Klausmeier and Bromwell Legislation Goes into Effect

The rising cost of healthcare continues to make it difficult for many Marylanders and their families to afford the medical treatments they need. Skyrocketing out-of-pocket costs for medication are forcing many Marylanders, especially those living with chronic and life-threatening conditions, to make difficult choices, such as whether to pay for necessary medications or pay rent.

Fortunately, a new law, which the General Assembly passed this year and which went into effect October 1st, 2018, will help protect Maryland patients from unknowingly and unnecessarily paying more for their prescription drugs.

Pharmacy benefit managers (PBMs), are little-known middlemen in the health care system who have a big impact on what Maryland consumers pay at the pharmacy counter for their prescription medication. PBMs are third parties hired by health insurers to administer prescription drug benefits, negotiate prices with manufacturers, and set rebates with pharmacies. PBMs were originally intended to negotiate cost savings for consumers, but because PBMs operate in a “black box” with little transparency, it is unclear how much of these cost reductions – if any at all – make their way to patients. When PBMs determine the price a patient pays out-of-pocket, how they arrive at that figure – and how much the PBM gains from it financially – are unknown to anyone but the pharmacy benefit manager.

What’s worse, some PBMs have inserted ‘gag clauses’ in their contracts that prevent pharmacists from telling consumers when there are cheaper options available, including when it would be cheaper for the consumer to pay out of pocket for their medication rather than going through insurance. PBMs inflate the patient copay for a drug, often beyond the actual cost of the medication, and then pocket the difference – known as a “clawback” – leaving Maryland’s independent pharmacists powerless and patients unaware.

Last legislative session the General Assembly took steps to increase transparency on PBMs and reduce the costs that Maryland patients pay at the pharmacy counter. With the support of the Maryland Pharmacists Association, Senator Klausmeier and I introduced legislation – House Bill 736/Senate Bill 576 – which banned pharmacist gag clauses. Beginning this month, if there is a cheaper option available to you when you pick up your prescription, your pharmacist will be able to tell you.

After a groundswell of activity in Maryland and other states, the issue is also getting attention at the national level. Federal PBM transparency legislation, H.R. 1316, the Prescription Drug Price Transparency Act, would prevent pharmacist gag rules nationwide within Medicare. The Department of Health and Human Services is also considering new rules that would potentially rein in the way PBMs earn rebates.

While I was proud to see Maryland lead the way on banning PBM gag clauses, there is still much work to be done to make healthcare more affordable for Marylanders. There is also more to be done to prevent PBMs from increasing the cost of health care for patients. Through tactics like clawbacks and spread-pricing – where PBMs dramatically mark up the amount they reimburse a pharmacy for a drug over what they charge their clients, and then pocket the difference for themselves – PBMs retain a broad, largely unregulated ability to profit from artificially increased costs.

Improving healthcare quality and making healthcare more affordable for Marylanders has been my focus since I was first elected to the House of Delegates. While eliminating gag clauses is a major victory for Maryland patients and pharmacists, there is more work to be done to prevent healthcare middlemen from increasing our health care costs.

During the upcoming legislative session and beyond, I will continue to work with my colleagues to hold all health care stakeholders accountable for the rising costs of healthcare, and I will work to ensure that Maryland patients can afford and access the care they need.