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Executive order takes aim at prescription drug costs

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Reducing the cost of prescription drugs in Florida is the focus of an Executive Order signed by Gov. Ron DeSantis last week. Specifically, the Order increases scrutiny of Pharmacy Benefits Managers (PBMs) and holds them accountable whenever they manage prescription drug benefits for insurance companies.

As middlemen between insurers and drug companies PBMs negotiate with drug companies to obtain discounts in order to pass those cost savings on to the insurance companies.

PBM firms make money when they up-charge the drugs or retain a portion of the rebates. Up-charging is the practice of adding an additional fee to a bill after a contract has already been negotiated.

“It turns out that the state of Florida in its history has never really done an investigation into the role PBMs are playing in the cost of prescription drugs for Floridians, and particularly senior citizens,” DeSantis said at a July 8 signing event in Cape Coral. “So (we’re) looking into (it) to ensure that we have reforms in place in the state of Florida to hold pharmacy benefit managers accountable and to drive transparency in prescription drug costs.”

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Specifically, the executive order directs all executive state agencies in all future contracts and solicitations with PBMs to prohibit spread pricing for all PBMs. According to the National Community Pharmacists Association (NCPA), “spread pricing” is a PBM practice whereby a PBM charges payers such as Medicaid more than they pay the pharmacy for a medication and then keeps the “spread” or benefit difference as profit.
The order also prohibits reimbursement clawbacks for all PBMs. Clawbacks occur when an individual over pays for a prescription and the PBM keeps the over payment as a bonus.

The Executive Order also directs agencies to include data transparency and reporting requirements, including a review of all rebates, payments, and relationships between pharmacies, insurers, and manufacturers, and directs all impacted agencies to amend all contracts to the extent that it is feasible to comply with the provisions contained in the order.

The state’s Agency for Health Care Administration Secretary (AHCA) will audit the PBMs that have done business with (state agencies) in the past to determine if cost saving measures are in place, DeSantis said.

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