types of reforms included in SS 1 for SB 120 were first contemplated in a report by the Delaware Department of Insurance and its Office of Value-Based Health Care Delivery, which was created by the General Assembly in 2019. Those same agencies would be tasked with implementing the legislation, creating necessary regulations, and enforcing its measures. To inform this work, the Office of Value-Based Healthcare Delivery embarked on an extensive data collection and stakeholder engagement process in 2020, which included data from Delaware health insurers, the Delaware Health Information Network Health Care Claims Database, publicly available sources, and perspectives shared during more than two dozen stakeholder interviews.

Research by the Office of Value-Based Health Care Delivery found that primary care spending in Delaware is low relative to the national average and about half of what is spent in leading states. This low investment in primary care services has likely contributed to declining numbers of primary care providers and poor access to primary care statewide. Increased numbers of primary care providers have been associated with improvements in health and decreases in mortality, as well as lower rates of emergency department visits and hospital admissions. Though many states face similar trends, the research also found primary care access problem in Delaware is particularly acute. The state’s population is among the oldest in the nation, a trend that will continue to grow.

“With one in five Delawareans are over the age of 65 and two in five of our neighbors living in an area with a shortage of primary care doctors, we have to do more to ensure our communities have access to the frontline providers they need to improve the quality of their health and keep them out of the hospital,” said Senate Majority Leader Bryan Townsend, the prime sponsor of SS 1 for SB 102. “Even as costs continue to rise for us all, the current system is simply providing positive results for too few Delawareans,” he said. “After three years of careful study and consideration, I am confident the legislation that Rep. David Bentz and I passed through the General Assembly will result in more primary care providers serving our state and better healthcare outcomes for our neighbors.”

“The primary care industry in Delaware is facing substantial challenges. Physicians are retiring or leaving the state, creating a shortage that means poor access to care for residents. Factor in the low levels of investment and we have an unsustainable system. We need to tackle this crisis head-on immediately,” said Rep. David Bentz, the bill’s lead House sponsor. “SS 1 for SB 120 will modernize and enhance primary care services in Delaware by directing the Health Care Commission to monitor and promote compliance with alternative payment models that promote value-based care. Primary care is critical in our efforts to improve public health outcomes and reduce long-term costs. It is, without question, where we get the best return on investment with our healthcare spend both financially and in-terms of the health of our population. I look forward to Governor Carney signing this bill into law to reverse the losses we’ve seen in recent years.”