Insurance and Commerce- Senate and House

We're gonna call this meeting to order for all the audience. Thank you for coming today. If there's anyone out there that is not on the agenda or has not signed up. There's a sign up sheet out front. Please get signed up before they pick it up. If you want to speak today. I said just wanna go thank you for coming. We look forward to a lot of good testimony today so we can all make a good wise decision on what needs to be done, so thank you for coming, Mr. Co-Chair, is there anything you'd like to add? Thank you, Senator. I just want to echo what he said. Appreciate everyone being here and the interest. We look forward to a robust discussion of all the issues today and I appreciate you being here. First item on our agenda today is, uh, approval of the minutes in the last meeting. You should have that exhibit B. I have a motion by Senator Irving. Do we have a second? Second Senator Brown, I mean Representative Brown, all those in favor say aye. A pole sign sign. And it approved. OK, we're gonna start out with the review of uh Rule 128. Rules and regulations pertaining to pharmacy benefit managers. We'd like to ask, uh, Mr. McLean to come up with his staff. Please introduce yourself for the record. Mr. Commissioner, I guess that means you have no comments. That Hey All right, sorry about that. uh, Alan McLean, insurance commissioner, and I'll, my colleagues introduce themselves. Jakeuinley, director of Legislative affairs for the Department of Commerce. I think this works. Booth Rand, general counsel, Arkansas Church department. You can go ahead and proceed, sir. All right. Thank you, Mr. Chair. Uh, again, Alan McLean, insurance commissioner, and uh we're here today to, uh, present to you a rule 128, which of the department which we have. Uh, completed a promulgation process or in the end of a promulgation process and um so rule 128, many of you are are familiar with it, but, uh, our, um, processing and promulgating of this is, uh, in accordance with the uh pharmacy benefit manager licensing Act and which does note that that the department shall adopt rules related to PBM, uh, network adequacy, so that's, that's why. We've put this together in a in an attempt to exercise our responsibility under the PBMLA and, and the rule and its corresponding bulletins does seek to comply with the law again the PBMLA that the General Assembly has passed and the the rule and the corresponding bulletin that uh general counsel Randall will outline, uh, uh, does it outlines a process for a collection of payment information for health plans, and this is an effort to ensure. Pharm uh insure pharmacy network adequacy and so it's an it's a the the idea would be, uh, just to verify that the pharmacies are reimbursed in a fair and reasonable manner and so with the the the presumption being that if plans are not reimbursing in a fair and reasonable manner that there would be less likely that there would be adequate pharmacy networks for our, our citizens of the state, so that's what got us here today and um if you're ready then, uh, Booth can kind of walk through the rule. There we go. OK, thank you. Um, this initiative started in the early spring of this year, maybe the late winter, um, the insurance department began to receive a significant number of complaints from pharmacies, um, around the state complaining about inadequate reimbursement from PBMs and health plans, primarily in generic reimbursement or generic drugs. Um, we, we're receiving about 7 to 10 emails or letters a day, uh, beginning back in February or March. I did not think it was coordinated in any. Weigh your form by the pharmacy association or anybody, uh, variety of different pharmacies who didn't know each other, were all complaining about the same thing. And what we saw in the last, what we've seen in the last year and a half is PBMs um through the health plans have been reimbursing pharmacies, right at the level of NADAC or national A drug acquisition cost, uh, right at that level for drugs that are dispensed, both in generic and brand, and the complaint by the pharmacies was that if we're only going to be reimbursed our inventory cost or our reimbursement cost, um, uh, we're going to not be able to sustain business. And to give you an example, on a small generic, let's say it's $5 the pharmacy is reimbursed $5.60. Um, by the PBM, they make 60 cents gross profit, but what the pharmacies would like to tell you and what they complain about is that you don't know that the pharmacy or the pharmacist that got the 60 cent gross. Profit or surplus there had to spend 30 minutes on the phone, getting a prior authorization, had to spend 3 or 4 minutes with a customer to go over contraindications and other required licensing disclosures, had to submit the claim, had to label the drug, had to do all of that and make only 60 cents on, on that. And many times it's less than that or below acquisition cost. And so what I want members to understand here is, I think when you really compress this issue up for evaluation. You're looking at what should we require health plans and PBMs to pay pharmacies for these administrative costs or overhead, where they're only making barely a cent or more over acquisition or their inventory cost, um, they will tell you that the administrative overhead just to label the drug, go all of the prior authorizations to go through all of that should be in the neighborhood of about $10 administrative cost and so over the last spring, many of the pharmacies felt like, um, Arkansas should adopt what Tennessee, what West Virginia, And what Kentucky have done, which is to require a $10.50 dispensing fee on every transaction to help overcome their administrative costs for dispensing the drug and so, uh, with that, with the complaints that had been coming in, and many of them escalated, um, up until the May or June of this year, um, Uh, until we started, um, uh, discussing this initiative with pharmacies who have been applauding this, uh, rule, uh, and I got 3 or 4 emails this morning and I get, I think the commissioner gets quite a few from pharmacies that applaud this rule, but, um, essentially that is the background for this rule, and while we initiated the rule at the insurance department. Let me explain the rule itself. Um, many of you have, and we have submitted a lot of documents. Uh, to the bureau, both to the rural subcommittee as well as to this insurance committee, and I apologize, but this has been a very difficult rule for us, and so, although you may disagree with it, we have done a lot of work with this. I think that should be evident from the documents that you've gotten. Um, we did have a hearing on this last month. We received over 80, 85 different comments, all of those are in your package, uh, the majority of comments were from pharmacies that are for this rule. Um, but there are a significant number of opposition to this over cost impact and over just implementation issues and so, um, I will try to address each of those if I can, um, I will start with the rule itself, um, if you look at the clean version of the rule, um, under the section of authority, um, the commissioner has authority. To issue a rule related to compensation for pharmacies as well as for network adequacy for pharmacies. It's not even a question. So the issue of whether or not the commissioner has authority to do what he's doing is not debatable in my, my opinion, and was not, uh, objected to by the public comments against this rule. I mean, clearly the insurance commissioner has authority to issue a rule-related compensation in a network adequacy to ensure an adequate network or pharmacies. Um, the second, um, section relates to definitions, um, We need to find fair and reasonable pharmacy compensation to me essentially what the commissioner's determination of whether a current or proposed health plans reimbursement, pharmacy reimbursement results in adequate number of pharmacies for health benefit plan. Now, let me, there is a dispute. Or argument or, um, Uh, concern about whether pharmacies are in reality going out of business over this, these pharmacy lowered reimbursements to NADA minimums. I will concede That the PBM and health plan data shows a steady number of of pharmacies, uh, that they're not going all out of business all at one time. There's no question about that. The pharmacy, we do not license pharmacies. I do not know at the insurance department, whether a pharmacy or why a pharmacy drops out of network, whether it's over low reimbursement or not. I do not license them, so I do not know whether or why they're staying in network, but complaining about inadequate reimbursement. However, the health plans and PBMs show a steady number of pharmacies that are not going out of business. Again, I would submit there may be a lot of reasons why pharmacy does not want to just say, I don't want to contract anymore. They may want to continue to service the community, via pharmacy, uh, they may get a better reimbursement on other products of the PBM. There are all kinds of reasons and complicated reasons about why they would stay in network as opposed to dropping out over low reimbursements. Um, what my point is, uh, if you look at the statute that authorizes a commissioner to issue rules related to pharmacy reimbursement. It says, To ensure EN S U R E that the reimbursement for pharmacy services paid to a pharmacist is very reasonable. To provide an adequate. Pharmacy Benefits Network for a Health Benefit plan. Um, insurer, E N S U R, if you look it up in a dictionary means to guarantee to ensure and so it is both a present condition as well as a future one. And the question I think this body should, and it's up to you. Whether you feel like the reimbursement strategies, the reimbursement minimums are going to ensure guaranteeing in the future, maybe not right now. An adequate number of pharmacies, so it is both present and future on, on keeping these pharmacies in network even though you may have a steady number of PBMs, of pharmacies in APBM network today. I think it's up to this body to review whether or not that's a sustainable future realistic um approach given the reimbursements that have been going on with PBMs who are slowly reducing the reimbursement down to NADA minimums. Um, so, uh, I think the commissioner is authorized. To issue this rule to consider. Requiring health plans through their PBMs, um, to issue dispensing cost additions to try to improve reimbursement and so, uh, that is the authority and the applicability, uh, we'll talk about next, um, in terms of what this rule applies to for health benefit plans, uh, it essentially parrots or follows the PBMLA, the PBM Licenser Act, which you approved and enacted. So whatever applies to the state law under the PBMLA will apply to this rule, so, uh, if there are exceptions in the PBMLA, there are exceptions in this rule. We're simply following um The provisions of the PBMLA as to the applicability of the rule to various health plans. It will apply to the fully insured plans, uh, it will apply to the self-funded plans, it will, will apply self-funded government plans, uh, there are plans that may not apply to which are medi Medicare Advantage plans, Medicaid, uh, uh, Christian ministry plans and there are others, uh, that are not subject to the PPMLA. So we're just being consistent. With the PBM law. Um, section 4. Again reiterates that The authority of the commissioner under the PPMLA under 239250681. The commissioner is clearly authorized to approve a compensation program for um, pharmacy benefits, um, to ensure that it's fair and reasonable to provide an adequate pharmacy network. Section B, um, we have changed, I want to make it clear that the commissioner issued a finding. That the commissioner finds the current pharmacy reimbursement under the PLA. Or payments within a close range to minimums of NADA or Mac that do not do not include reasonable cost to dispense may impair. The sustainability of network adequacy for pharmacy services for health benefit plans. I want to, we had, I think it said initially does impair, we changed that to May and so the reason why is because, as you'll see as I further explain this rule in bulletin, a pharmacy, a health benefit plan or PPM. May not be required to pay a dispensing fee or cost if after evaluation by the data that are submitted pursuant to the bulletin, the commissioner determines that the reasonable, that the, that the reimbursement is already fair and reasonable already, and there's already an adequate network of pharmacies. So there's a, uh, very real possibility that after the data is submitted pursuant to what is requested in the bulletin from the health plans, a health benefit plan may not have to pay a dispensing fee. It's quite a possibility. So I'll get to that in just a minute. So we changed the word does impair the sustainability of network accuracy in Section B. Under Section 4B to say may, and so, um, we don't know until we look at the data of whether or not, uh, pharmacies are being, um, reimbursed adequately by the Health benefit plans until we receive the data. Um, and again, uh, section C, uh, is long and I, I agree it's long. I will try to boil it down. Um, essentially, uh, health benefit plans are given until February 17th, 2025 to provide a written report, uh, providing us with the pharmacy comp that compensation data as required by Bulls in 18-2024, um, the requirement shall apply to plan your 2025, but on a perspective basis, and so, um, the plans are given, we feel like adequate time to supply these uh Pharmacy RX data uh to us before February 17th so we can evaluate whether or not they are required to pay a dispensing cost and what the cost would be. Again, we are reviewing each health plan on an individual basis and not setting a fixed fee for everybody, and I think The governor's office and the commissioner did not want to set a fixed $10.58 fee across the board for everybody in the market to avoid price fixing issues. So, uh, we want to review whether or not the pharmacy compensation programs are adequate and reasonable on an individual health plan basis just like we do with rates. So like we do with premium rates and so that, that is sort of our agenda with that and we are referring to the data requirements or procedures or processes that we attach to and describe in the bulletin attached this rule. Um, essentially the uh commissioner has 20 days from the day of such report to issue a decision about whether or not the dispensing costs or dispensing costs would be required or not. Uh, the commissioner may ask for additional time for additional documentation, and then ultimately elsewhere in the rule indicates that, um, If the commissioner does require dispensing costs, the plan would have 30 days to implement that cost and would have a right to a hearing to challenge it, and we would provide administrative remedies or rights for hearings if they object to that, but essentially the commissioner's determination would go into effect 30 days after, um, his decision or her decision. Uh, if there is a dispensing cost added. Section D, uh, representative Wardlaw and some others, uh, wanted to make sure that the data that we submitted, uh, the data that health plans and PBMs submit relate to their proprietary and confidential pharmacy compensation figures be confidential, which we agreed to, uh, to submit. However, Um, when the commissioner does make a decision for each health plan what the average dispensing fee or cost should be, that would be transparent, that would be published, but the underlying data that we reviewed would be proprietary to protect any uh trade secret or uh commercial proprietary concerns by the PBMs and health plans. Um Uh, let's see, so that's that. So let me talk a little bit about the bulletin. The bulletin describes the data. That we want, uh, if you'll turn in your packets to bulletin 18, that's 2024. Um, the first paragraph is essentially just to reiteration of why I've already pretty much explained uh section 2 section 1. Are the reporting dates and deadlines on, we would like to have the 2025 data, no later than February 17th. Um, our goal would be if this passes, if this passes, if this rule passes, if it does, um, we would like to have the pharmacy data sent to us on a recurring rhythm on or before March 1st of each year, so that we get the data in March of that year for the next, for the filing or request for the next calendar year. So in March 1st 2027, uh, we would be reviewing what pharmacy compensation programs would be effective on January 1st, 2028, so that we will have time. Um, 6 or 7 months to review the pharmacy data to get everybody into a rhythm, everybody meaning health plans and PBMs. On filing that data every First of March, we're going to have to do a little fast pace here, the first year, require the filings for plan your 2025 no later than February 17th and then for 2026, uh, we won't want the data on, on or before July 1st of 2025. After July 1st, 2025, then we will get into a regular rhythm of March 1st filings so that we can, we can review the data 7 or 8 months before. They actually, they actually go into effect. Um, the data required to be filed is very important. That's section B of section one. And so our primary statistics are we want to look at from health plans and PBMs, the total annual average percentage of total pharmacy reimbursement above uhAA pricing or whack if, if, if, if NAAC is unavailable for the previous calendar year. So we want to see, um, in our data in the prior calendar year, how far have you been above NADA Minimums on generics. How far above or low or wherever you are as a health plan, how far are you above NADAC Minimums for brands. And then we want to see a total combined reimbursement, a percentage of the basic momums from NADA, uh, we would like to see a total combined reimbursement of 18 to 20% above NADAC for sustainable pharmacy network, uh, uh, uh, compliances or or or sustainability on generics, I, I I think we're looking at 200, 300% above, uh, NADA minimums for that to be sustainable, uh, for, for pharmacies, um, that, that would be a percentage we would look at. So we're, we're looking at in terms of whether or not we want to apply a dispensing costs, a lot of the data related to where the health plan is and reimbursing the pharmacies relative to minimum of prior calendar year. Um, second bullet point is we want to see the average dispensing fee paid to pharmacies. Uh, from toll pharmacy reimbursement previous calendar year. We're not seeing a lot. In the commercial market of dispensing fees, as you know, Medicaid does have a $10.58 dispensing fee, but we don't regulate Medicaid. Uh, we're not seeing a very significant high dispensing fee, but we want to know what that is. If you already have that. Um The total number of drug reimbursement claims paid during the prior calendar year, generic brand and specialty again, we're wanting to see what your rates of reimbursement are relative to the minimums, um, a very important, um, bullet point is, uh, we want to see pharmacy Network retention data, the prior calendar year. How many pharmacies have you lost? How many have you gained, uh, in the prior calendar year and uh if you submitted a, a network adequacy report to the insurance department that files or discusses these adequacy numbers of pharmacies, uh, please advise us of that. We'll look at that. So, in our review of the statistics, one of the very important items that the commissioner I and the actuary will look at is, do you already have an adequate network of pharmacies, and so I think If you do, that's very, very good uh signal for us that you may not require dispensing costs, um, the other bullet points are the number of adjustments you've made the prior year related to complaints, uh, of payments below NADAC, we have a significant number of complaints that we received. Um, you are below NADA mounds, um, and we would like to know how frequently you have to adjust below NADA minimum payments, uh, that, that impacts our review of whether or not a dispensing cost is required. Um, the other bullet point is quite a controversial one, but, um, as many of you know, um, Ah, PBMs, uh, health plan, PBMs are not uh permitted under state law to reimburse their PBM affiliates, pharmacies higher than non-affiliates. Um, we did an audit, uh, or a limited scope exam in 2020 with all the major PBMs and the majority of PBMs in that survey indicated that or our examiners determined that PBM affiliates were. Paid about 2% more than the non-affiliates which were was a violation of the law. So we would like to know how much you're paying your affiliates higher than non-affiliates because that tells us you could maybe increase your pharmacy reimbursement to non-affiliates, uh, maybe, uh, with a dispensing cost and uh in the initial proposed contribution or increases in pharmacy reimbursement that the health plan or PBM proposes to do that. perspective here. So if the PBM or health plan, uh, wants to increase or feels that there's a need for increasing premium reimbursement. We want to see that. That will affect our decision as to whether or not those, um, Those, those statistics will uh influence the commissioner to issue a dispensing cost addition. Um, section C, um, we want no cost impact. I know many of you, um, And many of the presenters after us will complain about, uh, the cost impact, uh, I will repeat what I think I explained to many of the members either privately or in the room back there or whatever it was, uh, on a $9 dispensing cost, um, we surveyed the commercial market. Um, the commercial market was Blue Cross and Blue Shield, UnitedHealthcare, Health Advantage, and Centene. Um, and those are our major health plans. Uh, we asked him to estimate a premium impact on a 9-dollar dispensing cost. Ah, with nonadac plus percentages added to it, um, and we ask our actuary to estimate as well, our actuary estimated that, uh, a $9 dispensing cost would increase premiums, uh, 2 to 4%. A, uh, the commercial plans, uh, without coordinating with each other or discussing it as far as I know, uh, all came back with a 3 to 3.4% premium impact from a $9 dispensing fee, uh, on a $500 a month premium, that's about a $12 to $15 per member per month increase, so I'm not gonna 5 here, if we require dispensing costs, it's going to increase drug cost, and that's going to have an impact on. So the decision for this body is whether it's worth that or not, um, we think that the other states, Tennessee, West Virginia, Kentucky decided that it was, um, over concerns by pharmacies over lower reimbursement, uh, so our best, uh, Uh, surveys of that. Uh, of the cost impact from a $9 dispensing cost is about a 3 to 3.3%, 3.4% impact. Now, Under this proposed rule and bullets and the commissioner may not require $9 dispensing costs. He may require a $2 dispensing costs. He may require $3. He may not require one at all. It may be $5. It all depends on what the data shows in terms of where the health plan is the last calendar year on a generic and brand payments above NADA minimums. If we feel like, uh, a, a company. close to our ranges, we may feel like a $2 dispensing fee is required. So, although I'm presenting to you a 3 to 3.3, 3.4% impact, that's only $9 dispensing cost. I do not know what it would be for $2 or $3. So it would be less than the 3.3, 3.4%. If he decides to or she decides who the commissioner is to award a, uh, dispensing costs, um, section D, um, this is the opportunity of the health plans. Um, and PBMs to provide us with any additional data. Supporting their actual calculations addressing whether or not their pharmacy compensation program already provides and shall provide in the projected plan year fair and reasonable reimbursements to pharmacies to ensure an adequate network. I mean, this is the opportunity we're giving. To the health plans and PBMs tell us, tell us how you're, how you're ensuring and guaranteeing um or ensuring an adequate and reasonable, fair and reimbursement program to ensure network adequacy, so we'll take their, their independent calculations and, and information into that. Um So, uh, again, we have in section E, we will review all the data and we will decide whether a health plan has to pay a dispensing costs or not, um, but the most we could ever require would not exceed the Medicaid dispensing costs of $10.50. Section F is just another uh repeat or mirror of the rule, all the data we get is confidential except for the disclosures per health plan of what the fees are, um, The fully insured plans may submit, uh, all of their data on product type like individual market or small group market or group market. Um, and again, the procedures and timelines for review are 20 days by the commissioner, uh, if he asks for more data, that would extend that time, um, and we already repeated that in the room. A PBMA filed the data for the health benefit plan. Um, we do not have a form for any of this and so yet, so we will accept whatever, uh, format, um, the PBM or health plan, uh, has submitted. We are already receiving. Um, some of these data already, uh, so we are organizing that and we've not made decisions on dispensing costs with the current data requirement, the data submissions that we've already gotten. Um, Again, exemptions, whatever the PPMLA exempts from health benefit plans. This rule does not apply to. Um, I've had this question asked on I do the dispensing costs of award to plot out of state pharmacies. Yes, they do. Uh, because of the Commerce Clause or legal issues, we have to treat them just like anybody else that's licensed, uh, by the Arkansas State Board of Pharmacy. Section 2, relates to self-funded health plans, um, If you read the rule and you read the bullets and you'll see that we're trying to be very lenient. With smaller self-funded plans with less than 5000 lives, uh, for our determination under section 2A for, for plants that fall underneath the $5000 5000 dollars number lives, they only have to submit the first bullet point under the first section. We're trying to not overwhelm them with data requirements as they're not licensed like normal fully insured insurers, uh, however, the rule. The dispensing costs will apply to self-funded plans, um, but, uh, the data or the limited data requirements for those with less than 5000 lives will only have to submit the first bullet points. Um, I'll be glad to answer any questions. I know it's a lot of information for many of you, um, we try to do the best job of responding to public comments, um, that we could, um, and we made many concessions to the health plans and PBMs. Uh, on some of the information, uh, I will say this, I, I know PCMA is going to speak about this in opposition, that is the PBM uh trade advocacy organization, and they have pointed out quite, um, I think, uh, that, that clearly it is not the insurance department's job to keep pharmacies uh in business, you know, um. I agree with that. um, but it is our job to ensure statutorily that we can ensure that they have adequate networkers of pharmacies and so if you're not paying them and they start dropping out, you're going to have a network adequacy problem. Eventually you will. So I agree it's not our job to make Pharmacies wealthy or rich, uh, or hospitals or doctors or dentists, uh, but we do believe that we have a function to ensure that if they're not adequately compensated, they're not going to be in your networks and then they're going to have a network adequacy problem in the future. I'll be glad to answer your questions. Thank you, Mr. Rand. I guess my my first question for you then we'll go to. The chart over here is. We're 30 days away from a session. Why are we here today looking at this when we're less than 30 days away. And then it's gonna take you so long to implement so much of this and you do not have the information that you need to, to make a decision on how much it's going to cost per prescription when we're 30 days less than 30 days away from a full session to where we can work this out and be it out with the entire legislative body. Thank you. Well, that's typical. Thank you, Senator. That's a good question. I think we can break it down into a few parts. The first is that AID has to enforce the laws as they currently exist. If we waited to enforce any law based on the chance that it could change in the future, we'd get very little done. The second is the statute specifically states that the commissioner shall adopt rules relating to pharmacy benefits managers network adequacy. That's a legislative mandate we have to enact it, and if we didn't, we would have to report to this body. Another issue is we're a little stuck because currently I believe AID and Mr. Rand or Commissioner McLean can correct me. AID has received over 3000 complaints this year alone. From pharmacists relating to compensation costs. Now we don't know from a network adequacy perspective, whether those complaints have any merit or not. We need some mechanism for evaluating the data all at once in a broad swath because right now the signal to noise ratio is too high and respectfully, I'm not sure we can wait for another 3000 complaints to respond. If the legislature wants to amend the PBMLA to it's more concrete guidance or change that ha language to a Mai. I'm sure we'd all be happier, we'd be happy to enforce whatever comes about, but right now we have a legislative duty and a command to enact the law as written. Thank you, sir. Sender dismay. Thank you and just to make sure that I understand, so you're saying currently you're not enforcing the law? Respectfully, Senator, it's more of this rule for one is commanded by the statute, but for two, we're enforcing the law to the best perspective, to the best that we can. It's just that we don't have the data to accurately assess network adequacy while we're responding to individual complaints. Yeah, but I, but I do believe you've had it an adequate period of time to establish these rules and you're revisiting. I mean, you don't have a problem with enforcing the law. You're wanting to change the way you're trying to enforce the law, is that correct? Let me. All right, I'm on, uh, thank you. Uh, good question, Senator Desma. Uh, we have never issued a rule defining fair and reasonable, or any data requirements that will allow us to conduct that analysis. The statute itself is not clear about what that means. And so this rule is our first attempt of doing that. So, I would agree that it's not clear and we've talked about that and I think the law was poorly written, um, in, in the beginning. Uh, just a couple of questions though because I wanna make sure I understand some of the guard rails and protection. that we have in place. So the first one is there's really two fundamental rules. Number 1, Uh, we require a payment of a minimum, a minimum payment, correctly, that's what the law does. And the second is, uh, we require, uh, pharmacies to be paid the same amount that an affiliate may be paid, right? And you, and so those, those are two, the two guard rails which I would have argued at the time when you're setting minimums, what do people tend to do? They said that as representative Warlaw pointed this out. We set a minimum here, that's where everybody goes and so that's another issue inside the law that it's itself, but again, one that was pushed and and then passed and so but I wanna go back to the 2020 survey that was done. Uh, because you know, when, when you started this, we started with we're doing this because of PBMs and the actions of PBMs, right? And as I continue to read this, there is nothing about PBMs and the rule that we have right now. There's just not if I can respond to that, um, uh, and Mr. Bucks in here explain this, but, uh, the reason why I targeted the health benefit plans as opposed to the PBMs is that PBMs are actually third-party administrators. What they do, what they endorse. What they, what they do, all that's endorsed and authorized and approved by the health benefit plans they work, they work for as clients and so if you want to require dispensing cost or you want to increase reimbursement. The PMO simply goes to the health plan and says, look, here's a change in Arkansas law, where you authorize this, so the health benefit plans authorize higher inorse review and approve all the stuff. It's not just coming from PBMs. They are actually authorized by their client health plans. And so that's if you don't mind. Mm I understand what you're trying to say, but I'm, I'm saying the core issue that's being, you know, that's been presented to be the problem isn't exactly what we're tackling with this rule. I don't think that's arguable in some ways. And so my question was, before you responded. Uh, that I was trying to give was there was a survey done in 2020, right? And y'all had access to that data. How, how did y'all conduct that survey in 2020. That survey was a review primarily about whether or not PBMs were engaged in spread pricing. And so there was a secondary research or secondary um aspect of that exam that looked at affiliate pricing and, uh, we, we looked at affiliate pricing to be about 2% higher than non-affiliate, but the primary um function of that report was to address whether or not PBMs were engaged to spread pricing. Right. If you don't mind, which you referenced as you were talking about in one of the issues that you've recently seen is that there is a 2% differential between what they're paying affiliates and others. I guess my question would be, do you have the capabilities or ability to conduct a similar survey today. Yes, sir. Why haven't you done one since 2020. Well, we have not due to priorities with other issues related to enforcement, some of which do you understand where you would be coming from from my perspective, you're wanting to do an all-out rule change you've had at your fingertips the ability to do another study to prove what I think most of my pharmacists originally started complaining about or issuing concern about was the differences between how they were being paid versus affiliates. We haven't done that now in almost 5 years. Yes, sir, but we're going to utilize a 2020 report even though we have at our fingertips the ability to gain the information. As part of the argument for why we need to do something today and create a rule change and see, so what I would say in, in all this and what I was trying to say earlier before As I was trying to make a statement to give context for a question, and I haven't been able to get through those yet very well. But my point is, I believe you have the authority and the ability to gather all of this information. I, I don't believe that you even have to have this rule in place to see what you want to see. I mean, you said right now, and I, so I've got another question. We already received the info, so we're starting to look at that now. Now, I wasn't really clear on why you already received the info, if you're receiving it because you've missed mostly recently requested it or they're just voluntarily giving it over, no, sir, that's not what I'm saying at all. We do not receive the statistical information on NADAC Minimum's last calendar year. telling you that you Could, could we require that by order or by do you already have the authority to get that information is my question, that's debatable. Um, I'm, I'm, I'm I I but it's not debatable. Like that's either a yes or no because if I were doing my homework and wanted to present a rule like this to legislative bodies. I would say there's nothing in the statute that requires the insurance department to compel a PBM to provide us with a statistics of, of NADA minimums in generic or brand. The prior calendar year, but you're already getting it. Why and how? I'm getting it because of the emergency rule that was issued by this body. OK. OK. You through Senator Dismay. And then I'll, I'll circle back. OK Senator Boyd Thank you, Mr. Chair. I appreciate the opportunity to ask a question, so. There's been a lot of discussion about whether the state did a report or the state didn't do a report, whether a state can do a report. Lots of stuff about things. So one, I just acknowledge I'm concerned if you have the staff to adequately do this and research this and chase your tail all the time. But are you familiar with the federal trade commission who had a report that showed that the PBO affiliate paid itself not directed patients, cancer patients there for $19,200 versus the local. Pharmacy word, it was $97. Are you, are you familiar with that? And would that be some marketplace evidence that maybe we got a problem. I think I think, yes, uh, in response to both you and Senator Desma, however, The issue about whether an affiliates paid. Higher than a non-affiliate doesn't answer the question about. 95% of the reimbursement, or 98% of it each day is at NADA minimums. I get it. If you're concerned that affiliates are being paid higher than non-affiliates, that's an issue we need to address separately. What I'm talking about is the base NADA minimum amounts, regardless whether you're affiliate or non-affiliate are at base minimums. That's the affiliate compensation system is not going to, if you fix that, if you fixed and said all affiliates. All non-affiliates should be paid equal to a uh affiliates, that's still not going to address this problem, which is PBMs paying pharmacies at NADA Minimums. That's the problem you've got. I can fix the, the affiliate issue that Senator Desmay, uh, raised. There's no question we could through examinations in terms of staff, we contract out with our actuary like we did in the 2020 exam to look at that issue. So we contract that out and the PBMs actually pay. For that examination. I see affiliate compensation as one issue. I see pharmacy reimbursement at NADA Minimums is a separate issue. I don't know if I'm making any sense, but I, I think you can have both problems going on at the same time. Now, if there, if they're paying their affiliates 2% more than non-affiliates, then that's 2% more that should go back over into the non-affiliate reimbursement system, in my opinion, right? But that isn't Dress your bottom NADA minimum requirement, which is, I think the problem here. So you don't, so. I, I just want to clarify because there's other evidence out there that I've personally seen, I'm sure other legislators have seen, I'm sure you've seen where this pharmacy is getting paid significantly more and so you don't think this rule provides the transparency to levelize the, the playing field so we can get rid of the overpayments one of the the underpayments. I do one of the, one of the data elements that I went through is your pharmacy and uh affiliate and non-affiliate reimbur. differences, so that's something we will look at as we review whether or not you should pay an additional dispensing costs. I'm just saying the problem that you've got isn't over affiliate, and that is a problem. It is your wall right now, a lot of it says you're only required to pay NADA minimums, and that is the problem that you've got with a lot of these transactions, so let's, let's move off the affiliates for just a second. Is there any logical reason why two pharmacies situated in the same city should have a significant difference in pay. So you have a drug that costs the, the, the NADA is $1 and this pharmacy over here gets paid $1 and a nickel, and this pharmacy over here gets paid $25. I mean, why in what world does that make sense? Did the pharmacies all agree in the same PSAO to agree to that reimbursement. I mean, there's a lot of things going on in those differences, pharmacies are required to, or they do participate through reimbursement programs through their PSAOs. So the pharmacies may have different compensation arrangements through their PSAO agreements as I understand it. No, I mean, what, what I understand is it's more or less an adhesion contract. You take it or leave it and when fewer than 10% of 55 to 10% less than 10% of people are cash bank customers. I'm just answering your question that each pharmacy may be under a different pharmacy compensation arrangement with the PBM through their PSAO that, that, that, that, that causes these differences in compensation that you're talking about. I'm just answering your question. I don't, I don't, I don't like it. I'm just saying I agree. The question is really, can you, is this going to offer the transparency so that you can get to that. So I'm in the state employees plan and I'm being directed to Walgreens or, or a chain pharmacy, I, I shouldn't call one out. It could be any chain pharmacy versus this other pharmacy over here. Why, why would state employees ever want to pay? Significantly more. I mean, I'm not talking about a nickel or a quarter. I'm talking a dollars, I mean on a commodity, why would that make sense? I'm not saying it does. I'm just telling you that the compensation contracts between pharmacies, uh, through their PSAO with the PBMs may differ in how one pharmacy has paid for one drug as opposed to another. Mr. Buxton can explain that when he gets up here to testify, but I think a lot of the, uh, variances related to why one pharmacy uh across the street is paid $15 more for an antibiotic than another is simply due to the contracts that were signed, uh, whether they're adhesion or not, I agree, Senator Boyd, that, uh, those are adhesion contracts. I'm just trying to describe to you why that result might might occur. If I may, Senator, to back to your broader point because I read the Khan FTC report on PBMs and it was very interesting spread pricing you indicated. I think both you and Mr. Rand are hitting on the right point, which is for a typical pharmacy, your day to day are going to be large volumes of generics. And as Mr. Rand points out, when 95% of your business every single day is basically at acquisition costs, you're going to gradually be bled out of business, where affiliate pharmacies get their leg up is on the the specialty or cancer drugs where they are able to get the large spread pricing and that competitive advantage is why they're to tank the NADAC reimbursement costs that you standard pharmacy can't. Uh, so basically the insurance company is setting the price and taking the price. And they have all the incentive in the world to put their competition out of business. Thank you. Representative Woo. Thank you, Mr. Chairman. Mr. Gilbert. A month or so ago. Mm This committee was told that y'all had adequate staff. To do enforcement relative to PBMs and insurance companies. Now today we're hearing totally different. Version The Federal Trade Commission, Congress, Congressional committees. Have all investigated PBMs and nobody seems to know. What the problem is I can tell you the problem they're raping and reusing and ravishing consumers of the state of Arkansas. Not just state employees, but all of them. And I was gonna save this till the end. But I'm telling you we've got a major problem when in UK and Canada and other countries overseas can sell drugs for very minimum. So we've got a problem in the whole industry. But why were we told that y'all had adequate staffing to be able to investigate the claims. And, let me give you a claim. How would you investigate a claim where a forest is paid $100 and could only charge $90. Now what would you do with that customer? When you told them that first of all, the PBMs are entitled to process, and so a complaint will be filed by the pharmacy, our PBO director would assign an analyst to present the complaint to the PBM and review their response. And then if it's not adequate, we would, we would pursue violations. So, and again in terms of staff, I don't, I, we have 123. We have 433 employees. We have a PBM director, one Premium Alice, uh, and another new PDM Alice, I think, um, budget has given us approval for an attorney to do an enforcement and yet one more financial analyst. So that's going to be approximately 6, in Oklahoma and Tennessee. They have a staff of approximately 12. So, um, and some of them have 8 or 5. So we've looked around the state of the United States and we have, we would have 5 to 6 staff, uh, would there be need for more? Yeah, I mean, if you want to give it to us, but I think what we've got is adequate, so. You think you have an adequate staff with 3000 complaints have 6 people not yet complement 3. Again, a complaint we consider a complaint to be one drug. So if a pharmacy files a Excel spreadsheet with us, uh, in one email with 20 different drug transactions, um, below NADAC, we would consider that to be 2 complaints. OK, let me ask you another question if I may, Mr. Chairman. I'd like to know. Why With a Company Be permitted To operate where they charged a pharmacy $100 and they could only gain back $90. Well, again, that if they're restate so what, what is the pharmacy's acquisition costs in your example. $100 and they're getting back 90 that would be a violation of our, uh, of our statute, for sure. That would be a violation if the plan is subject to our jurisdiction. There are, if it's, uh, it may be a plan that's not. I'd have to look at the actual complaint. Well, you you you use the definition while go of a third party, PBMs. OK, if, if they are a third party and they were designed and correct me if I'm wrong, they were designed to be a clearing house for what used to be called kickbacks. And they were a violation of the law today they're called rebates and the PBMs are holding on to some of that money and they're not reimbursing our pharmacies in this state. Another point. That I want to make with you and I want you to be able to, I want you to respond. And commissioner, you may, you may run get on this. What if. They can do that, that we don't do anything about Demon with the fact that we don't control their percentage of gross margin like we do the pharmacists, do we? Well, I mean, I'll speak, I'll let the commissioner speak after me. We have no laws requiring us to have jurisdiction over their gross profits or capital surplus or those kinds of things. We do have a law that prohibits them from paying below NADA minimums so we can take action there, but in terms of rebates and their profit margins in their vertical corporate. Uh, surpluses and, uh, profit, uh, we don't have authority to get involved in that. Now, the Attorney General's office might, but we don't as the insurance department, so I don't, I think there's, there's the problem. Were dealing with vertical integration. Now, in the oil industry, which I'm familiar with, that's a totally different deal because they control the product from the well head. To the refinery, to the pipeline, and to the distributor and to the gasoline dealer. This is very voluminous products that all funnel through the PBMs and they set the prices for the pharmacists, is that correct? They do They do? Do you agree that if you've got chain stores that endorse this rural 128. Do you agree with the, the local uh the state forests association that agrees with the rule. Does that tell you that there's a major problem. Well, the rule, the rule, the rule, the rule that as proposed. Would benefit larger change pharmacies just as it would independents because, because they are licensed pharmacies by law just like independence. And so you legally would have a problem, in my opinion, if you exclude this r benefits to large change pharmacies, they are just as licensed legally and entitled to it, Walmart pharmacy would be entitled to this rule just as much as Joe's Pharmacy down the street. Otherwise, you're going to get some lawsuits here, OK? That's my point. if, if the National Association says, hey, we got a problem in the studies association says, hey, we got a problem for the national chains. They tell you you've got a problem. The local pharmacists association tells you, we got a problem. I think it ought to apply to all. Thank you, and we agree, we, we agree. Representative Wooten, are you through or do you have any more questions because I need you to get back in the queue because I'm passed on my screen. Centra Irvine. Thank you, Mr. Chair. Um, one of the things you said is that, um, You need to act now to enforce this law. However, when, when was the first fine and penalty that you assessed 2019, something around there, so the law had been passed for how many years? 2018. But I mean the the most recent one was this didn't you issue one this summer and, and, um. I, I, I think a lot of the, the trouble in Senator Hickey will appreciate this. uh I just want to ask my questions. So, um, so in order to, you did the 2020 survey and then you had spread pricing and affiliate pricing, which my understanding of the legislation and my intent for this legislation is to ensure that pharmacies are paid, uh, so that their affiliates are not paid higher than them and to eliminate the spread pricing that's in the legislation. that the ability to assess fees and penalties and fines for that type of behavior was given the authority to do that. So we know for sure that that that is that the, the, the PBM, the pharmacy benefit manager signing the front side of that check, right? In violation of the law. OK. So, um, so with, with what we're doing with now, you, you've had the ability to continue to do that on page 6 of this document, it says that um. The report I on exhibit C4. Um, on page 6, it says, we understand this dilemma, and I'm going to skip around on different questions, but This was to the report has to be filed on or before, um, November 30th. Um And so that, that question was, and you said, we understand this dilemma, but we're requested to apply this requirement to plan year. Who requested you? The governor's office, OK. And That's, that's what started this inquiry in spring, OK, of the 3000 complaints, how many complaints do you receive from patients or from businesses will after this rule is passed, do you anticipate receiving complaints from businesses, self-insured plans, patients that very, very good, very good, very good point. We have gotten complaints from the small employer health plans about costs. issues which you'll hear from them later, uh, but would I receive complaints from, um, Uh, enrollees and insurers who may have a uh additional cost issue, yes, we might, but right now it's all pharmacies, so it's all pharmacists, OK, so this is a complaint driven rule. You created a rule based on complaints that were driven by pharmacists. OK, so my, my read and interpretation when you're including, you are including Medicaid because you're including the passes because you responded that I think the pharmacy Association complained that passes were not included and in this. And I was wrong, they said, oh, we agree with you and we're going to uh remove that exemption so the past past programs, not just passes but private option as well. The our home, that's called now called our home. So those, that will have a, um, that will have a budgetary impact on the state budget. It will. It's not good, it will. So I wanna, I, I'm, will you please let her ask the question before you answer. I am trying to speak in what is actual here. When you have this is very opinionated. And I have a problem with it being so very opinionated. Because when you say that this is going to be with self-insured plans, OK? And they're, they're included. That is a contractual agreement that that self-insured plan has with a healthcare insurer. And so there's no way for you to determine whether that's going to be an increase in premiums, or if that's going to be a direct assessment to that patient at point of sale. You, you, you say your opinion, and I think a lot of this is based on your opinion. Your opinion about adequacy of work. That's an opinion. I don't see a process. I don't see any data to show whether we have an adequate network or not. I, I can look at my eye test from where I live in Mountain View, Arkansas, and see 3 independent farm or two independent pharmacies and Walmart and Harps all within my town of 2800, doing quite well. I can see that, but I don't see a process of determining adequate adequacy of network. I don't understand that except for it being very subject. active and opinionated. And I also don't understand reimbursement rates. Reimbursement, I understand, dispensing fee. I, it's completely a different animal and a different beast. And, and as a legislator, I see those things are two different things. We, we, we talk about CPT codes and healthcare. We talk about reimbursement rates. We always talk about that. I don't see clinical fees, scheduling fees to cover the overhead cost of Of, of, you know, these other folks. I don't see an administrative overhead costs for an independent grocery store. Are we going to be now going down the path of, well, do we have an adequate network of grocery stores in this community, in this town, in this county, and if we don't have an adequate network of grocery stores, then we're now going to have to assess a bagging fee to pay for the overhead cost of that employee and that receipt that they're going to get in the paper bag, they're gonna get. I mean, this to me is super objective, and it all relates back to you, you, you cannot guarantee there's no way, I don't think that you can guarantee that a self-funded plan does not pass that down to the patient at the point of sale. And for my mom, who's on 8 prescriptions a month, that's $72 a month. You also, uh. I, I mean, there's no, that is a contractual agreement between that private business. And their insurer that's running. their self-insured plan. That is a, that is a tax. That is a complete tax. On the patients and, and the people I represent cannot afford that, and they sure as heck cannot afford a $9 dispensing fee on a $4 generic. I think that's crazy. You know, I mean, I don't know what the specifics are, or you're going to look at every single different type of a prescription because a Z-Pak comes in its own cardboard container. That doesn't require counting pills and, and packaging and labeling, um, partial supplies. There's partial supplies. A lot of people don't keep medicines on their shelves. And so then they have to reorder it. So am I going to have to pay for 1010 pills, Am I gonna have to pay $10.50 this time and then $10.50 the next. time when the more medication comes in. I mean, there's inhalers, there's all, I mean, are you, are you, as the insurance commissioner now going to say, we're gonna look at every single drug. And determine a dispensing. fee on every single little drug because this one doesn't require a little plastic bottle, but this one does. This is this rule to me goes way beyond what the statutory language to me is, it goes way beyond it. And, and I personally am not going to support tax increases. I'm not gonna support a tax on my, the people I represent. Those are patients that are struggling already to pay for it. Now, I absolutely. Agree with predatory, uh, practices by PBMs. 100%. But we have, we have the ability to assess them and find them so we know that they're riding the front ends of the check. I'm absolutely for that. That's what we intended to do with this legislation, but, but this to me goes down a whole different line of we're just going to respond to complaints. But we're not taking in the whole. Picture here of how this is really going to be a policy that sets major precedents. And that guarantees a profit for one industry in the state of Arkansas. I, I don't, and, and for you to say that it's about adequacy of network in the future based on what? What data? How, how do you even determine that? We, we don't, we, we can't deal with the future. Like, I don't, I don't understand that comment whatsoever. And so, I mean, my question to you is, You know, How, how do you define adequate network. How, how do you do that? And you have the ability to do surveys, you've done them in the past, but You have the ability to do another survey. What's your process there except for what you believe in your head or what your opinion is. I think you raised some great points. We, our network adequacy maps that we require, require the health insurer to list every pharmacy and network, uh, and their metric, uh, mileage distances to zip codes of enrollees in the health plan. So I've got that data. I've got that data, and I think you make a great point. Uh, we are not Seeing pharmacies drop out of the network right now. No question, um, but my concern is in the future, and I, I agree. It's speculative, but I do not believe pharmacies, again, you're right, I'm making an opinion here. I do not believe pharmacies can sustain themselves in the future with a When they're getting back reimbursement that's equal to their inventory cost or very high, very, very little bit above it. So, and you can, are welcome to talk to the pharmacies they're gonna talk later. I just, I look at this as a future issue, and I agree it is uh it is subjective but is a concern given the complaints that we've gotten. So Well, and, and I know there are other people that have questions. I have a lot of other different questions and I, you know, I'm, I'm concerned on how all that's tied. I, I will, I, I just want to stay. I think it's really, really critical though, that we recognize you have tools, you've been able to utilize the tools already for going after PBMs. This has nothing to do with PBMs. This is going to affect businesses and employers in the state of Arkansas and patience at the point of sale. I don't care what you say, that's gonna get passed down to the people I represent, and I have a huge concern about that, particularly when we have no idea what that impact's going to be based on what you've presented here. Thank you, Senator, please get back in you if you have any more questions. Senator Hickey. Thank you, Mr. Chair. Am I home? Yes. OK, I have a bunch of questions, but I'm gonna limit it to one right now because I want to make 100% sure that I understood what you said, Mr. Rand. So when Senator Dismay was asking you a question earlier and we were talking about the PBMs. You said that there's nothing in the statue right now that that would allow you to get that information from the PBMs. Is that correct? Well, I, I again, I've not combed through the code, but I'm sure you're going to correct me. I, I, I, I don't think there is. I don't, not specifically on that. OK, well, all right. So this rule though would allow you to do that, correct? OK. So earlier you said there was nothing. I'm just gonna say, I mean, obviously, we've got it, you know, uh, you know, that that's what you said. He did it and you said there was nothing within the code that will allow you to get it, but this rule would. I'm referring to statistical averages in the prior calendar year, um, that would be permitted for us to, uh, investigate or something like that. OK, so, and I understand you, you're very wise and smart enough to see where I'm about to go. Of course, earlier you said that there was nothing in statute that would allow you to do it, but now that this rule would, and I think everybody in this body knows that we sit down here whenever we do these rules and we say that we turn these things down because they're either not constitutional or they do not comply with state law or they exceed state law. And I think Senator Ervin is went there and actually send her he was ask you about the next session. From my standpoint, that statement alone, we're basically saying that this rule exceeds what is allowed in statute, which is what actually the reason that we review these rules and look at these rules now because the people through the Constitution, through the Constitutional amendment has us to make sure that we're not exceeding the authority given by the entire legislature in the rulemaking authority, which it appears like to me that we're doing that with that one statement. Well, the statute in the a light allows the insurance commissioner and says it blatantly, the commissioner may issue rules related compensation. This is about compensation, so I think we've got support for that and you know, I guess I'll, I'll go one step further if it's OK. I mean, we, we sit down here and I was here and as, as the pharmacists like to point out, Jimmy, you are a hickey, you were a, uh, a sponsor of the PBM legislation, and I was, uh, because, of course, I understand the, the need that they're not, that they're not paying their affiliates more, uh, and all of that. But at least from, I may have not have known what the legislative intent was in 1974 because I wasn't down here, but I'll tell you this, as far as from my standpoint as a sponsor of that legislation, whenever we put the stuff on, it was my intent because it specifically says NADAC, and I understand that you can sit down there and try to make a business argument as I could. That maybe you can't survive that way, but the law specifically says NADA and so whether or not we like that or not, and we're trying to come in here with a rule to exceed NADAC goes against what the what the legislature's authority or, or what the legislature has given. I see no reason that we don't wait until the session if somebody wants to attempt that and try that, uh, I was told, I was told, uh, Point blank, cause I've asked that question out here, well, why are we not waiting to the legislative session, you know, you know what the answer was, and I'm gonna retain that to myself. Well, because, uh, we don't think that we can get it passed that way. So from my standpoint, you know, we are greatly exceeding. What this body has, has allowed, sir. Thank you, sir. If I may, Senator Hickey, a bit of a light response on my end. This might be. Apply Professional disagreement between Mr. Rand and I. The insurance code does give the commissioner broad investigative powers. He can request or even subpoena information from health plans if he so chooses. What this rule allows us to do is instead of us having to shotgun out several different subpoenas every single year with various times for each of the health plans is to get a rolling requirement every single year with consistent data for each of those health plans. I understand, but I'm just going by what the testimony was sitting here with a few minutes ago. Thank you. Representative Perry. Thank you, Mr. Chairman. Uh, Got one question going back to Mr. Rand, going back to the complaint you mentioned you had had roughly 3000 complaints, and then you explain that the complaint could actually be one pharmacy or one pharmacist having multiple prescriptions which would be multiple complaints, uh, is that about average for the number of complaints you receive in a year. Yes, yes, so it's not, this is nothing out of the norm then. I've, I've gotten more this year. I'm not, I've not researched this yet. So I will be glad to ask our PBM director to compare the 2023 reimbursement complaints with 2024. It's my sense that we've got some significant more in 2024. OK. And another quick question, how many prescriptions are filled a year in Arkansas. I do not know. So, so 3000 would be probably a really. small number I don't know. Yeah, OK. All right, thank you. Senator Dismay. I thank you. um. I mean, I would, I would go back to, I have concerns that we, we haven't been doing what we were supposed to be doing, or at least we haven't done a review since 2020. So we've kind of demonstrated that we're willing to, you know, take the foot off the gas and let things go along and maybe happen that shouldn't happen, and this is regards to the affiliate, uh, payments and so I'm, I don't. Yes, and I apologize. I know this is an emotional issue for you. It's very obvious. Um, and maybe if I So I understand. So I'm gonna try not to have emotion on my side. But as you know, The 3 largest employers in my Senate district all called a post because they were concerned about what it was going to do for their employees and their health care cost and what it would cost every time they went to the pharmacy. That's a real problem and one that needs to be vetted and discussed. Uh, one of the biggest issues I have a couple of complaints. Number one, there's been a, would you agree that there's been a substantial change in the original rule that was introduced for public comment period and the one that we have before us today. I wouldn't call it. We can argue about whether it's substantial or not. I think a majority of the changes, uh, were referencing the bulletin that was going to implement the rule. Maybe it wasn't as elaborately staged in the originally filed rule, which is interesting because you get me to my second really probably more major complaint is, um, and because I think it's a sidestep in a lot of ways. And I do, I think it's a substantial change if you set the two next to each other. I've done that, uh, and, and when I talked to, uh, individuals that, you know, had previously reached out. I'm not even quite sure what to make of this latest, uh, version, uh, that has come, and so, but what I really don't like or have concerns about is we've promulgated rules. That allow us then to create a bulletin that is really a subset of rules that then is shielded from the oversight of the legislature. I disagree with that if you, Senator Desma, if you look at the rule, the last rule and response to public comments, I incorporated that bulletin and indicated expressly any changes to the bulletin would have to go through rulemaking. So you're going to So today we need to be we need to be mindful of the fact that we're also discussing the bulletin, not just the rule that's before us, it was incorporated by reference into the primary role, and we indicated in the, in the rule just to assuage your concern that we might amend or change the bulletin without going through rulemaking. We made it clear, I thought I made it clear that it had to go through rulemaking itself. Why would you do that? Why wouldn't you just make it part of the rules. It's just cleaner for me because the bulletin describes essentially. The data filing requirements, more so than it does substantive issues about what it's covering and what it's not that kind of thing because my biggest concern is, and it's really what I think. We're getting at what, what these, these definitions that are not yet determined. So that's access and that's fair and reasonable and all those things. I mean, I think y'all's argument is, is the legislature just let us come up with those on our own. Uh, which, and so you've written a rule in a way that allows you to to create those definitions without having to have a rule come before us and so you're saying whenever you create these definitions because they're gonna have to exist somewhere, you're going to bring those, those will change the bulletin and then those are going to come before us? Well, again, if you look at the way we review rates, um, the statute that you, uh, empowered the insurance commissioner to review premium rates, says rates shall not be discriminatory. or shall not be excessive. That's it. That's all it says. And so we give discretion to the commissioner in that situation to review medical loss information from actuaries to determine whether or not health premium rates are excessive or discriminatory. There's no elaborate rule in that situation, but you're protecting who in that situation, the consumer, correct? Now this is a very flipwards back, just do a backflip, and that's now we're talking about protecting those. we're paying, which is a completely different position for the insurance department, and I was going to, I did, I was, I've debated whether or not to go down that road, but now you've opened it up because nothing in this rule protects the consumer. Right, which is your primary function, I don't see it here except access I might respectfully disagree because with the locus of this rule being entirely on PBA the locus of this being entirely on network adequacy, an individual pharmacy may go completely bankrupt under this rule and network adequacy may be preserved. Rates may be lower than an individual pharmacist might like a network adequacy may be preserved. What we're trying to avoid here is a situation where network adequacy is no longer preserved because in order to save on costs, a PBM has driven reimbursement rates so low that pharmacies go out of business and then there's no network adequacy in the sense of a PBM is basically eating the seed corn. And we've had a few good years of lower costs and now consumers are paying to that point because I think this is something that maybe, but because I've contemplated and then had wondered if y'all had. Let's just say that there's an area that has an abundance of pharmacists. Are you telling me that you'd be willing to allow them to have lower rates in those areas because there's so much competition. Let's, that's the competition work and maybe in that particular area, we won't have a dispensing fee because why would we? Because there's an abundance of pharmacists in that area, but the rules are not written that way in in the comments you explicitly said that they couldn't because you wanted it to be statewide, which Doesn't make a whole lot of sense, but. If we're talking about adequacy. Right? So again, we have not, that's a good point. Should we increase reimbursement in the rural areas as opposed to more highly concentrated area where there's a lot of pharmacies. That's something we will consider in the future for sure, um, but as to your answer, are we protecting the consumer? I think what Jake was saying or implying, uh, we want to make sure that consumers have always have adequate access to pharmacies, and I know in Cersei, you indicated you have tons. You don't see business and Senator Urban sees the same thing, but I think the pharmacist can explain that in other areas, that's just not the case, I understand, but your rule doesn't intentionally delineate out between those areas and you said you were unwilling to do so at this time. Well, it'd be very difficult to try to decide how to do that Representative Allen. Thank you, Mr. Chairman. Uh, it appears that we have a, a crisis here. One of the things that we need to remember is that we should never let a good crisis go to waste. And I have a question. Uh, my question is, uh, at the core of this issue, it appears that we are allowing PBMs. To pay more to big national pharmacists. Then our local pharmacists. Why is that? Uh, you mean, well, they, if they're in network together, or I mean, to, to non-affiliates again, I think that is an issue that we need to enforce, as I've explained that to Senator Desma and Senator Irvin, the insurance department needs to do a better job in preventing non-affiliate pharmacies are being paid less than affiliate pharmacies, but again, I keep coming back, uh, to the issue which is that the overall reimbursement minimums and Arkansas and Senator Hickey pointed out, RADA minimums. It's not the, the affiliate issue is legitimate. I'm just saying we need to address bare minimum night out reimbursements to both affiliates and non-affiliates. That's causing a lot of the problem. Follow up. Yes, sir. Is there anything that you guys can do about it? Yes, we can do another exam on the PBM industries related to affiliate pricing. If you, if we do, and you find that affiliate pricing or non-affiliate pricing is 2 to 5% of the commissioner can take action to correct that and adjust the reimbursement to equal, uh, non-affiliates, I don't think that's going to solve this problem that I'm here presenting. I think that that is a problem that we've got enforcement to do, to take advantage of and to pursue as a separate enforcement action, but I think the problem here is the PBM. health plans have been reimbursing pharmacies at or below NADA minimums, so. That, that's What we're here for, really, and I understand the affiliate issue, but I think we're sidetracking a little bit from the basic problem that we've got, which is the pharmacies are really only being reimbursed right now, um, uh, both the large chain and the small um retail, uh, at NADA Minimums. And I think that's, that's what we, what we're trying to deal with. I'll, I'll get back in the queue. I have a couple more questions. Thank you, Senator Hammer. Thank you, Mr. Chair. Based on your explanation a while ago, um, I know there's the concept that this is going to go to a $10 dispensing fee, but did I understand your explanation of the rule a while ago that it may not actually go to the full $10 that it's gonna be fluctuating based on the data that you would be collecting if the rule is allowed to go through. That, that is correct, Senator Hammer and the, and the ceiling you anticipate in work case scenario would be 3.3% impact to the, uh, to the policies. Is that correct? $9 fee, yes, on a $9 fee. Have you, have you collected any data thus far that would give you an idea as to whether or not we would hit the ceiling or not with the tools that you have in the toolbox currently. We haven't gotten the data in yet. We're, we're getting it now from the health plans of PBMs. So I won't know that till I see the data. And when do you anticipate that would come in? Within the next month and a half and half, yes sir. And the reason And, and that effort to initiate getting that data started when? Back when we I passed the emergency rule. Uh, a few months ago and prior to the emergency rule being passed, why were you not collecting the data prior to that, we did not, uh, again, the complaints about NADA minimum reimbursement really started from my perspective. Uh, in the spring of this year, so we started this rule process in June or July. Uh, so we did, we were on this as fast as we could go. OK, and since this rule has been in place. What have you done since you were given authority under the emergency. Again, we, we're, we, we issued a bulletin this bulletin to the PBMs and we're now getting that data as, as, as they come in before February 17th. And if it's going to be about a month, month and a half when you get that data, is that when you feel that you will feel, uh, and I don't mean to use this word in a negative context, but a little bit vindicated about what you're trying to do here today or when that data comes through, what if the data shows Something different than what you're arguing for today. We'll wait and see again if Um, I think one of the most outstanding statistics that's in favor of not requiring a dispensing cost is we see a steady number of pharmacies who are not dropping out. So it's up to the commissioner, not me, but, uh, that would be a very important statistic for us to look at. If you already have an adequate network of pharmacies, that's going to impact our decision on whether to require dispensing costs, right? And currently, do you know if we have any areas of the state that are under, uh, inadequate. Uh, pharmacy status. I do not know. OK. All right, I'll hold up for a little bit. Thank you, Mr. Chair. Yeah, I just want to clarify one thing here from what what you said. Basically, you're asking us to review this today. And you'll tell us later what it's gonna cost. The consumer. So you're asking us to review something and then you decide what you want to charge us later. Well, again, our decision about yes or no, yes, yes. OK, thank you. Uh, Senator Irvin, and just so everyone knows I'm taking members' questions first and get to the non-members as the members drop out. Thank you. The the determination to exempt self-funded plans. Do you have statutory authority to make that determinate and we are not exempting them on page 5 we are, I think that's of the bulletin, correct? So you don't have, I mean, I, I just wanted to know what the authority statutorily, you had authority to do this or to for exemption for self-funded plans and self-funded government plans with less than 5000 Arkansas resident covered lives. That was just something. Well, again, they're not exempt from the requirement of requiring to pay a dispensing cost even though they have less than 5000 covered lives. I'm only minimizing the data requirements, they have to report. They are only required to report the first bulletin point. They're not exempted from the rule itself. So I'm not exempting them at all. OK. And then, um, but again, that was, that's no, that's not statutorily. There's no language about self-funded plans being exempted or not exempted, OK, page on C7, page 3, it says you're in response to a comment that was made. It says we really have not explored whether the next question of whether it instead can be applied or recovered under co-payment or co-insurance responsibilities. So, I mean, that goes back to my whole first issue where, um, You know, I, I do believe it's a contractual issue on ERISA plans, but you're saying that you have an explored. The effect of this rule. Um, on co-payment or co-insurance responsibilities. I mean, a co-payment is also recouped at the point of treatment or care, is that correct? I eventually decided in the final edits of that rule was to permit the fee or cost to be collected through copay, but not beyond the copay, so co-insurance and copay can be used to offset that fee, but they cannot go beyond the copay or co-insurance. That language was a suggestion by the Arkansas Blue Cross and Blue Shield Company. I adopted that a co-payment is determined by the plan, not by you, right, but if it's a $20 copay, they can collect whatever they can collect on the copay that's left for dispensing costs, they can't go beyond that. Yes, but for the next year's plan, the $20 copay can just go to $30 copay. I don't know if they're going to do that or not. Well. No, we don't know. And that's the point. So, in a co-payment is every single time you see treatment or care, so you could absolutely tuck the dispensing fee into the co-payment of every single one of these fully insured plans and self-insured plans. What's this going to affect all, all businesses in the state of Arkansas that have self-insured plans or that contract with a fully insured plan for Blue Cross Blue Shield, no matter the size of their business, so a small business with 30 employees, which we ran at one time, then it's going to see a significant cost to their, to their health care coverage for their employees to the point where they actually might drop coverage for their employees. So just, I just wanted to make sure I fully flushed out the co-payment co-insurance responsibilities and co-payment because my original language was they could not use any co-payment or co-insurance to offset this cost. We had an astounding number of PBMs and health plans object to that. feel like it was not consistent with their co-payment formularies and all that. So I'm trying to address inside with the health plans to the extent that I could. So we came up with a solution which was you cannot collect this dispensing cost outside of the copay or co-insurance. So that's what we decided to do. I'm trying to respond to the health plan objections. Sure, but like I said, in, in, and just normal functioning of how this all works, that's just go from a $20 co-pay to now a $30 copay. So, um, and then one other question on page 5 of C4, there was a pharmacist who was against the cap on the dispensing fee and your response was, we assume you're referring to the Medicaid amount cap in Rule 128. We may later adjust the fee cap or limitation in the future, however, it is, however, in place over cost concerns over inflation issues. Again, the concern about the Medicaid dispensing cost is there needs to be an inflation. That's what I was referring to. Yes, but the Medicaid dispensing costs is to offset a lower reimbursement rate. I mean there's, there's, there's not an apples to apples comparison between the private marketplace and Medicaid. Medicaid is never supposed it it is always never going to be, I mean, I agree with you and, and I, I don't quite understand how every other Medicaid provider. That's in the Medicaid budget and space, it will be to their detriment. So again, like that continues to put pressure on a Medicaid program, which has a reason for a dispensing fee, which is to offset the lower reimbursement rate for the medications and to utilize a formulate. So there's not an apples to apples comparison to what Medicaid does and what the other private company, private industry. Tennessee I, I hear you, but again this for uh $10.50 dollars fixed fee adjusted for inflation. I was referring to inflation. OK. All right, I have other questions I'll get back in the queue. Representative Maddox. Thank you. Uh, Mr. Rand, to follow up on what Senator, um, what they were discussing, the plans are now getting you information, is that correct? Natus his father Rule 128 data, um, I anticipate getting, uh, similar data, uh, from our health plans and PBMs within the next several weeks. OK, let me ask it this way, are they being compliant and and cooperative they are very, very much so. OK. Have you ever been told that you need to subpoena the documents? OK, thank you. The only self-insured, where did you come up with the number 5000. Good question. Um, we debated our actuary and myself whether it should be 2000 or 5000, um, I wanted to be as lenient as I could, Senator Hill, uh, to expand that to allow more self-funded employer plans to have a lenient data request, so I expanded it to 5. Is that subjective? Yes. If I may though, Senator Hill, the Arkansas code specifically allows the commissioner to set rules without limitation concerning data reporting requirements, the statutory citation for that is 2392509A2F. Sounds like you were expecting that question. Hope for the best plan for the worst. Thank you. Representative Aker. Thank you, Mr. Chairman. Um, To the AID, it appears um there's been a little bit of confusion on, um, exactly what it is you're trying to accomplish here. So I was hoping that maybe we could get some clarity. The current PB Licensure Act does not say NADAC or fair and reasonable. Is that correct? That is correct. Does the language read NADA and fair and reasonable. OK, so any discussions we have here about going above NADAC are a requirement of that license right. Wonderful. Um, follow up question, Mr. Chair. Um, there is no definition of fair and reasonable, and to this point, it appears that you are trying to have a data collection to help see what the market in Arkansas would be to determine what fair and reasonable is. That is exactly what we're doing. Wonderful. And To that end, there are scenarios where not a blanket number will be applied to every plan, not a blanket number be applied to every similarly situated plan or patient. There are plans that are cooperating that will have methods that are fair and reasonable. Is that your expectation? Exactly what I've been trying to say. OK. And final question, Mr. Chair. Yes, sir. As you go to determine whether or not, um, the current market has Entered into areas of where there's concern for adequacy. I would encourage you to work directly with the State Board of Pharmacy. The reason I ask is because I am someone who has opted out of a plan from Arkansas Blue Cross and Blue Shield. And they sent a letter to my patients in our area that listed 4 other pharmacies that they could go to. Since I was out of network, all 4 of those pharmacies had closed over 8 to 10 years ago. The network adequacy numbers that you're relying on are people who have an incentive for them to be inflated. Thank you. Would you state all that again? When I declined to be a part of a network? Yes, sir. And the health plan sends out a letter to all of the members that currently use my pharmacy. That state other pharmacies that they can go use. This most recent round that happened two weeks ago included 4 pharmacies that had all been closed within the last over 8 to 10 years. So when we ask whether or not there's network adequacy issue in the future or what the numbers are you're relying on, the data that you will be receiving that network adequacy is not an issue. It's coming from entities who have an incentive to inflate those numbers. None of my patients who I chose not to participate in the network can go to a harvest foods that doesn't exist anymore. Thank you. Senator Stubblefield. Thank you, Mr. Chair. I'll make this really quick. Uh, I, I too have a number of pharmacies. In my district that are struggling, uh, one in particular submitted 7000 claims and was paid below the NADA, uh, all those claims were submitted to AID on a 1010 out of 7000 were rectified. So I just have one question, uh. Why is the, why is the middle man allowed to take control. Of the entire pharmaceutical industry. Well, as your first comment about the 10 that we process versus the other 7000. Bear in mind that a lot of the complaints that we get from pharmacies are from health plans that we don't regulate, OK? Federal employees plan, Christian Health Ministry plans, um, uh, some ERISA plans, uh, I mean, Indian tri all, all kinds of federally regulated programs, have health plans that we don't as a requirement. Regulate so when the complaint comes to to our PBM division, we have to, we have to have a fully regulated, that means state regulated health plan that we can regulate and, and apply our laws to. So a lot of times when we don't make adjustments to NADAC below NADA minimums, a lot of times it's because it's a, a self-funded plan or a grandfathered plan, or it's a federal employees plan or it's something we can't regulate. I don't. I, I understand that. The, the main why is it a middle man? Because, because 30 to 40 years ago or longer, health insurance companies, uh, decided it was more economic. A much more profitable for them to contract out their pharmacy, um, reimbursement, uh, claims handling to a third party to do it cheaply. So when I grew up, maybe when you grew up, when we had Blue Cross and Blue Shield, they had their own drug in-house, you know, uh, pharmacy claims system or whoever your health insurer was in the 1960s or 1970s, over time, the health insurers found it much more Economic for them to contract those services out to PBMs to do the drug handling processes. Just, it's just therefore, PBM can, can take 75% of the profit from Ozempic while the pharmacy gets 25. I, I, I, I have to look at the contract, but it's all legal in terms of how Mr. Chairman. Thank you, Senator Hammer. Thank you Ms. She refresh my memory, Booth. When does y'all's 120 days run out? January 12th. January 12th. OK. 2025. All right, and if this rule is not passed out, what happens between January 12th and any solution we bring out of the legislature, I will pull it down. I will pull the emergency roll down. This permanent rule, um, If, if the permanent rule fails, I will withdraw the emergency rule. There's no sense of having an emergency rule that would last for 12 days, right, but what I'm asking is what happens between January 12th and the time that we would come with a legislative solution. So what happens to the pharmacists that file complaints and. They would have to wait on legislation, assuming it's granted by this body. OK. And in the other states that have already, uh, pioneered this rule, as you were referring to a while ago. How long ago did their rule go into effect and what does the data show as far as the actual cost or do you have that question. They enacted. Um, West Virginia and Tennessee and Kentucky enacted their dispensing costs, uh, laws last about 3/4 of a year ago, I want to say last, early part of last year, um, of this year, um, when we contacted uh Kentucky, West Virginia, and Tennessee, about rate impacts or premium impacts. We had several discussions with them, um, this fall, and. This fall, all three of them said they were just now receiving health plan filings for premium, they could not give us the data because they were at in the process of making those decisions back in November, uh, or October. So they did not have the data at the time for me to see what sort of impact they were seeing at that time from the dispensing costs. West Virginia, uh suspected they would see no dispensing costs because of the way they had uh arranged a rebate provision in their law that allowed rebates to be used to offset this dispensing costs. But this this rule has, doesn't touch that area, right? We are unable, and I got into this discussion with representative Wardlaw, um, we had, we tried to, uh, Allow our fairness and cost sharing Act, which allows rebates to go down to reduced cost sharing requirements of patients at the counter for drugs, uh, to utilize any leftover or surplus rebates to help reduce any costs from this law, and I agree with Jeff and, and I, I think, uh, the bureau and others that the law that we passed for fairness and cost sharing didn't specifically say you can use this to defray uh pharmacy. uh dispensing costs, so we thought it was a legal problem. So last thing, when do you anticipate that those other states will have their data in so that we could benchmark against what month or two. So it's gonna align pretty much with, with what we're doing OK, thank you. Representative Maddox. Thank you, Mr. Rand. Um, so ostensibly if someone is paying fair and reasonable, the cost will not go up. Is that correct? That is correct. You told me that, um, they are being cooperative now with the data, correct? So is that, are you getting that data now and that cooperation because of this rule? Yes, yes. So if we don't have this rule, do you think you're getting that data? No. OK. Thank you. Senator Irvin it's nice that we're trying to just frame this as data collection rule. When it's really not. It's about increasing and guaranteeing profits with a dispensing fee. So, if that's really what the intent was is data collection. Why didn't you just write the rule to be a data collection rule. I think it's both. I think it's, let's let's make sure that we're real clear because I think you already had the authority without this rule to seek that data, and the reason why is because what does the insurance department do when they review rates from insurance. networks because this has nothing to do with PBMs. Everybody wants to beat up on PBMs. They need to be beat up on. But this rule has not, is not going to affect the PBMs. They are not even opposed to this rule. The PBMs are not even opposed. So you determine insurance rates by Blue Cross Blue Shield, and Better, whomever, you determine that every year, OK? And in the determination of those health care insurance. rates, you always look at network adequacy, correct? You look at network adequacy is always a part of a a right evaluation factor. It's an evaluation factor you evaluate, but when you talk to insurance companies, they are talking about adequacy of network in how they create their rates because they have to be able to pay providers so that they have an adequate network. So we've approved that every single time and so you do have the ability to get that data collection without this rule there because you've done it every single time that you've reviewed an insurance rate and a premium rate. Can I ask you a question? Uh, and I don't, I, I want to answer your question, but I'd like to ask you, so you think it's perfectly permissible for the insurance commissioner to decide and collect the data and decide dispensing costs without going through approval with your body. this rule is not just about data collection. This is about actually being able to set and price fix This is a price fixing rule because but you're giving, you're allowing your uh subjective review of the data, then to go one step further and determine pricing of a brand new A brand new animal or beast or whatever you want to call it, beyond the reimbursement rate. What good would it be for me to collect all this data and do nothing with it to make a decision about the cost or fee, but again, you're talking about data collection, we don't have an adequacy network issue or problem that's been testified to and we have not had, if pharmacies are closing, it's because they sold out because guess that's what's happening. I mean, there, there are corporate. Buyouts and there are a lot of pharmacists that are selling because guess what, they're cashing out big time and they're, they're getting paid a lot of money, and their, their pharmacies are getting bought out by corporate, that's happening in the dental world. That's happening in, in the, the health care, medical world. I mean, that's just the nature of the business and so much of what we've discussed today, the vertical integration, the spread pricing, all of those things is a federal issue. There's only so much that the state can do. And so, again, I. I don't understand why we wrote this to be so incredibly comprehensive to allow and give ultimate authority into a whole another arena and area that's beyond, in my opinion, where we were supposed to even go with on reimbursement rates and the NADA, and which is an average, right? And it's an average cost, not, we're not talking about a wholesale acquisition cost like in manufacturing, you have a wholesale cost, you have a retail cost. This is an average cost and you do have access to that data, correct? That's public, the NAAC This is an average cost and you do have access to that data, correct? That's public, the NADA, again, we can get the data without this rule, OK? But I can't make a decision about a dispensing costs without a rule. That's why I'm saying, OK, so then I don't understand the necessity of the rule, then if you, I mean, because I don't believe the dispensing costs her feet is something because I'm very transparent, as you know. I want everything I do by you before I do it, OK. So, Yes, it's a technically possible we could collect this data and then come back to me with a rule after we collect the data with our, yes, uh I would and I would argue that at that point then it would need then then go and become a statutory change with the data, a statutory change and, and that gives you solid footing and solid authority through statute versus very subjective and opinionated and we don't know if it's going to be $1 or $2 or $5 or $9 or $10 or we don't really know. I mean, I, I think that there's a lot of problematicness in that, but then, and, and, and. I guess the last thing I would, I would just ask a question about is, um. When, when you, when you, when you look at the, the public information that's already available to you. How much of that, what are those things that you look at there's nothing public, I think that Senator Boyd talked about the Federal Trade Commission, and I think Mr. Galbraith, the FTC reports that are critical of PBMs, but the data that we're getting is proprietary and confidential drug reimbursement data. So it's not public at all and will not be public, um, on that, so, uh, and I appreciate your suggestion that, uh, As an alternative to this rule, AID is to go out and collect all this reimbursement data and then maybe come back with the rule of standards about what that is. I, I just would point out, uh, the circumstances that we found ourselves in first this year, and for many of you who got emails and from, uh, To the commissioner, to the governor's office, others by a significant number of pharmacies complaining about these reimbursement practices is one reason why I was pushing this rule so quickly, so I understand what you're saying, um, but we're reacting to complaints, uh, that started way, way back in and I understand, I understand that. I just know I'm going to get a, I'm gonna get more than 3000 complaints of people's co-payments go up by $10 to cover a $10 dispensing fee. every single time they get a prescription filled and for some people, particularly the elderly, that is going to be a significant amount of money every single month, and this is going to impact our elderly population and patients more so than anybody else and that is what I have to consider because I, I have to represent all of my constituents, not just one industry and, and businesses are furious, they're blowing up, they're very very, very opposed to this. A lot of businesses are. And so, yes, you've gotten those complaints, but I assure you there's going to be a lot more complaints coming down the pie if this does go through, and that concerns me from a policy perspective, correct? Because we have to, we have to look at policy and we have to understand it. So for me, legal authority, authority and statutory authority is really, really important. I have one more question. What other, have you ever brought a bulletin through the rules promulgation process before. have not. Why? Why? Because normally they're just advisory, but because this is so integral to this rule, and because of the criticisms about this bulletin being amended without going through the rule process. I made this an exception to incorporate it by reference into the rule so that no changes can be made to the bulletin without going through rulemaking simply because of the criticism that that you and I think some others have maybe had that we might change this bulletin without going through rulemaking, that's just not gonna be the case. OK, but that was just a decision you made. There's nothing though legally I'd have to go back and look at all of our 10,030 rules. I, we do issue bulletins quite often to the industry about data, uh, submissions and format, uh, issues. So without going through rulemaking, um, uh, we have over the years, I, I would just have to go back and look and see if I've ever done, and I think my point though is that it's The subjective decision whether we brought the bulletin through rules promulgation process or not, there's nothing statutorily that says that in the PBMLA that says if you issue administrative rules process. There's nothing in there either, so you've given us your word, but actually, there's nothing that says you couldn't change it after it goes through this. Well, there's nothing saying I can't do what I'm proposing to do, which is incorporate into the rule either. OK, OK. I just wanted to make sure I was clear. on that. Thank you. Representative Wooton Thank you, Mr. Chairman. Oh How You mentioned The pharmaceutical companies in relationship to the PBMs. They were outsourced, they outsourced them to the PBMs what they were doing internally, is that correct? I don't understand that at all. I don't know if I said that. The insurance companies outsourced their internal bargaining to PO 30, 40 years ago, um, in the 50s, 40s, uh, health insurance when you bought it, they had in-house their own drug, um, handling claims review. process. It was internal and over the years, and I'm just guessing but 70s and 80s and 90s, they found it much more economical for them to contract out their drug, uh, adjustment uh claims handling or reimbursement programs to PBMs to handle that, who are able to do it at a more cheap uh price. OK, so that's, that's what I'm saying. They outsource that under a contract between the insurance company. and I said pharmaceutical, but I'm meant insurance companies. so the contracted that out. Well, how, why is it that they have a right of 75% they keep and 25%, they pass on to the pharmacist. I don't know about the 7525, you're gonna have to help me out on that. Where did you get that? Well, that was brought up by Senator Stubberfield. I don't, I don't know if that's true or not. The, the reimbursement rates between the health plan and the PBM are all governed by a contract between the PBM and the health plan about how the drugs will be priced, about how the drugs will be listed and so on. So I, I don't know if it's 75, 25 or it, it just varies. So, OK, can you answer the question of what, how many counties in Arkansas. If We believe what you're saying on your Rule 128. Can you say how many pharmacists or how many counties will be without pharmacies in Arkansas. No, but I would defer that to, uh, Mr. Vinson, who's going to be talking, I think last in these presenters. I do not, I do not know that representative well. Thank you. Thank you, Mr. Chairman. Senator Boyd Thank you, Mr. Chair. I just have 2. Related clarifying questions. uh, Senator Irvin threw out a couple of things. One about how this rule was going to affect the elderly, but you had given testimony that Medicare would not be affected by this rule, and when you consider that most of the elderly are on Medicare. Yes. And then secondly, there was a comment made and I'm, I'm paraphrasing, maybe I don't have it exactly right that pharmacies are selling for big dollars by Senator Irvin. Would it surprise you to know that I know of, uh, multiple pharmacies which. have recently closed or are about to close that there is no dollar, they can't sell their pharmacy. It's not worth anything. Would that surprise you? No, thank you. Senator Dismay. You know. Thank you. And I, I'm gonna circle back to, I think it was maybe in response to some questions about Senator Stubblefield Essentially, he had asked, well, what happens if we don't pass this, and I think your first response was that you'd pull the emergency rule back and then I think his follow-up question is, well, what happens to all these complaints that have been filed and you said nothing. Oh, I, I, I'm sorry if I misunderstood that we would pursue the complaints. I'm just was referring to the general concept of whether they would get any relief with the dispensing cost the law, so we would. Is a rule, right, so they would not have the benefit of a rule in place. Or a law in place to give them a dispensing cost. I didn't mean to insinuate that we wouldn't enforce the complaints. I'm sorry, what have you been doing to enforce those complaints? What are the findings look like and, and then have you responded we've got 4, we've got 4 or 5 enforcement actions against the larger PBMs that are um ongoing enforcement. We are in negotiations with uh many of the PBMs related to fines for payment of uh below minimum, uh, NADA payments, um, I think Hickey, uh, uh, I will, I will tell you this, um, uh, in all honesty, many of the violations below NADA are less than 2 or $3 or 4. So we can find a company $5000 for violations below NADAC, um, but we're struggling with this issue about being reasonable about that. And so if you're 60 cents below NADA, I'm not regulator that's gonna play gotcha and ask for a 5. 00 $0 fine. I think Senator Hickey and I had this discussion last time we were up with this discussion. It says up to 5000. So we're developing, um, and we need to develop a first how we want to assign penalties for fractionalized cents or for violations below NADAC, they're like $2.65. So is that gonna be a new rule, and, and it, and it was a lot of response to Senator Hickeys and our discussion that I, I agree with him. So we haven't taken the time to promulgate that rule yet, which hits at the heart of the PBM problem I'm gonna get to that after this, uh, I think we want to caliber the violations relative to the amount that you're below NADAC, um, and not take a strict view of it's being $5000 if it's 4 or 5 cents off NADAC, OK? So we're, we're, we're trying to deal with those issues right now. But those will all be new rules that have come before us, I will definitely do that for sure. I mean because here's my concern is why we haven't, why, why it's taking a rule to do what we're doing here today because even Senator Hickey handed this to me, but if you look at the, uh, pharmacy benefits manager network at the uh language essentially we've given you the ability to do what it is that you say you can't do without a rule, but I don't think you've given us the, the, the ability, I again, I wanted to again. I, like I told Senator Irvin, Could we have done this without a rule, probably collected the data. But we're not defining much with fair and reasonable, uh, outside this rule like we're doing with this rule, but, um, I, I, I like running by our initiatives and actions by this body just so that you know what we're doing, OK? Now, I'm, I'm, I think I guess I in a way I understand that, but as as far as you collecting information and be able to say the right thing is happening or the wrong thing is happening, which is still where we are. Like I said, I don't know how many complaints. I don't remember what you said several 1000 and we get into the single digits when we talk about outcome, which is also incredibly disappointing if there is a huge problem if we're talking about a success rate of claims or issues of the 0.001%, which is what it sounds like, then that's a pretty disappointing number. I don't know what that means besides that maybe you're aren't effectively enforcing what you're allowed to enforce, but I sure would love to see the information. So it has a bigger picture context, maybe we can take some of the fear that people have. But instead of doing that, we're saying, hey, we're gonna collect the information and simultaneously put something into place. We'll collect the information, come back and let us know what it looks like, what is wrong with that, because I can promise you. Because I've had plenty of phone calls too. Of people that are concerned about what it is we're doing here and when you talk to people on the street about hey, you may have to pay a dispensing fee. I promise it's not going to be very popular. Yes sir, but it might be tolerable if we could demonstrate what was happening before we asked for it, but for whatever reason, we think we can't do that. And I, I don't know why and maybe that's the pressure that you feel from the number of phone calls and the fact that you're incapable of pursuing all of those complaints because to date you haven't done it. We've not or they're not real complaints. One of those two things is real. Well, what's real is we've not ever collected statistical data on from any of these people even though you could. That's correct. But again, I, I don't understand. I, you've been getting these complaints forever. You said I mean these are replicated forever you said they were, they were common to the prior year and the prior year it's more complicated than that soon. I think within the last year, we have seen a significant number of more complaints SPBM's ratchet down a minute ago, you said it was on par with the complaints that we normally receive. These are I, I listen. I try to listen and, and that's what I'm hearing a significant number of Again, I'm not, I don't sit there and measure the numbers each day. I, uh, you can talk to our PBM director, but I've seen a significant number of complaints the last year and a half over NADA minimums, and it's just now that you're waiting to try to figure out what's going on rather than exercising the authority that you already have. Actually we tried in the spring to start this initiative and, and then again, we'll go back because I didn't add it, you added it for color in the context of your overall. Discussion about PBMs you said that you knew of instances in which PBMs were paying more to their affiliates and the other pharmacies yet we have not done another report or another study since 2020. I agree we have not done a you think that we need another rule in place for y'all to have more work to do when we're not doing the work that we have in front of us, the affiliate reimbursement statistics that we require in this rule is just one of 6 or 7 factors that we're going to look at deciding. said it, I didn't. It's an issue, I promise you, that's what I hear from my pharmacist. the first phone call is about what affiliates are getting paid at versus non affiliates, which is a direct violation of law, but we're not pursuing that. We, we have not yet and we haven't pursued it in 5 years, but we want a whole another rule because I think it's easier rather than maybe doing that work, maybe it's easier just to add this fee on or whatever you want to call it whenever we go to the pharmacist. I think it's just the easy way out rather than it's like. I want to make 100 of my tests, but I don't want to do the homework. Let's do the homework and tell us what's actually happening again, the affiliate data component is just one of 6 that we require in this data. So going back to what Senator, uh, Dismay was saying just then and alluding to and taking a little bit farther. It still sounds to me like Pass it now. Review it, and we'll write, write everything later and tell you what it's gonna cost you. This is Obamacare 2.0. We don't know Siger Hill, which health plans are going to be required to pay a dispensing cost until we review the data. So I can't tell you the ultimate cost impact on each plan until our actuary and our commissioner and our staff review the data. We do our citizens deserve that right to know what it's going to cost them. That's up to you guys and gals. Representative Beatty. in and out so much. Do you really have a question this time? Thank you, Mr. Chairman. Yes, I have a question. Earlier, uh, there have been several questions asked about counties that maybe don't have, uh, sufficient access to pharmacies and you've answered a couple of times, Mr. Rand, that you weren't aware and didn't know that information, you've deferred that to, uh, John Vinson with the pharmacy Association. I'm looking at page 2 and I heard you read this earlier. Uh, is that, you know, part of this to ensure an adequate network of pharmacy services, uh, for our health benefit plan and to ensure reasonably sustainable, adequate network, uh, for such service. Can you give me a definition of what an adequate network of pharmacy services is because it's nowhere in, in the rule as far as to find what an adequate network is. Well, an adequate network for sustainable, reasonable, um, reasonably sustainable, uh, network would be. Uh, an adequate re reimbursement system above NADA minimums, both for generic and for brand that allows the pharmacies to stay in business, not only currently but in the future. Uh, I, you know, I, we, we don't, uh, I don't know how much more specific you want me to be with that. Well, I, I, I guess adequate network of services to me means that, uh, folks in my, in my county, and I think most of the members in this room, adequate network of service providers would mean that when someone in my county wants to have their, their prescription filled, there's a pharmacist within, uh, a few miles that they can go and get that, get that service provided, that is correct. And but All the way through, right now, you, you can't answer that question as to if there's a county anywhere in the, in the state that has a shortage or has the threat of not having an adequate service, but that's part of what this whole rule is based on. I know it all comes down to the green salve and a little money, but, but the, but the primary basis of the whole rule is to ensure an adequate network of service providers. And so I, I that I think that's what's important to all of us, and I think that's important to our employers in this state too, is that their employees have an adequate network that they can go and get that service provided. So I would thank you. And Senator, while I'm not as familiar with the data as Mr. Rand might be one good thing about the statute is it does lay out a floor. For Pharmacy access 2392509B pegs it to the federal standards established under Tricare, Medicare Part D, and then lists at least some pharmacy access requirements, for example, in rural areas, at least 70% of individuals have to live within 15 miles of a network pharmacy that's a retail pharmacy, so we at least have a statutory floor for access. Go ahead, Representative Beatty. I'm just going to follow, follow up. I would, I was kind of finished, but to follow up on that, based on those requirements that you just read. Can you give us some information of any county that does not meet that definition that you just read to us, uh, out of the code. Not Booth, not you. The gentleman in the middle that's been quoting the law to all of us. once again, I am not as familiar with the data as Mr. Rand. Just a yes or no. Can you, do you know of any counties that don't meet that definition. All right, thank you. Last question, Senator Hammer. Saint his chair. I want to go back to a comment you'd made earlier about, and if I remember it right, it was like mid-year, uh, was when the uptick in the complaints started coming in. Is that correct? OK. And you've had 3000, what, what's the number of complaints you've handled since then roughly. About 3, about 3, and that represents how many pharmacies. I'd have to ask Amy, um, 5060, 70 I just guessing. What is it that attributed to the sudden uptick there's speculation about that. I think, uh, several of the PBMs over the last two years. Um, after, um, 2021. And this gets to Senator Hickey's point that the state law itself under the PBM law only requires PBMs to reimburse at NADA minimums. That was some of the legislature passed. I think a few of the PBMs had better Or higher reimbursement above NADA minimums 2 or 3 years ago, and this is my speculation that several of them started taking very um strict view of the Arkansas law. And as representative Wardlaw has pointed out, and Basically took the position, well, Arkansas only requires NADA minimums. Let's do that. And so I think there was a change, uh, about 1.5, 2 years ago when some, several of them start lowering reimbursement to NADA minimums under a strict reading of that law, and many of the pharmacies have been being paid NADAC plus 100% or 200% on generics. We're now getting NADAC plus 1% or being paid right at the NADAC level, uh, in reaction to, uh, just a strict reading of the state law. That's just my speculation and of the 3000 that you've dealt with, has it gotten the pharmacies that filed the complaints up to A sustainable reimbursement. I, I don't think so. I, I again, I don't, I, I don't think so. You can. Well, just it's not subjective due to the number of complaints that we continue to get about this reimbursement, uh, being at NADA minimums. I, you really need to hear from the pharmacies about this, and I OK. Thank you. Representing Maddox just to clarify, and we've been here a long time and I think we're done with you finally, but, um. It's nae and fair and reasonable. Is that correct? That's correct. It's not NADA, man. It's NADA and fair and reasonable. That's the law. Thank you. OK, can I Oh Yeah, I, I want to ask you a question now. You referred to NADAC a while ago. Who brought that bill to the General Assembly? Pharmacy Association. Thank you. uh pharmacists association, I think. Go ahead just as I sense that we're bringing us to a close. I just wanted to sort of kind of put a uh Kind of close it up, I guess, but uh of course I still have more questions, that's fine, but you know it's kind of how we got here and it isn't a spirit of transparency. He highlighted some things that we didn't have to have to have a rule or a bulletin, and I, I think as Booth, uh, pointed out, we just wanted to make sure we could get something here uh that that everybody knew what was going on, so that that's a you know largely well, you know, if, if there was any err on the side of of of transparency and getting it here, um, and you know, network adequacy. You know, that that's something that's in the in the uh statute for us and and we just wanted to um. In, in our efforts at getting this data and us being able to analyze what, you know, that that those minimums are at least being adhered to. I mean that's really the only tool for, you know, you, the presumption is if they're not paying those minimums that they're not gonna continue to be a part of a pharmacy network and so really I think that was just what, what, what drove it and, and, uh, that's, I mean, these are the two lawyers in the bunch, but I think that's why we wanted to keep pushing this thing through to to to get it in front of you so that's really all I want to add. OK, well thank you very much, appreciate y'all's time, appreciate the answers, appreciate the hard work y'all put into this and, and thank you for the information you've given us. They uh We're gonna go to uh John Vinson with the pharmacy Associate. Mr. Vinson, please introduce yourself for the record. Like this chair, Chairman Hill, Chairman Maddox, members of the committee, thank you. My name is John Vinson, CEO of the Arkansas Pharmacists Association. The Arkansas pharmacists Association represents over 2000 pharmacists and student pharmacists in all 75 counties just for perspective, located here in Little Rock, been around for a long time, so thank you for the opportunity to speak today. The PBM rule 128. We are supportive of that rule, and I know we've circulated our comments around like commissioner said and his team, lot of comments submitted. We do recognize from the testimony today, their concerns and we acknowledge that the rule and the data collection is not perfect, but we do support the concept in the original law and the attempt to force the law and hold accountability to the law as it was written. So we're supportive of that. It has been a rough. for our pharmacists and our pharmacies around the state. It's been challenging, um. There have been situations from our perspective where there were contracts signed, there were rates in place, there were payments made based on what they experienced the year before and the year before. No changes in contract where unexplained similar to what those of you who've been around, uh, serving at the legislature back in 2015 and then also in 2018 when the governor called the special session and this law was introduced that allows the rulemaking where it, you, you thought you were going to be paid one thing. But there are clauses in the contract that give the PBMs unilateral decision-making without any explanation, without any changes in the market and without any changes in what the drugs cost the dramatically reduce reimbursement and we've even seen that since September, so the emergency rule was passed in September. We have seen plans that have blatantly, they're fearless. They don't feel like there's going to be any accountability. And there have been dramatic cuts, for example, Uh, I'm not gonna name who it is unless you ask me, but there's a, a, a major insurer in the state, commercial plan that was paying fair and reasonable to the point earlier you were asking, are there plans that are doing that, that on November 1st or, or a few days before, depending on the pharmacy, cut reimbursement by 65%. No explanation. No reason, no change in drugs, no change in what it costs to operate a pharmacy. They just did it without explanation. And you call your PSAO, you call your contractor, you call the PBM, you get no answers. And so this rule. Does create some accountability to see that transparently for at least the referee on the playing field, the insurance department, which this body gave them the authority to review. So for that reason, we're appreciative and supportive of the rule, even though we acknowledge that there could be challenges or it's not perfect. I'm gonna go ahead and ask you to name who it is. You knew that was coming, sure, so in that particular example that was Arkansas Blue Cross Blue Shield, who we had even been in early conversations with the governor's office saying, this particular plan for the last 6 years has tried to do the right thing. They've tried to put in a fair and reasonable compensation program, and they've been reasonable about how they've implemented it. This year, they have about 17 different networks and forgive me if I don't know exactly the number, but they have different networks. Where the rates aren't exactly the same and every network and there have been some where there were cuts in April, which we thought, well, maybe that was just the employer, the PBM, but this latest one on the fully insured product, you can't say that. It's, it's black and white and insured fully insured product and those cuts went into effect in November. Thank you for that. And there, there were some questions too about pharmacy closures. I wish the state board of Pharmacy was, was here to answer that question from the licensing board. But they have a, a website which we could circulate around or we have a, a PDF we could circulate around, but over the last two years, there have been uh a net. Approximate net closure of approximately 40 pharmacies with about 20 of those this year and 2/3 of those are independent pharmacies and, and 1/3 is chain. Yes, there have been some pharmacies that have opened too, but the net effect has been a net decrease of about 40 from my calculation to reviewing their data. And to the point about, are there any counties that have zero pharmacies. There are no counties right now that have zero pharmacies, but there are a few that are in trouble, and there are some areas, Little River County and Miller County have lost all of their independent pharmacies, they still do have some national chain pharmacies there, but to the point earlier about the services rendered, there's They may be able to fill the prescriptions, but they may not have some services like after hours emergency care, hospice services, long-term care and assisted living nursing home services or compounding. So when you lose that competition, we want a market that's fair where there's fair competition, where monopolies are not both prosetters and price takers in an unfair ways I know there's been a lot of discussion already about that, but the, the unfair tactics of and, and to the point of. The insurance commissioner and their team looking at these issues separately where we're just gonna look at NADAC violations or we're just gonna look at, uh, fair and reasonable or we're gonna look at affiliates separate and worry about that later. When we supported the language and the law of the association, it was important that all of those factors were looked at as part of one conversation that it on safety net claims, they weren't paid below NADAC, which is the same methodology that Medicaid uses, and I agree with you, Senator Irving. It is a very low reimbursement for NADAC Historically, the plans have paid much higher than NADAC and Arkansas Blue Cross Blue Shield that I gave a minute ago, example, even though the, the dispensing fee may be very little. The ingredient side of the drug reimbursement has been significantly higher than NADAC, but the federal government has interfered in this market in my opinion. And when you take the invoices of the pharmacies. And you publish them on a CMS website, and then someone who is your pro, someone who's your direct competitor is setting the price and taking the price and can see what you bought the drug for on a CMS website and they can push the overall compensation. It doesn't matter if we're talking about dispensing fees or ingredients. They're pushing both sides to zero because it's on a, a government facing website, and then in the same plan, and I know I've talked to Senator Dismaying and several of you in the room in the same plan, you may see large chain pharmacies, some who are owned by PBMs that are paid NADAC or the cost of the drug plus $25 or $30. And I would tell you too, the one thing that's different about this year versus previous years between 2018 and now, this is not just in Arkansas issue. They're pushing the rates to zero, particularly in independence in all 50 states, whether you have protections or not, we just happen to be blessed to be in a state. Where our state lawmakers stood up for patients and they stood up for businesses and they stood up for pharmacists, and they said, we aren't going to let our consumers just be run over by these middlemen, uh, trillion dollar companies. We are gonna have regulations and be able to intervene and not have to wait till legislative session. And I would say if, if, if you're not supportive of the rule and the rule doesn't go into effect and we do try to tackle this in the legislative session, we'd be welcome to be part of that conversation. The rule could get implemented quickly, which is why it's nimble and allowed to happen. Our experience has been when we passed legislation, it takes at least a year. I mean, yes, we could pass an emergency clause, but because of the way contract law works and the way, uh, the Arkansas Constitution works historically, even when we've passed legislation, it has not been fully implemented for a year in the past and with rule making, I understood that. It could be done quicker because adequate notice was given and notice was would be given to the plans and it could be implemented in 2025 and not in 2026. I'll be happy to answer your questions. Thank you on that. And yes, it does take a little while with legislation, but I will go back to conversation that we had in, in March. We've been almost a year with this. And so it's got, you got the same results there. Uh, question I'm gonna ask you, I was gonna ask, uh, The commissioner. Now with the with mail orders. Well, this, uh, feed that's gonna be implemented for out of state companies will be implemented, will they be receiving that as well? That's up to the commissioner and I heard him say the answer was yes earlier, but that would assume or, or most of those mail order facilities are owned by PBMs and insurers, or at least the ones who are filling the vast number of the claims, so. It will be very interesting to see because we have seen examples in our office from our members where mail order pharmacies owned by PBMs, not in Blue Cross's plan, but in other plans, um. are still paying their selves more than local pharmacies, so it'll be interesting to see what decisions they make based on that data or what the board of pharmacy even might. feel about that. I also would say that that is consistent with what if you're reading the national news, Wall Street Journal, New York Times, Axios, Bloomberg, Federal Trade Commission, as well as US House Oversight chaired by James Comer from Kentucky, Congressman Cobers seeing the same thing nationally with interstate commerce law, I'm, I'm pretty sure they're gonna have to pay it. Or they will get paid. Correct. Senator Dima. So just uh of the complaints I think 3000 complaints that have been submitted or whatever it may be, what is the response from your members about how those are being handled by the insurance department. I wish that Amy Seale, the pharmacy director over PBM regulation was up here at the table from the insurance department because she would have more accurate numbers than that, but my answer to your question will be, yeah, from my members, I, first of all, I believe those numbers are much higher than that. I don't think that's accurate. I have members tell me I alone submitted 3000 this month. I have in terms of numbers of claims, I don't think, I think those numbers are underestimated, and I would say that We still have members in our association that have submitted claims that are valid, that are Arkansas-based plans, not Medicare, not federal, not Tricare, that still are unresolved from months ago. I mean, there, and I'm not trying to criticize the interests. I'm just being factual like I am trying to criticize and, and the point behind that is we're asking to stop everything that we're supposed to be doing and start on another track and start doing something differently and somehow we think we're going to get a better result. by taking this alternative path, even though we have a solution in front of us, I mean, even you, as you sit here, was brought up by the insurance department and now by you, the number like one of the major complaints is affiliates getting paid more. You all talk about it. You talk about it over and over and over again, and yet we haven't done a single thing since 2020. About that. We haven't done the study and we. And so now we're going to implement a whole another layer, by the way, they have the authority to collect all the information and look at these complaints and see if they have merit, but for whatever reason, we can't get those satisfied, but we want another rule. That's going to allow us to make some blanket decisions and then then take really our work and what we're supposed to be doing as an insurance department and simplified and you know what, we're just gonna pay a fee, because, you know, that's really gonna impact the consumer more than it is anyone else. So I mean, who the result of having to have this dispensing fee falls on the back of the consumer, not that we're gonna go fix the problems with the PBMs that we say exist in the affiliation payments and all those are the things that are happening. We're going to ignore those for now because we've just driven those too hard to tackle. What we're gonna do is dive in and we're just going to start making the consumer at home, the innocent. Pay more to get their prescriptions filled. That's when I look at it, that's my concern. That I have in looking at it in our position would be we agree we want all of the aspects of course we've got the tool, we got the car, we're just not driving it down the road, right? And that's what blows my mind about this entire conversation. It's like we sidestepped everything that was put in place and the rules as they stand right now, because it was a whole lot easier to talk, start talking about making the consumer pay. The patient pay, the person at home pay than it is to try to fix and reconcile what's happening with the PBMs that we say is happening. But we're not, and we're not just, just clarify, we're not at the association or pharmacists want the consumer to have to pay this, but we went off the only alternative that's being presented right now. If I look at this rule. The only person that has to pay one way or the other is the consumer and the patient. Read it. That's what it does and we can sugarcoat and talk about PBMs and affiliate payments and all this other stuff that you wanna color the conversation with, but at the end of the day. The person back home that we all answer to is who's going to have to pay the additional money because we're not willing to do what it takes to hold BBN's accountable. Because the tools are there. One of the things and that and the other part of that accountability is inside the you mentioned contracts and one of the things I've never really understood is how these contracts work and so if you don't mind, explain that. It's not, it's my individual pharmacist back home? Writing or, you know, having to work out these contracts with PBMs on their own because I could understand that would be a, a daunting task to write that out with a billion-dollar industry. We have some pharmacies, including one in Calico Rock, just as an example, I'm gonna throw, who's very savvy and they do them themselves. Harps who's in the room, they do their own contracting. There may be situations where they work with the PSAO, which is a, an entity that has lawyers that intervene and, and assist the pharmacists. signing the contracts because they're complicated to your point. But what I will tell you is, is that whether it is harps or the pharmacists in Calco Rock or one in Cersei, Walmart, Walgreens, Kroger, they're all uniformly will tell you that we are all being given contracts of adhesion with no little to no negotiating power at all, and there are clauses in all of the contracts that I have seen in the infinite world that give the PBMs. Sole authority to change the reimbursement to whatever they want whenever they want. I mean, that's the issue, is the, why don't you have authority. What, why Why is that? Because they're monopolies and if you don't, if, if, if you, if you turn it down, there's a pharmacist in Carlisle right now that has tried to negotiate and turn down contracts and try to negotiate in good faith, and they just told her no, and she's closing her doors on December 31st. She is not selling her pharmacy. She's putting a sign on the door and closing. She's going away that also happened in Morralton recently where the lemons who've been in practice for 50 years. They didn't sell, there's no windfall. They just put a sign on the door and close and yes. Senator Irving's point earlier, there are some that have sold and been paid fair market rates in the last couple of years, but the ones right now, if you talk to bankers, and I know some of your bankers in the room, I appreciate that, but I've talked to bankers in the last few weeks. They tell me that 25% of their customers right now can't, can't make their payments and that they're in trouble, and they tell me about 5% of those are in in, in serious risk bankruptcy. That's what I'm being told by bankers about farmers. that have loans out on stores that they've purchased, yes, so then, but Blue Cross Blue Shield, for instance, doesn't exist without access. I mean that that's the, you know, the free if there's a free market to healthcare, that is the fact that that access has to be paid for because if not, then you don't have a value of insurance to sell to someone, right? If I can't get my prescriptions filled if I can't go to the doctor, if I can't get emergent care, whatever it may be, then there's no point in having insurance because I can. I can pay for it, but if I can't use it, it does me no good. So you're saying, and this is one of the things that's confused me. I mean, that is the leverage, is it not with the PBMs. I mean, if PBMs put a stranglehold in, in such force in place. That it shuts down a bunch of pharmacists, then the PBMs won't exist and neither the Blue Cros Blue Shield or anyone else, so. Or do y'all negotiate as a collective? I mean, is there not an ability? I wish we could do that. The federal government, Department of Justice. FTC currently does not allow pharmacies to collectively negotiate as one. They don't allow it. OK. All right, thank you. Senator Hammer, thank you, thank you, Mr. Chair. Um, I know for a fact I over here, John, I know for a fact, I don't want to call the name of the, uh, pharmacy, but the reason a lot of pharmacies sell out to the big. Chain stories because they've been put into a cash flow negative because of the reimbursement rate, would you agree with that or disagree? I agree that that is the case, and I would say that. I'm not talking about last year, but this year based on survey data, data working with National Association, 99%. I would say 100%, but the data says 99% survey have either cut staff significantly. OK, yes, or, or, um, completely cut surfaces. All right, give me, I want to give you a scenario. You've got a pharmacy that's owned by, you got to change pharmacy that's owned by PBM and they are reimbursing at a different rate than they are to an independent. Who has a contract with that PBM that owns the competitive competing, uh, pharmacy. When, when it comes to the reimbursement to the pharmacy that's owned by the PBM versus the reimbursement to the independent pharmacy. That has a contract with that same PBM who ends up paying the cost for that higher reimbursement to the, uh, to the, the PB to the, the pharmacy owned by the PBM. Depends on the depends on the copay structure and how it's designed and what the employer decided to do, but sometimes the patient does, sometimes the plan does, but inevitably, the patient does through higher premiums. Well, and that if they're overpaying, yes, at the end of the day, it's either gonna be, it's either gonna be because there's gonna be higher premium rates because PBM is pocketing the money, or it's gonna be driven down to the patient because they are having to pay above their copay. Is that an accurate statement. I think that's accurate. And I would also say too is that from the rule perspective, or if there's a insurance department intervenes. There's nothing in the rule that stops the pharmacies from competing with each other. And offering a usual and customary that's lower than whatever the agreed to rate is, and that happens all the time. Pharmacies work with patients. They offer cash discounts or they even offer usual and customary that's, that's lower than what the negotiated amount is to gain and retain business, but having someone who's your direct competitor, put their foot on your neck and push it to zero because the price was published online by the federal government to force you out of business is, that's, that's what. we're talking about. It's not just the to boost point, that's not just the affiliates being paid more. It's also the reimbursement to sustain those networks is not sufficient to safely and effectively operate. So it's both. Well, the point I wanted to make to bring out is, and, and if it's not accurate, You say it now is that whether it's going to be in higher, uh, premium rates because the farm, the PBMs are pocketing the money or whether it's going to be driven down to the individual consumer because their plan requires them to pay above their copay or to the scenario that was referenced a while ago, it's all going to drive down to the consumer either way. It's what can we do to effectively minimize that, that impact on the consumer if the PBM is the one that's driving the cost. Then that's who needs to be addressed. Is that accurate statement? In your opinion, complicated question, but yes, I think the answer is yes. Representative Wootton. Thank you, Mr. Chairman. Mr. Vinson. How many insurance companies own PBMs. Uh, the majority, I mean, the big 6 certainly do. Arkansas Blue Cross Blue Shield and Centene do not. Centene used to, but they do not anymore to my understanding, but the majority of the big ones, UnitedHealth, Aetna, and Cigna, who are the big three, as well as Humana and, um. Several others are all vertically integrated with PBMs now. How many major Stores are closing. I'm, I'm talking about chain stores are closing in Arkansas. So in the last two years, my numbers that I've calculated are 15 chain between there have been some Brookshire, some Super One, Walgreens locations that have closed for City, Ashdown, Little Rock, Jonesboro, etc. So it's not just urban areas. Walgreens has lost some, I think, key stores in For City and Ashdown as well that were very important. Little River County and. down only has 4 pharmacists in the entire county and one Walmart and one Walgreens left in the county, but about 15 of the 40 in the last 2 years and 25 have been independent stores who many of whom offer additional services like compounding, delivery, hospice, long-term care that maybe the chains don't. How many compounding stores do we have left in the state? That's a good question. So sterile compounding, only a, a couple and we lost a big one in Benton, uh, this last year, and then from a Non-sterile compounding which are Creams and some of the common things, mouthwash. There, uh, I don't know the exact number on that. I'd have to get back to you on that, but we've definitely had a, a decrease and I know there's some legislators in the room today who've asked me about, is there some legislation we could do to address compounding because our constituents have lost that service. How many, how many, uh, Walgreens or CVS do you anticipate closing this year in Arkansas. I don't, I don't anticipate, yeah, I don't, I don't know. I mean, both, both companies are closing stores nationally, Walgreens has announced nationally that they're going to close 1200 stores and that 2500 are at risk out of their 9000, 10,000 stores. Walgreens is in the room today and one of their, uh, leaders is gonna come up and answer questions. He's on the docket to come out of their 9000, 10,000 stores. Walgreens is in the room today and one of their, uh, leaders is gonna come up and answer questions. He's on the docket to come up one more, well, a couple of more, um. On the compounding situation. Those prescriptions were turned over to another chain store or to a chain store in Saline County. As a result, and this is a personal experience I called them. They said they have your prescription. I called them. They told me, no, we don't have it. You'll have to call this pharmacy in Salem County. I call that pharmacy to secure it within 35 miles or or 45 miles of where I live. No, we're not doing it. You have to call Berryville and West End pharmacy or uh economy pharmacy. In, in, uh, is, is that a is that a true representation? That's accurate. OK. 50% of my performances in BB, Arkansas, which is 17 miles south of Cersei have told me that 11 of them said, I can't sell a drug for $90 under a plan and pay a PBM $100 for that same prescription, is that a true and accurate statement. It happens, but if you do that too often, you're right, you will not stay in business for. You're not going to stay in business very long, are you? Another pharmac that told me uh under the new plans that have been uh enacted by the insurance companies and placed upon the PBMs that he will go broke in the 1st quarter. Is that an accurate statement? I get calls like that every day. I'm and that's 50% of the stores in BB which represent 9000 people in just the city of BB itself is, and so can you tell me how many counties may be without pharmacists. Is it, let me restate that. Is it true that Arkansas County may be without a pharmacist. Is that true? I, I believe every pharmacy in Arkansas County is in trouble. I really do. And it because of the, the specific networks there and the rates that have been implemented that are not sustainable, uh, and I've gotten that feedback from all of them. We've, we have lost one in Arkansas County, the, uh, Deans did close, and that was an example. I don't know the exact financial situation, but I believe they did sell their files to another store. So you'd say they consolidated, that one didn't just put a sign on the door and close without merging the patient charts if that makes sense, but that pharmacist who did close that store, the they have closed too, they've closed one in Helena, which was open and now is run by the federally qualified Health Center, so there is still a pharmacy there, but there are less services being rendered compared to when. the elderly as well as those who can afford to pay it. Let me ask you another question in one fair one fair point I would make there are do you have a question that pertains to the rule or the bulletin this pertains to the rule. OK, OK. This, this pertains to the rule. How many pharmacists have had to tell customers. That they can't Ensure them or pay or provide them with form with prescriptions this next year because the plans have changed. I think every pharmacy in Arkansas that is independently owned, I would say 100% have made decisions to not stock drugs or to not provide services when those services are violating the law and are not sustainable. I think it's happening in every single store in Arkansas. So even if the pharmacy is still open. And I think that we've had patients experience interruptions in care and in every scenario in the chain pharmacies, I can't comment on if they are doing that or not, but I know it's happened in every single, in my opinion would be in every store in Arkansas, so rules 128 is proposed by the insurance company uh insurance commission is an accurate reflection of dealing with the problem. It's a real problem, and I think it gives the pharmacists hope that there will be a referee on the playing field to hook it. This and apply some common sense to fixing what is broken. That's what the hope is. Will, will the elderly be adversely affected because of Medicaid. Through the people he owns. Or through their, well, let me put, let me restate that. I'm told. That Medicaid pays much faster than the private insurance company plans PBMs, what, whatever you want to call it that's true on fee for service Medicaid, they do. They pay within 7 to 14 days. Yeah, as opposed to 30 days or longer with some of the private commercial. Would you agree that what normally has been accepted in the past is no longer working in this state, and we need to reevaluate the 128. And with a new a new approach based on what our experience has been and what we anticipate the experience being in the future. I think when the assuming the rule is reviewed, I think we'll learn a lot about the data that's submitted and we'll have some, some answers on what policies need to change. So I'm very interested to see what they discover. Thank you, Mr. Chairman. Thank you, Mr. Chairman for your forbearance and thank you, Mr. Vinson. Thank you. Representative Warren Thank you, Mr. Chairman. Uh, uh, everything keeps relating back to PBMs. I'm curious. I don't know if you have the data, but I'd love for this committee to be able to have the data that shows What cut Of the total pharmacy business. That the PBMs are getting. Out of the total costs. Of the pharmacy industry. I think that's a great question. I've seen data, data recently in the Wall Street Journal in an article where the employers of the state of Washington were overcharged, in some cases, 35 times compared to what it would have been filled at local pharmacies and the PBMs and Smoke and Mirror were promising them savings and then pushing them to the plans that are owned by the PBM but in that, in those studies, my estimate would be if Arkansas, and these are just estimates, but if Arkansas had a $4 billion spend on drugs, and I think that's pretty close that about 50% of that is the spend, not the prescriptions, but they cherry-pick the more profitable, um, specialty and generic specialty drugs, that example, I think earlier about the $19,000 versus $97 they shouldn't be charging that amount. That ought to be a false Claims Act issue under federal law. It shouldn't, that's crazy that that's happening, but it is happening in the FTC Wall Street Journal, New York Times, they're all finding it all over the country and but about to your point, about 50%, 51% or so, I believe, of the revenue is being steered and sent to mail order pharmacies filled by PBM own insurance company pharmacies. Uh, I'll take that a step further. I came into the legislature 8 years ago and the senator called and said, I need you to go up to Little Rock. Uh, we've got a new issue that we're dealing with called PBMs. I, I'm like, what is that? the way over, he started explaining to me, so in 8 years, we're looking at that cut. Of the pharmacy business. Going to PBMs. And I think that's a fair question for our Committee here to know how much of The pharmacy cost is going to PBMs and I don't know if that's Mr. Chairman. Our chairman, if, if that's something we can request, but I'd love to know an answer on that. Yeah, I'd love to have an accurate answer to you. Thank you for that question. That if for you, Representative Warren. Senator Hickey. Thank you, Mr. Chair. Uh, John, in this first question I'm gonna ask you, I probably should have asked the booth with the insurance department, but, uh, within the last 10 minutes, I've heard it 2 more times. And I guess, uh, everybody thinks it's so gracious that they think this rule is gonna, is gonna handle it. We literally recognize that the affiliates of the PBM should not be, have been being paid more, whatever that was, 68 years ago, and we have that legislation in place. It's like we keep skipping over that and skipping over that and skipping over that to the point, and I guess maybe it's just, uh, a deal to try to get this rule passed or whatever we're trying to do. So my question to you on that is, we do have that in place where it is already illegal within the statute for the PBM to pay their affiliate more. We've heard that over and over again. That's correct, correct? OK. Do you believe that the insurance department has the tools in place to. do that if they need to. And again, I should have asked Booth that question. But Uh It was y'all's legislation. Not my job to tell them how to do their job, but if I think they need more resources. I believe they need more staff, they need more resources to be able to enforce it. The FTC can't even get them to answer. I mean, if the Federal Trade Commission can't get them to answer, why would we think 2 or 3 people in Arkansas could get them to comply and answer. I think they need more resources, OK, resources, resources, and I'm gonna say this and I've even heard the word policy come up in in this committee. This is way outside of the authority. Of the rulemaking process, and that is what I've been harping on and harping on whether or not I agree that they should be paid NADAC or more, whether any of us do. The key is, is that we've put that in place and if we think that policy changes need, need to transpire. We need to bring that before the legislature and see if you can get the entire legislature with the House, the Senate, and the governor to sign off on this to do it. But to come in here And to put in front of me things that are gonna allow the insurance commissioner to set some price that's gonna affect every consumer in the state of Arkansas, that's over and above this whole general assembly is just ludicrous to me. And I guess my, my next question to you is, is with this rule, and I'm gonna put you on the spot here, because I, I know it doesn't. But do you believe that this rule, Fully complies. In totality with every With every everything that is currently within the statute. There's nothing added whatsoever. I think that the rule, in my opinion, is trying to address the concerns with network adequacy and access to services by addressing that the insurance department put out bulletins after some of these PBMs cut their reimbursements without any changes in contract without any explanations to exactly the cost of the drug. And there and back to we've had conversation about this before. It was never to pay NADAC on every claim. NADAC was a safety net for random claims, but when they started paying NADAC on every single claim, mainly an independent pharmacies. I agree, I agree with what you're saying. However, that is the statute, which includes fair and reasonable, right, and I understand the fair and reasonable, but if we can go down, we can go down that little road too, is 3% fair and reasonable or it's 2.9 or it's 3.1. So, as hard as it is and the reason that I assume that your legislation doesn't have that in there is because whenever we did that, this legislature probably should have put a definition in for what was fair and reasonable, but you all knew that you could not get that through because that is where we're gonna go to pieces, but to try to do that, but now to try to put that on the insurance commissioner, which is probably outside of their authority, that should be within this legislature to put those definitions in. And here's the thing. As you all keep reminding me, I was a sponsor on that bill, so I'm also personally at fault for voting for that, and we appreciate you for that, but It's not, it's not correct in this rule, this rule even exceeds that, that. So from my standpoint, I, I don't see. How anyone could go forward with this because we're trying, we are trying to enact policy within a within a body that is not authorized to do that. Thank you. Representative Allen. Thank you, Mr. Mr. Chairman and thank you for being here, Mr. Benson. So if all the independent pharmacies that get paid at NDA. Plus $0 or plus 0.50 opt out of a network. Due to low low reimbursements or go out of business right now. And all those patients go to a large change, chain or affiliated pharmacy. Would that not cause the rate paid by the employer. Or the patient to go up drastically. Less competition equals less service and higher prices. I agree with you. Thank you. Senator Desmaine. Thank you. And my, my question is really on access because I wanna, I just was going to get your take on the access portion of this and if you think that there's, you know, as we stand as a state right now, do you think we have issues that exist or just looming issues as far as access. I think, I think there's both, I mean. It's a problem to have Little River County and Miller County to not have any pharmacies that do compounding to do after hours, do hospice, do long-term care services, not saying pharmacies from surrounding areas can't come in or trying to fill those gaps, but they're longer distances to drive and challenging. So yes, there are pockets where there are real access issues. And then also on specific drugs, there are definitely issues where specific drugs are not stocked at all and maybe like a. BMs are doing that on purpose to try to steer it to the mail order pharmacy they own, so the patients lose you may not be able to get the cancer treatment drugs that you need in Texaranus because it's too costly for that farmers to be able to provide that service because they're paid unfairly, not because they can't compete because they're paid unfairly and there's different rates at different pharmacies and they rigged the system to benefit the pharmacies they own or choose, so you would be in favor, I mean, because I'm in favor of just increasing access as much as possible. And I'm assuming that's the same position that you have, so we should remove all barriers. We should do whatever we can to create as much free market as possible. biggest competition, driving prices down, we were talking about, if yes, if there's, if there's fairness in terms of the way, the patients have freedom of choice, yes. But, but as far as increasing access, you're supportive of that? If, yes, if it's fair to the patient, yes, as long as it's fair to the patient, right, if the patient is steered as long as it's fair to the patient. I'm asking because I'm, I'm bringing that up because there was a bill last session to allow nonprofit hospitals to own permits and we wanted to work with the bill sponsor on that and we're still gonna have a conversation on that this session. I'm sure we are, but you've got to ensure the patients have freedom of choice and access and it's fair, and if that is part of that legislation we can have a conversation I'm all for the patient, and I think you've heard and, and, and again, it look, we, we can have that conversation because you'll be having it with me. Thank you, thanks, Senator. Senator Boyd Thank you, Mr. Chair. Uh, Senator Hickey referred to this rule affecting every Arkansan, uh, I took that to mean presumptively because Price was going to increase. I don't wanna to put his thoughts, but that's how I interpreted it. He can correct me if I'm wrong, but does, will this rule affect anybody who pays, just pays cash and leaves the insurance out. Will this rule affect anybody who, um, is on Medicare and uses Medicare D or Medicare Advantage plan for their, his or her prescriptions. Will this rule affect any? thing for somebody on Tricare, well this will affect anything on Blue Cross? Uh, federal employee plans or is this just limited to the states where, you know, It, it won't, and just a reminder to educate newer members of the legislature. Federal plans, Congress is very aggressively, if you saw the news today or President-elect Trump was very outspoken today. Meet the Press on addressing that in federal plans. So thank you for that question, but because this was litigated through the courts over a five-year period of time by the PBMs. It was very clear on pricing between PBMs and patients and employers that the states have the authority to regulate in that area and then just quick follow up yes or no. Do you have the Constitutional authority to file or amend legislation or is it that legislators have that constitutional authority authority yeah thanks. Sandra Irvin. Thank you. On the legislation on it gets referred to as NADA and fair and reasonable, but that was referring to reimbursement rates. Above and beyond the cost of the drug, yes. Right. Uh, well, you're saying above and beyond the cost of the drug, but it related back to the cost of the drug. And so, I mean, my, my interpretation, and I guess every lawyer could say interpretation of legislative authority, a dispensing fee is a set cost and it really doesn't relate back to the cost of the drug. And so, you know, my understanding that keeps getting brought up is that NADA and fair and reasonable should be. So why? Why wouldn't we consider a NADA minimum plus a certain percentage based on the cost of the drug versus a set amount dispensing fee. We're open to that. I mean, as long as there's sufficient payment to pay for. Buying and producing and dispensing the drug plus the overhead costs and professional services that are required by state and federal law. It doesn't really matter if it's on the ingredient drug side or dispensing fee or whatever methodology we'd be open to any of those policies, but. From our perspective, NADA is the very bare average invoice, minimum of what the average cost to buy the drug is, same methodology that Medicaid uses. So I ask you a question. It's the average. So explain average invoice cost. So that means that somebody is paying average means. If I, if Is based on who's invoices. I'm a small, most pharmacies can buy, well, it's based on the pharmacy's invoices that from their primary wholesaler, so it's based on that and so it's fair to say that if it's an average cost. Some are actually gonna get paid more than others or, or, I mean, it's, it's, it's an average, so some, some is above, some is below, that's how you get the average. Right? My members are very close to that number. That number's a real like it's a very realistic number. It's the best number that's out on the market to what it costs to actually purchase the drugs, but it does. Definitely would definitely incentivize you based on, if, if you're able to purchase it less than that, you do what you can and pharmacies do aggregate in thousands of members and purchasing groups to try to meet or equal that. It's very common for our members and independent pharmacies on brand name drugs, which average $500 apiece and specialty or $5000 on average for the high-cost cancer type drugs. It's very common for independent pharmacies to actually pay more than what that NADAC is because it's 50% are buying it slightly below and 50% are buying it slightly above, but there's no massive. chasm, I guess, if, if you will, in terms of purchasing drugs across whatever that average is, and If you're paid NADAC plus 50 cents without any markup, any percentage or dispensing fee or combination of percentage and dispensing fee, then I, I do have members who on average paid more than ADAC on their average purchase of drugs and so they're not even breaking even at NADA plus 50 cents, which is why in the legislation, and I know there's an argument about whether they have the authority or not, but we would have never agreed to just NADA on every claim. You cannot operate a business on paying reimbursement at exactly the cost to buy the product with no markup. And historically the insurance companies have negotiated or allowed or voluntarily to maintain networks as it was talked about earlier, above that number and they're still doing that in some pharmacies in some networks, but in some cases, they're being very aggressive, I think, to try to squeeze out the independent pharmacies from the market, right? But, but this isn't a wholesale cost. This is an average cost, so it's not like I'm a manufacturer and I have a wholesale item. I mean, many, many of your pharmacies sell items. And they marked those up, right? There's no markup on the NAAC or the purchase of the drug. I mean, it's exactly your invoice, right, but that, but the invoice and that pricing is reached by an average. Right. True. OK. So, that's, that's what I wanted to just So, so that's an average, and then you're paying what on average everybody is paid. It's just the cost of the drug though, and there's very little I'm telling you, very minimal difference in your overall purchase compared to that average. It's, it's. It's, there used to be a wholesale acquisition cost and you're still could be a wholesale acquisition cost that you used when there's no published NADAC. And sometimes those do have, they're not real numbers. They do have significant, uh, depending on the drug, marked up over what the real invoice price is, but on NADAC values, those are an accounting firm come in and make you turn over your invoices of what you really paid and yes they are averages, but they're pretty close to accurate of what the actual cost is, and so with all of that information, right? I, I, I still again don't see how we are making sure that those that are ripping you off. are the ones that are actually going to have to pay the penalty instead of the patients. Cause they're not ripping you off. The patients are not ripping you off. And, and that's, that's, I mean, I'm, I voted for this legislation and co-sponsor as well. If you're getting ripped off, I want to make sure that we, we have the tools to be able to say, no, this is wrong. We need to deal with it. We need to fix it, but I, I, I, I just do not understand how I could justify the patients having to pay for something that they did not create, and they're not the ones ripping you off. They're the ones supporting your businesses. They're the ones going into. to your pharmacies and buying the, the picture frames and the baby gifts and the candles and and all of those products that you're able to make mark up on. Those are the people that are supporting you. And so this rule penalizes those people. And that's where my heart is. And I, that is where my heart is for those people and I, and I, I, I will finish my, my, I, I appreciate it. I, I wanted to know the information between your reimbursement rate, the NAAC and the Um, and how I understood this to be a right, like we generally speak of when we look at rates that are paid, particularly in Medicaid. It's a rate. We don't introduce new set costs and set fees, or we do maybe very rarely, but when we go down that path, I can't imagine the precedent that would be set at that point and I, and, and how much money, you know, that would be. And so I'm just trying to be fiduciary responsible to this, but My heart goes out to the patients because, and my heart goes out to the pharmacies as well, because, but I want the people that are, that are causing the pain to be the ones to pay for it, not the patients. Thank you. I was just gonna say their employers in the state that are doing that where they're bouncing they've they've saved costs, they've done it the right way. They've got a fair and reasonable. They're not passing it on to patients. It's ultimately controlled. By the employer and if you've got a PBM that won't work with you to implement it in the way that you want, then fire them. If they're lawbreaker, fire them and hire a new one. And there's several employers that have done that in the state, Arkansas State being one of them. I know he's on the agenda to, that they have designed a program that works. White River and I'm not sure if that's in your district or not. I think it might be, but the hospital has designed a rate that is fair and reasonable and not pass it on to their employees. So it can be done. Mr. Vinson, we thank you for your time. the questions on the cube. I've got one for you. Yes, sir. Is this Rule in the bulletin going to solve every problem that y'all have. It is not. Thank you for that question. We don't think it will, but we appreciate the we doing it well. What message does it send to the people who are doing it the right way, that the people who are breaking the law and not even trying and ignoring the bulletins continue to get away with it. This rule from our perspective is an attempt to enforce the law as it was written and hold the bad actors accountable from our perspective, and you may, we may agree to disagree. I'm not talking about you specific, but some members of the committee, we're supportive because it was a, a step in the right direction. And I do agree that the legislative sessions coming up and if issues that pop up or the data they get doesn't make sense or the way they try to implement it is not fair or is passed on to the patients as Senator Irving's concerned about, we definitely can address that in the legislative session, but I would rather Send a message that we're serious about enforcement rather than sending a message we're not. OK, so the message we're sending is we're going to increase the fees on the consumer as Senator Irvin said. I, I don't know if we will or not. Booth said earlier, we don't know that yet right there because that's, that's, that's what we're looking for. We don't know. You don't know, we don't know when we're being asked to make a decision on information we don't have. Thank you, sir. That's fair. Thanks, Senator. Appreciate your time. Thank you for taking questions and and talking to everyone you thanks. Up next we have Mark White. We got several agencies and divisions that are, that are coming up here. One of the main issues, I know some of you kind of wondered what you need to present what you don't. Main thing we wanna know is what is it going to cost y'all? I think we wore them out today. Here you go, you're on. Oh, OK. All right. Thank you, Mr. Chairman. Uh, Mark White, uh, with the Arkansas Teacher Retirement System, uh, thank you for having me today, uh, the committee had asked me to come and talk about how these premiums uh could possibly impact our members of the teacher retirement system, so I'm gonna give you a little bit of context about, uh, the teachers and other educators who are members of our system. Our, uh, soul connection to this issue is that we pay retirement benefits to our members, uh, and then for some of our members, we deduct health insurance premiums for them and for their benefit and pay those to EBD, uh, members are not required to pay their, uh, health insurance premiums through us. Some choose to be billed directly by ABD, but for those who choose to do so, we will deduct those premiums and then send those back to EBD for them. Uh, every month we pay out approximately $120 million in retirement benefits, uh, to our, to more than 57,000 retirees and beneficiaries, uh, out of that $120 million we deduct about $2.5 million each month in health insurance premiums that covers about 19,000 of our members who are having those premiums deducted, uh, which is about 1/3 of those retirees and beneficiaries. The average premium deduction is $132. 23 cents, uh, for those members who deduct their health insurance premiums, their average monthly benefit is just over $3000 so on average those members have a deduction that's 4.4% of their retirement benefit, uh, and he asked about the, uh, the question of what would the impact be on those premiums. Uh, so if there was a 4% change in premiums whether it's up or down, on average, it would be a difference of $5.29 per month. per member for those members for whom we are deducting premiums. Now I do want to say there is a very wide variance there in the premium amounts. We have premiums that run everywhere from $9.03 to more than $1200 a month, uh, depending on what kind of plan that members in, so that 4% is going to vary very widely between those different ones. I, my, my number was it'd be a difference of between 36 cents a month and $50.18 a month for that. for those handful of members at the very top end, uh, with that, I will stop and be happy to answer any questions. How many members you say you service? Uh, 57,735 members, uh, who received a check in November. Any questions from from the committee? Senator Johnson. All Aunt Mark. Thank you for being here. So was that applied across the board to every member that $9 dispensing fee. That uh that is assuming that they're all impacted by it. Now that's the members who are on EBD and my understanding is this would apply to all the members who are receive their insurance through EBD. But this does not apply to every situation. Yes sir, and I, and I, I make no representations as to the accuracy of the 4% increase or decrease. I just know that was in testimony earlier. That's the number I was given earlier just as a, a number to use as an estimate. OK, you have. Anyway, that's uh uh that's way above. What it would be because it would be That would be a plan $9 dispensing fee to all your members and That's not even accurate. Yes, sir. And I, and, and please be clear, I do not claim to be an expert on this rule. This is outside my area, uh, so I'm just, uh, here to bring the information based just on from our numbers of our members. Thank you. Representative Acer. Thank you, Mr. Chairman. Uh, Mark, you, you mentioned, uh, 4% increase in the dollar amount that that would translate into. Where did you come up with the 4%? That was the number that uh Mr. Booth, Booth Ra had mentioned earlier today, uh, because I think that number's been mentioned before as a possibility. Again, make no representations as to the accuracy of that number. I'm just taking what was given, right. Would you agree that, um, having more concrete data and analysis and review of claims that have been filled would be more helpful in determining what the actual impact would be. I can't argue against that, right? So the tenets of Rule 128 that allow that to happen would be helpful in determining that. I, I can certainly see that argument. Yes, sir. Seeing no other questions. Thank you, Mr. White. Thank you. Grant Wallace, director of the Employee Benefits division. I, I really would just like to start by, uh, answering questions. OK, the question that I asked first for all of y'all at the division or agency was roughly the amount of dollars it's gonna cost you. So I believe that, uh, EBD is currently in compliance with the law as it is written, um, and it, unless we are shown otherwise, there wouldn't be a financial impact to EBD, uh, now, if there is something that comes back different, um, and I've heard various numbers, uh, through the months of debate on this, uh, that there will be a financial impact. What that exact dollar amount is, I can't tell you right now because I don't know what the uh end result of all of this. work was going, will be. OK, thank you for that. I see the questions have started popping up now. Senator Hickey, yes, sir, thank you, Grant. I understand and, uh, another, another one of my concerns is we're looking to play as a rule here that we don't have an idea of what the cost will be. But I guess what I'm going to ask you, and I'm gonna make an assumption you've done it, because we've been in conversation about this literally for months whenever we first heard this, whenever it come up in the last fiscal session. So, so if you have a $1 dispensing fee. Do you know how much it is for each dollar? What the cost would be to the plant. One second. And then we can extrapolate it out there, simple enough. Unless you tell me otherwise. And I guess, are you gonna be talking about the state and the public employee, this will be combined. So looking at an increase of $1 dispensing cost. That's a 0.2% increase in premium, reflectively, uh, $1 per member per month premium impact. And what's the total? Um Yeah, I want to know what the aggregate total is because we're gonna have to put that in RSA if, uh, Of course, we don't know what to put in RSA because we don't know the number, but I'm gonna have to. What make a guess. They did not run me the full, I just have, uh, percentages of NADA and Looks like a $9 I will have to go back and get you that exact uh figure. OK, whenever we first started this a long time ago. I don't remember if you and I was talking about $7 on a dispensing fee of $9. I may have it in a load of paper that I have here. But if I remember correctly, I thought it was, it was gonna cost the plan like $22 million on. $9 and we had talked originally it was $9. So we do know that, OK, is that whenever you say the plan, is that just the state's portion or do the employees also, are they gonna have uh added cost to that. So that's gonna. That's a simple answer but a complex answer. Uh, it's gonna be shared, uh, but I do want to be very, uh, transparent in this in that we have our copays set, um, at $20 or $15 or whatever the plan design is, um, if these amounts. Say the drug costs $2 right now. The member pays all the $2. They pay the 1st $15 is the easiest way I can explain that. So up until the point that you get 15, the member is going to absorb 100% of those costs. In addition to the premium increase. OK. So in this whole Disneyland deal that we're doing today with the, uh, let's just use the 22 million. So the 22 million, Are you saying that's the total cost for the state and the employees? Just let me put it that way. So, Or is it just 22 million for the state, plus an additional amount for the employee. It It would be 22 million for the plan. So, yes. And there's gonna be additional cost overall because they, they will actually have to pick up some more of the, some more of the costs themselves, correct? Yes, sir. Thank you. Representative Aker. Thank you, Mr. Chairman. Uh, grant in reviewing the rule, um, I guess you've seen that you would have the opportunity to, I guess, turn over the current methodology, have that analyzed, and then if AID found that you were fair and reasonable, that would not have a cost impact. Is that correct? That's what I I started the answer with, uh, Senator Hickey. Yes, that is correct. And assuming that AID did some analysis and found that that there was a recommended amount that's unknown, um, that you would have the ability to then meet with them and appeal that and have the discussion beyond simply just applying that to every single prescription. I do understand that that would be kind of the normal process that any ruling the AID has, that we would have the ability to appeal that and have a conversation about it, right, because the number of prescriptions filled is seemingly irrelevant if they're priced separately, like some pharmacies receiving $1.40 dispensing fee while other ones receive a 40 cents dispensing fee if the requirement was to move it to $1 then some of those would increase 60 cents and others would decrease 40 cents. Well, if you're all going to $9 or $10 then everybody's going up if they're under that amount. Right, but the argument is that there are some being reimbursed in separate. Dispensing fee methodologies right now in the plan. I just see the averages. I, I, I don't I have arm's length reach into the contracts that pharmacies have with the PBMs through their PSAOs or any of that information. The, the way my contract is set up with my PBM is that I have a, a guaranteed average over an entire playing year. Thank you. entered this man. Yeah, so I just want to make sure I understand dispensing fees too because it's not, you know, nowhere in. The PBM wall as it mentioned dispensing fees, it does talk about services provided, and I'm assuming if you're in the industry, then you understand that dispensing fees are just part of the mix, I guess. Um So I guess what I'm, but you're saying essentially on the on the state level you're gonna have to like act like any other entity. Or any other self-insured, whatever it may be, and you're going to have to prove out. That you're paying what's adequate and, and I guess, but if I look at this, then it's all about, it's the cumulative service services and so we could, for instance, have a PBM that's paying at NAAC or just right above NADAC, but also paying a more significant dispensing fee and that kind of offsets and ensures adequacy, or we could have one that's paying more for the pharmaceuticals and let and know dispensing fee and then that's allowing for adequacy or, uh, access adequacy like. I don't really understand. So How are we only talking about a dispensing fee in this rule. So essentially that's the lever that we're talking about pulling is if it's not adequate. It's not that we're going to ensure that they're paying adequate drug prices we're just ensuring that they're going to pay more in a dispensing fee. That's not, by the way, contemplated in this legislation by name. But we are in a rule making it the lever. Is that kind of how you see it? I mean, so I'm, I'm assuming if they raise your dispensing fee. Then you're going to be lowering your pharmacy fee and then we're gonna have this whole conversation again because there's a mix of a payment that's making someone profitable or not profitable. Is that this is a dynamic, uh, aspect to how we set our premiums, the premium rate exercise is a very dynamic exercise. There are a lot of factors that go into it, whether it's the pharmaceutical cost of uh pharmaceutical claims and inflationary aspects on that or medical claims and inflationary aspects on that, um, any change, uh, upper. Do, yes, has a flow-through effect to the overall rate setting exercise, um, and the best way that it's been explained to me, uh, and I'm again I'm not AID. I'm not in the the weeds of all of this. If you look at total cost, total cost has got two sides of the equation here, ingredient costs and dispensing fee, and then you've got member pay and plan pay. And there's a balance that happens on all of those things, uh, if you look at dispensing fee, that direct, most directly correlates with member pay and the ingredient costs most directly, uh, correlates to plan pay, uh, so that's really uh how I've kind of looked at this and understand this and then this is my question. So who typically pays is the dispensing fee. Purely borne by the PBM. Not necessarily because at the point of saying and I'm sorry to interrupt you, sir, um, uh, at the point of sale, there's not one line item that says dispensing fee in one line item that says ingredient cost. It's $1 amount and your co-pay takes the 1st $10 of that and the remaining balance goes to the plan. So there would be no way uh that I understand it, uh, from my own personal experience and how it's been explained to me to sit here and say, oh, we're gonna carve out this dispensing fee and strictly shoot it to the plan. Uh, because that's not how the current system is set up to in those scenario do we just raise the lever of dispensing fee and we punished the the PBMs and they're gonna pay something and then that's adequate to create a network or whatever it may be that that's not even a possibility, not that it's been explained to me. That's when I read it. That's what I, we, we keep trying to say that it's about PBMs and then paying more but it is accurate to say at the end of the day. The only person that individual that's going to pay it is the consumer of the policy. I mean it I, I don't see how you force. The PBM to pay something that's being paid by the plan, maybe not necessarily by the PBM unless I misunderstanding how it all works. Yes, sir. OK. Thank you, Mr. Wallace. We'll see you in about an hour or two. Hopefully not that long. Right Oh Sorry, Senator Boyd. Go ahead. Thank you, sorry, uh, I thought you saw my lot on, um, I just want to clarify two quick points and then have 1 quick follow up, OK? So who is your PBM that manages the state employees Navius Health Solutions. Did they have affiliate pharmacies who fill their mail order prescriptions or fill other prescriptions. They were prevented from doing the mail order. Well, what about Costco? Is Costco an affiliate? Costco is an affiliate, but they're not, we are not utilizing their mail order services. They were prevented from doing that. OK, so what are you doing to make sure that Costco is not being paid more than somebody else. We continue to monitor all the, the fees that are paid out and, and we audit those internally as we've go on, we've not seen that, and I'm sure you've done that since day one, correct? Yeah, it's close to day one as we could. And then final question, are you familiar with the Johnson and Johnson were the case where the. sued Johnson and Johnson for failing to be a fiduciary. I've seen the headlines on it. I've not read the case. OK, well, I'd suggest you read it. Thank you. Thank you, thank you, Mr. Wallace. Next up is Janet Mann. And Miss Man, you know the question. Uh, good afternoon, Janet Man, DHS Laurie McDonald DHS. Uh, thank you, Mr. Chairman. Um, for context, um, Medicaid fee for service serves, um, over half a million individuals are Kansans every year. We, um, have written about 5, we have fulfilled 5.3 million scripts over the past 12 months ending November 30th of 2024, which does account for about $500 million annually. The past program and the QHP program is, um, would be subject to this rule, and we, um, we are confident as long as the pharmacies remain in compliance that we will see no change. And if they are not in compliance with the law, then we will need the data to address our rates. Thank you. Any questions committee? Saint Irving. Oh. Do you have any estimates? Per dollar. For the past and for the expansion program, which will be affected. There you go. OK. Mr. McDonald, you can answer that. 10 years came on. Yeah, um. So as this rule has progressed, we have run lots of different scenarios, given examples, and they've all come up with different answers. Oh, this one is back on now. Can you, I mean. Um, I don't know where I was. We've tried to run different scenarios. We did look at the, try to look at the 3.4%. The um, the issue or the concern that we have is our expansion population is um administered through the marketplace and so those rates are set. Um, for the marketplace, not necessarily for Medicaid. We do operate that under an 11:15 waiver that does have some limits for every year for increases. So we've had a very difficult time. Um, I was trying to look through my notes to see if I could answer Senator Hickey's question that he'd asked Mr. Wallace about the $1 change. I don't have it with me. OK, uh I mean, I think it's critically important that we know the numbers and I, I understand your answer. Because it's all very subjective and we really don't know. I mean, but we've gone from $1 to $10.50. And so, and you, do you know how many prescriptions are, are on the paths program or how many prescriptions are on the expansion program do not at this time. I have requested that information from our carriers. I don't have it yet. OK, so because that's really, really important because again, that's a set, this is a set cost. And so that's going to be, there will be a financial impact to Medicaid. There's no doubt about it. So we just want to make, I mean, In my opinion, that, that becomes incredibly problematic to our state budget. Sandra Hickey, and uh, I understand, I understand what you're up against right here, but, but let me just say this. So, you're sitting there saying basically, If there's no dispensing cost added, then you're not gonna have any other costs, and you know, it's we're kind of circling around saying, well, if it's already fair and reasonable in this, you're going to have a cost, you're going to have a cost if there's. Either a dispensing fee added. Or a percentage increase to the price of the drug. Correct And if not, you're gonna have to explain to me. How, how that could be. I'm just gonna go ahead and say that. I don't disagree that there could be an increase, but with our rates being calculated on the marketplace and worked the carriers work with AID, then we do have a limit about how much that increase can be every year, according to our, our waiver that's your split that, yes sir, and so we have to keep that in mind. So we have other increases that will be factored into that also, but then they are subject to that limit. Um, in addition to that, um, what we can charge in copays and deductibles to our beneficiaries is limited by 5% of the household income per Medicaid rules. So that adds another wrinkle of us calculating what is a cost. So, yeah, exactly, so. Let's just use $9 and, you know, we can use whatever. So, the $9 in that particular situation then. Of course, they're, they're going. The participants of that are, are the ones that you're serving, they would actually have a cap on it, but then the state itself is going to have to pick up that additional cost. Is that correct? Yes, sir, because my, my rates on the QHP, uh, model currently range from $336 to roughly $1400 a month, depending on the, um, type of individual buying the, um, insurance that we are purchasing. So I, it would be a different percentage for each one of those Types of coverage. So I, that's the complexity and that's all fair, right? You're, you're exactly right. I hadn't even thought all that through. You, you do have a little more complicated calculation, maybe the EBD does, so I, I appreciate that. Thank you. Center Dismay. Are any of the 3000 complaints related to Your program. I don't know the answer to that. OK, thank you. Seeing no other questions, Senator Boyd, I didn't miss you this time, did I? OK. See, no other questions. Thank you all for being here and answering the questions. Shane Broadway and Melissa Rust, y'all just come up at the same time. And please introduce yourself for the record. Thank you Mr. Chairman Shane Broadway, Arkansas State University system. Uh, Melissa Rice, um, University of Arkansas system. I guess I'll go first, uh, Mr. Chairman, thank you and to the members of the committee, uh, for the opportunity to be here today and talk about, uh, our plan. And what if a dispensing fee was added to in terms of the question, uh, to provide that information, uh, to you. I do want to thank John Vincent for his comments earlier, uh, about the ASU system plan and give a shout out to Uh, our team, our staff, my CFO, uh, who and I was going to preface by saying, I'm the least, uh, expert about PBMs that should be sitting at this table, uh, talking about this, I'm not even sure I can spell PBM. So, uh, I'm gonna give you what I what I've gathered in several meetings with my CFO and our, uh, benefits, uh, vice chancellors and everyone who's involved in this, but What John said is to their credit, they've worked very hard these last several years to strike that balance, uh, to ensure, uh, that we are being fair and reasonable to the pharmacies that we work with as well as trying to keep our costs to our, uh, everyone who is on our plant. Uh, we currently cover about 4500 members annually. Uh, it's about an $8 million pharmacy spend per year. Uh, 5200 scripts per month, which is about 62,400 scripts a year. If there was to be a $9 dispensing fee. I, I said this at the public hearing, we think we would beat any fair and reasonable standard that is established should the rule be adopted. But at a $9 dispensing fee, it would be an additional cost of 46,800 a month or $561,600 per year to uh our plan. Uh, would be Mr. Rand earlier was talking about 3% would be about a 3%. Uh, increase to our plan. uh I think the one difference that Melissa and I both need to make sure that we state to you, uh, as opposed to when Mr. Wallace was up here with, with EBD and Senator Hickey talked about. If there were additional costs associated with EBD, that money would be put into Their budget through general revenue and RSA. This is my 2-eighth year, uh, in prior even to that, any increase in costs and healthcare benefits or personnel costs borne by the institutions had to be raised by the institutions. Uh, we were not given general revenue had never been given a general revenue. That's nothing on this general assembly that's. Everyone before you Uh All of that has had to be borne by the institution, uh, either through its own reserves our ability to raise revenue, which you know what that is. I guess a step farther on that would be it could fall back on you as an employee. Correct. And in terms of our premiums that we would pay, yes sir. Go ahead. That's all I have. Uh, thank you, everyone, for the opportunity to be here today and to speak concerning the University of Arkansas, uh, health benefits plan, uh, not unlike the ASU system, the UA system has a self-insured, uh, healthcare plan, and we do have a PBM we use a PBM by the name of MedImpact. Um, to give you a sense of the scope of the UA system health, and pharmacy benefits plan. We cover about 35,400 lives, which includes both employees, uh, those employees' spouses, dependents, as well as approximately 300 retirees, um, for those 35,400 lives, we feel, uh, or excuse me, we have 36,100 prescriptions that are filled on a monthly basis for UA system, um, employees, uh, spouses, dependents, and retirees. Um, is Shane indicated and not to beat a dead horse, but I do want to say this, that, you know, when, when we have an increase to our health plan, uh, then those increases are either paid by our employees, they're paid by our students, or they're paid by the institutions. Um, we don't receive additional, uh, general revenue, uh, for our plan. Um, our premiums that we pay are not designed to create or build a reserve or excess reserve, but any reserves that we do have or used to offset the amount of premium increases. Um, we heard throughout these discussions over the last many months that they're potentially could be a 3.5 or 3.6%. increase for a, for a prescription fill fee. We've heard $9 we've heard $1050. When we ran the analysis based upon a request of one of the members. We ran it when the discussion was at $9 and at $9 a dispensary fee or a field fee for the UA system plan that would be approximately $3.6 million. Now, if for instance, a fuel fee was 1050, as we've heard here today as well, that would be a little over $4.5 million. Now that is Assuming that a determination was made by the insurance commissioner, you know, that we did not have a fair and reasonable, uh, plan, and I think we believe that we do, but once again, you know, we don't know how that determination would be made. Um, If it were 3.6%, uh, or excuse me, $3.6 million increase for the UA system that amounts to about a 2% increase in premiums, um, and one thing I would like to say, just quickly, in the summary document that was prepared, I, I presume by the insurance department. There's a statement in the, in the summary, uh, document on page 5 with respect to the public comments that the UA system provided, and it says as follows, we already have an adequate network of pharmacy. who are already being reimbursed, um, NADAP + 1%. The actual statement in our letter said, in the university's case, we are already reimbursing pharmacies at agreed rates that are, that are above NADAP + 1%. And in fact, approximately 90% of the prescriptions that we fill that our our generic in nature, and we are paying well in excess of 10% beyond NADAC. And so we just want to be clear out, it would be nice. To have that corrected in the summary document, but I just wanted to be very clear that it's not that we're paying NADAC + 1%. It's well in excess of that, and I just want to make that point. Um, you know, I find myself somewhat conflicted here because, you know, um, As a representative of UAMS being part of the UA system, we educate a large number of pharmacists in the state of Arkansas. And so we certainly understand the important value that pharmacists bring to our state and in particular those who are servicing individuals who, who reside in areas of the state where we have, uh, campuses, units, and divisions at the same time, we believe we have a fiduciary obligation to our health plan, so that we make sure that that plan that benefits program is not only affordable, but it's fair, it's reasonable, and it's sustainable. Um, and I'll stop my comments at that point and be happy to answer any questions if you have any. Thank you. We do, Senator Irvin. Thank you. I'm actually glad that you pulled that out, because, um, in your comment you had concerns over the cost impact, but you're stating that you already have an adequate network of pharmacies who are being reimbursed at, and it says NAAC +1%, you corrected it, Mr. Chair, I'd like for the corrected statement to be given by Miss Rust and, and put into our documentation for our committee so that we all know exactly what you stated in your comment, but in response, The insurance department says we are, we are also concerned over our health plan cost impact from additional dispensing costs, and it will be one factor, as well as your pharmacy network available, availably and rates. And in our determination of where the plane will have to add a pharmacy dispensing costs. So, again, you've been told all these years that you've had a network, an adequate network, even Mr. Vincent had said that y'all have been fair and reasonable, but that's not the response from the insurance department. It's saying it's saying that, well, yeah, maybe, but we might need to add here, we may need to add there, we may need to, and so, I, I, I just. How are you, you, I mean, I, I guess. That was such a troubling response to what you had stated that had already been Um, and it was a percentage versus A dispensing fee or, or fill fee or whatever. So if I couldn't, if I could just respond to you briefly and then I think, I think my colleague may want to respond. When Mr. Vincent was up here and he was talking about how, um, you know, one of the institutions basically, you know, did have a fair and reasonable plan. He was referring to the ASU system plan, so I just want to be clear about that. It was, I wanted to make sure that was clarified. OK, OK. But, but it's based on a percentage. Right? Basically, you were determined, it's determined to be fair and reasonable, based on an adequate network based on what you're paying plus percentage. I'll try to answer the question. I think, I think that I hear, and if I don't answer it, then please correct me, but, you know, I, our, our understanding, um, based upon, you know, the operation of a self-insured plan that we administer through the UA system office and working with actuaries that we have, you know, independent actuaries that we retain, along with the consultant that we utilize that we believe that what we are providing, um, is our fair and reasonable reimbursements to pharmacists across the state of our Arkansas. It's our understanding, basically that, you know, some drugs are, some drugs are, um, administered or if you will, the cost by, by NADAC. There are others that are not on NADAC, and so it's, I think it's, I wanna say it's called all wholesale pricing, but I may not have that exactly correct. But, but I think, I think based upon our understanding, we do believe that, that the plan is fair and reasonable. But we, but obviously, we don't know what kind of determine ation might be made once the data, you know, that this rule would mandate, you know, is, is provided. We don't know what standards, frankly, you know, based upon the rule or what guidance, you know, a determination would be made by the insurance commissioner and while this is no comment clearly about, you know, the this insurance commissioner or any other, we simply, it's simply impossible, I think, for us to determine what the potential impact might be, at least at this point in time, based upon the draft rule that we have seen. OK, thank you. If you could just submit your, the correct statement. I would like to have that in writing. Thank you very much for that. Representative Beatty. Much better. Thank you, Mr. Chair. Uh, my question for, for both, um, um, individuals at the table talking about your health, um, coverage there at the university system. What has been the increase in that cost of healthcare historically. In the far in the healthcare, healthcare side, that's a, that's an excellent point. We've been talking about pharmacy all day, and I'm actually made a note myself, Representative Beatty, that you also have on the other side, the actual healthcare increase and I think ours. varies from year to year, uh, but I think, uh, one conversation I had is that we could see about a 3% increase on the health, on the healthcare side, non pharmacy side. Uh, in any given year. And that, like I said, will vary from year to year what that percentage increase would be. So this would be, if there is a dispensing fee that's added and the cost is added to our plan, you could certainly look at a 6% increase to the total plan. That make my saying that right to you? Answering your question correctly I understand what you're saying. Rip and Beatty, um, I, I would really like to get with our individual that runs our health plan and be able to get you more accurate information, I think that I can provide to you, but I think, um, I think it's probably not too terribly different than what Mr. Broadway has said, but I'd be happy to get you that information. Well, I kind of a, a follow up along those lines, you know, I know you've got actuaries, you have other folks looking at this that are providing you numbers on what you're anticipated increase is, but we don't know that dollar cost either, do we? to what your insurance premium or, or your insurance cost is going to go to next year. We don't, we don't have that exact number, do we? No, sir, we don't. And I, and I think when we, when we look at this, if we were just simply looking we're only, when we give you the, the figures said that Shane and I have given you today, we're simply giving you the figures based upon a proposed $9 or a $10.50 field fee that assuming worst case scenario, you know, that our plan would be required, um, to pay, but we also have to Look at any potential changes to NADAC as well, you know, in terms of what might be anticipated increase might be, for instance, if there was some kind of determination made. And then when you put all of that to one, put all of that to the side. Then you also have to just simply look at inflationary costs and increases in potential and what that impact might be, um, you know, on a particular, particular plan. So, so at this point, we wouldn't be able to give you a firm, um, response, in, insofar as it concerns a, a definitive percentage. So, uh, just in, in follow up, there's a lot of times when it comes to health care, having, having, you know, managed and and led banking organizations in the past, you know, health care, health care costs always went, went up. They, uh, I mean, never saw them come down. So we, we know there's gonna be an increase there. And a lot of times, no one provides you with an explanation as to why there's an increase. There's just an increase. This is what your numbers and what the actuaries or what our, our business model calls for. So, I, I would just say that when it comes to healthcare, we know it's gonna increase, but and, and right now we don't know what that number's gonna be. Uh, we don't know, uh, I mean, you, your calculations are based on a high end of $9. I heard, um, uh, booth speak that it could be $2 to $9 so it was just a moving target. So we don't know. Uh, and I, I guess, uh, what I, my question is gonna be is do we just need to get to the point where we just wait and the number is what it is. And um and, and our goal is to provide healthcare for our, our constituents and, and folks in the state. Would you agree? It's an excellent question. So I'm glad I'm sitting here and you're sitting there. Thank you. Say no other questions. Thank you all very much. Thank you, Mr. Chair. Jonathan Buxton. And please introduce yourself for the record. Thank you, Mr. Chair, members of the committee. My name is Jonathan Buxton. I am with the pharmaceutical Care Management Association, the National Association representing pharmacy benefit managers. Uh, we appreciate the opportunity to be with you all today, uh, to continue discussions on this rule, uh, I want to start actually by I'm, I'm sorry, am I allowed to just start talking just start. OK, thank you. Um, I wanna start by actually thanking, uh, the insurance department for their work on this. We, they have been, uh, willing to listen to concerns. We have been trying to work with them, educate them, and others on the impact of this rule, um, this, our members, pharmacy benefit managers, uh, firmly believe that we are currently paying fair and reasonable dis dispensing fees based upon the free market. We are going out into the market and we are paying fees that pharmacies are signing contracts to accept, um, any increase because of this review would be a direct increase of either premiums or co-pays, for instance, I have a $20 copay. When I go home and I get the script that they just texted me a little while ago. It was filled, it's gonna, it usually costs me $4.30 if that dispensing fee was increased to $10.50 then I'm gonna be paying 14 something, uh, I'm not gonna do the math while I'm sitting up here. Um, over $14 when I've otherwise been paying for, uh, because that's where my benefit is designed. That is the way, uh, the, the, my employer has set up that benefit, and so I would be paying out of, out of my pocket that extra dispensing fee or If you don't allow it to be passed on to the, the dispensing fees directly to the co-pays as one of the original drafts of the rule, uh, indicated that it would be a direct increase in premiums. You can't pay more and pay less, and as Access is extremely tied to the cost of healthcare. We know that any increase in cost will reduce access, uh, I know there's a lot of concerns that PBMs are gonna, there are a lot of thoughts that PBMs will be paying this. We do not pay for scripts from our bucket of money. We pay from the employers, the plan sponsors, and the patient's premiums. The premiums are what we use to pay claims. It works that way on the medical side, it works that way on the prescription side and so this is a direct impact, could be a direct impact on, uh, those premiums or the co-pays that patients have in Arkansas actually pay. And with that I'm happy to answer any questions. I, I, I had a couple of other things just to say, uh, according to the George or the Kaiser Family Foundation, approximately 47 million scripts are filled in Arkansas each year. Uh, and based on the numbers that we've seen, uh, and also, you know, the National Community Pharmacists Association puts out an annual report. They, they report over the last couple of years that the independent pharmacy market is basically stable in the United States. Independent pharmacies in Arkansas represent over 50% of the pharmacies that are currently in business in Arkansas, and we have not seen a reduction we've actually seen like a 0.3% increase over the last decade, uh, in those independent pharmacy numbers. Um, and those are the notes I made on other people's comments, but I'm happy to answer any questions. Thank you for that, sir, Representative Aker. Thank you, Mr. Chairman. Uh, I appreciate the great relationship you have with AID and it sounds like you believe that your members already are paying fair and reasonable. Is that correct? Correct. So they should have no problem complying with the request for data and then working with the insurance department on the appeals should any additional fee be rendered. Any additional fee would result in an increase in cost for people of Arkansas, um, and that is problematic because this allows the AID to set a dispensing fee based upon whether whatever they would like for it to be for that. For that specific plan, uh, it's gonna impact big box pharmacies as much as independent pharmacies and because they have the, the ability to set the the dispensing fee on a plan by plan basis. Uh, we do not believe it would be allowed for a fair, uh, dispensing fee to be set across the board, and I think there's a lot of concerns. There is due process, but at the end of the day you could exercise with the insurance department following you turning over the data that you say already exists to verify that you guys are paying fair and reasonable. If you're already paying fair and reasonable, then turning over the data should have already been an email that was sent. The AID could could have requested that data at any point, yes. And AID has not requested that. They began the process through this rule, but the problem is the rule goes beyond just requesting the documentation into allowing them to set what is currently set by the free market. After a due process meeting with you to establish how that, how that came to terms government mandate. After due process, sure. Representative Wootton. Thank you, Mr. Chairman. How many insurance companies. On PBMs that you represent. I don't actually have that number, but I think that some of the previous testimony was, was probably not inaccurate. knew what it was probably accurate. I mean, there are several companies that own pharmacies, yes. How many drug Change on PBMs. Don't know exactly the, who owns who, but there are relationships, yes, because what they found was when they integrated, they were able to obtain savings and opportunities to leverage market share. Let me go in in a different way. 1% of your PBMs membership. It is owned by insurance companies. Well, we've got 17 members. There's 74 full-service PBMs across the nation. Um, I don't know what percentage of our members own pharmacies. I mean, I'm happy to go back and ask, but No, I said insurance companies, how many, what percent of your ownership of the PBMs are owned by Major Insurance Uh Companies I I do not know the percentage. I do know that there are, um, some large companies that own pharmacies and insurance companies and PBMs. Thank you. Thank you, Mr. Chairman. Center Desmaine. Are you aware, I mean, there's so there's been testimony earlier today, um, that you have. PBMs that are direct violation of law where they're paying their affiliates more than they are paying local pharmacies. Are you aware that's occurring? I did receive that information from AID. OK. How is your clients or I don't, I don't know what you call them your members. How are they responding to those inquiries. We've got 3000 complaints, I think according to the insurance department, how quickly are y'all responding to those complaints and getting that data to the insurance department or do you know? The I don't know the exact answer. I will say that in the past, AID has reached out to me personally, asking for contact information for groups that may not have been our members, and we've been responsive. We're trying to, uh, we, we want to continue to operate within the law in the state of Arkansas, and we're happy to work with AID, uh, those 3000 complaints, uh, typically are related to NADAC reimbursement, not the dispensing fee. Um, and so they, once the AID gets that complaint, they send the information to the insurance department or the insurance. company or the, the PBM that's administering it on behalf of the insurance company, and then they give them timelines to respond to that information. I do not know that there's any current outstanding, uh, PBMs not complying with the information request from the AID. And just to make sure I understand how this process would work if we were to follow this essentially what's going to happen is, is you as an insurance company, uh, it's got a self-insured, not a, that's a PBM I'm sorry, you're gonna be contracted with by an insurance company you're gonna set up a plan program it's gonna cover this number of lives, everybody's gonna do their actuarial studies and evaluations, whatever it needs to happen, then we're gonna come to a premium. Right at the end of the day. And then at that point, because the premium pays for everything. Everybody's worked behind the scenes or the scripts or the whatever services, whatever it may be. Then AID is going to take that plan. And say this one little piece. In here is fair or not fair. In the whole Ball game. Is that right? That is my understanding and then at that point you'd have to do a recalibration because let's just say like I mentioned earlier, some plans may pay more for the abs actual prescriptions, not below what they're allowed to pay, but they're, you're not a blow to the minimum and pay a higher, uh, you know, dispensing fee, and others are gonna pay a lower dispensing fee. Or a higher dispensing fee and lower, you know, vice versa, whatever it's gonna work, so the insurance department is gonna determine at what level that's reasonable, fair and reasonable on each plan, which seems like a pretty Daunting task, I would think even just the calculations that go into setting these things up are fairly complex. And so we're gonna insert them in the middle man. Is there any other entities? Well, you wouldn't know you're in the PBM business, so I will stop there. Thank you. Representative Richardson. Thank you, Mr. Chair. Uh, sir, did I just hear you correctly? I just wanted to make sure I heard you accurately. You said that the first time you heard about there being some price differences is when AID gave you that information? No, sir, AID reached out to us and asking us for contact information about a different PBM that they had complaints they weren't getting because I thought Senator Dima asked you, were you aware that there were some price discrepancies between affiliates and non-affiliates, and you said that, oh, the first time you heard that was when they provided your information. Yes, they they informed me of the report they did in 2000 or 2020. OK. Um, because we, we, none of our members have received that I know of, have received, um, Enforcement Actions from AID on that issue. The affiliate. OK, thank you. And Booth could answer that much better than I could probably. Representative Lindstrom thank you. You mentioned that you've known about these complaints since 2020. No, no, I'm sorry, I. When AID told me about the affiliate study they did in 2020. Right, so that's none of your folks that are members of these PBMs have ever said, hey, you're not paying a fair amount. Between the two pharmacies, none of your customers, these pharmacy owners have never said there's a problem. So we just represent the pharmacy benefit managers. And they have not, to my knowledge. None of my members have received enforcement actions related to the affiliates affiliate steering provisions. None Not that I'm aware of. That's, Pretty interesting. I run a small business and I think I'd do a pretty good job, but I bet some of my customers aren't happy and they let me know. I'm wondering if there's a gap here that nobody's listening to these small town pharmacies that are telling you you're clawing money back, you're changing contracts. I, I'm surprised they haven't said something about that. Well, First of all, clawbacks are illegal under Arkansas law. Affiliate steering, um, and just differential reimbursement in affiliate is illegal under Arkansas law. Lots of things are illegal under the law that doesn't stop people from speeding and that doesn't stop people from breaking the law. And the AID is responsible for enforcing those. Provisions of law. They are responsible for enforcing them, but aren't you also responsible for following the law and taking care of your customers? Absolutely, all of our members are complying with the law. I respectfully disagree. I think there's some problems here, but I'll stop there. Seeing no other questions, thank you for your time, sir. Thank you very much, sir. Mr. Zook Today's been a long and I know you can talk fast, so let's do it. I'm used to being last, Mr. Chairman. Um Obviously this is a very complex issue and I want to be very careful and, and what uh express on behalf of our members. Uh, as employers of over 65% of the Non-farm employ uh non-farm payroll in the state, we represent a group of, of employers and most businesses but also None or not for profit entities and others that employ a lot of people and that's what, what drives our interest in this issue. We had a couple of points and I'll be aggressively brief. Uh, number one, there is a high level of concern from employers that provide health insurance to not only to their direct employees but also those employees, uh, uh, dependence, uh, spouses as well as children and others. They have seen their costs rising year over year now for 7 to 10% per year. Uh, and this is just one more piece of increase that would be piled on top of those consistent and pernicious uh increases over the last several years. They're also concerned about the not only on the not just concerned about the direct impact on their own profit and loss data or results, but they're also deeply concerned about the effect on employees' family budgets through copays and deductibles. And let me give you a couple of examples, I, I got some data from some real customers, I mean real members as to how this will affect their uh Health insurance programs and the effect on their employees. The first is, uh, I, I'm not gonna name the companies for obvious reasons, but the first was, was really startling to me, the data that they provide us, their cost, this is a self-insured, um, major business in central Arkansas, uh, with probably 700 employees in Central Arkansas, another 250, maybe 300 in Northwest Arkansas. and even more in an adjacent state. They are self-insured programs, so they bear all the cost of, of the direct employees insurance and then their employees pay or share the cost for dependents. Their cost per prescription has increased by 77% since 2022 and adding a $10 increase, but that was the number we were working with at the time of the conversation would bump that up to 96% increase in the cost per script. Since 2022. I was astounded at that number and probed the, the Executive, I was talking with and said what in the world's driving this? He says it's very simple. It's the uh diabetes, uh, prescriptions and the weight loss prescriptions. I have literally exploded over the last couple of years and show every sign of, of continuing to, to uh increase these things cost $1000 a month for each patient. So that's what's driving that cost. Uh, the other employer, Uh, has quite a few more, maybe twice the number of the other company in uh Arkansas employees probably 1500, maybe 1600. They state that a $10 film, a $10 prescription fee would result in a 15% increase in cost for this plant in Arkansas, and that would be on top of an already existing national cost trend of 4 to 6% per year. They fill 23,000 scripts a year for employees and dependents total and that would cost them about $230,000 a year. And this was some of the subtlety of this thing. 3 of their 4. medical plans that are offered to employees or what's called high deductible health plans. This means that the subscriber, the employee in this case, and they're covered spouses and dependents will be on the hook for the enhanced fill fees over there until their deductibles are met. Specifically, their programs have like a $2000 deductible for each covered, uh, life, uh, either the employee or the, uh, dependents. So any increase in the fee or the prescription uh copay or the prescription fee would be absorbed or have to be covered in that $2000. Um, So that's, that's the point there. Um, the second point is that the proposed rule in our view is an extraordinary intrusion into the marketplace. Prices are market signals that reflect consumers' decisions. A government agency deciding what is quote be and reasonable undermines the entire foundation of free market economics. That's our second point. The 3rd point is if you put the legislative thumb on the scale for this business sector, you can think you can expect a long line of me toos to start showing up in the lobby. Uh, uh, and it's clear, I think it is, it's patently clear to me and I hope it is to all of you too. Uh, obviously, this issue cries out for a lot more data before you make a, a very costly decision for a whole lot of the 3 million people in Arkansas. So with that, I'd be happy to take any questions. I'm not an expert on health care plans, but I'll try my best. Representative Pilkington. Thank you, thank you, chair, over here. Uh Just a real quick question. Um, Has, you said you want more data and more transparency. Is there any push from y'all to ask these PBMs to give us their formulary so that we can better understand and make the decisions to help lower it. I mean, we talked about individuals being able to make decisions, but it's hard to make decisions or hard for companies to make decisions on plans when they don't even understand what the mechanics inside that PBM. So, would y'all be willing to help push for transparency on the On the PBM front. I think that, I think that the whole healthcare sector nationally, not just Arkansas PBMs and prescription costs, the entire healthcare sector is crying out for transparency and, and market economics rather than, than just dictates and, and bureaucratic decisions that Often run, run, you know, just aren't based on facts for very long. We need a lot of facts. Thank you. Senator Mark Johnson. Thank you, Mr. Chairman. Ah Randy, thank you for what you said about the market, and I agree with you, uh, but I'm concerned, I, I'm trying to, this, this thing's like peeling an onion. I feel like we keep peeling back and finding more things. Are you concerned about, and this is The gist to me of what this rule is about and then we may, we may, we may disagree on this point, but Uh, it talks about sustainability of the network adequacy. In other words, are there folks out there to take care of our folks. And in the perfect world, the market would take care of that. I, I just see this whole industry as a disrupter of those market forces. And um that's why I'm. kind of, I won't say I'm on the fence. I'm not on the fence, but I'm, I'm conflicted about, you know, just absolutely saying I'm, I'm free market person when I see things that are being done. In an insidious way to manipulate that market to the, to the benefit to the detriment of your members to, as we hear heard today, state employees, people on Medicaid, you know, the whole shebang people, consumers, uh, I don't think this is gonna go away as an issue, and I think that, uh, Senator Hickey and Senator Disy touched on the fact that we're gonna be looking at legislation and I hope that uh uh. Our new chairman will keep us from, uh, he's already stepped up but from how those hearings last 4 or 5 hours, but be that as it may. Are you considering in any way. Uh, the Sustainability of of the network and therefore the services as opposed to just the price thing. I don't like prices going up either, but I when if he can bring me down to to need to pay a little bit more to make sure I can get what I need, then I'll bite the bullet and pay a little more. How do you balance that out. Um, that's, it's a really good question and I think it's kind of where we are, you know, it strikes me, uh, I use this comment from time to time. Our members are all alike. They're all for free, free market competition, free markets, but just not want any competition, so this plays out to a great extent in this whole conversation, um. Yeah, it's, it's, it's a deep concern in many parts of the state, but especially where I grew up down in southeast Arkansas, you know, we're running out of doctors, uh, we're, we're, they're, they're either dying or retiring or moving. Uh, we're, we're, we still haven't run out of any pharmacies. We've still got an adequate number of pharmacies down there, but that, that, that's gotta be tough to, to be a pharmacist in southeast Arkansas right now just like we don't our, our OBGYN coverage is non-existent. We got, we got real problems in our health care system and lots of parts of the state and that begins to affect the development or the, the ability for, for capital to be deployed and people invest in businesses and start hiring people and growing if there's not health care available. This was a big problem, uh, the, the, the status of the hospital up in northeast Arkansas for one of the steel companies recently, you know, they're, they're sitting there saying how in the world are we going to attract people and keep. them on the payroll if there's no hospital available in the community. Uh, but it's a deeper issue there obviously than what you're talking about here, but it's all is the, it's all the same kettle of fish at the end of the day, adequate health care and access to it at least a reasonable cost. I don't know about fair, but you know, that's one man's fairs and another man's. Uh, short stick. Rennie, my dad used to say that most lawsuits were caused by the word reasonable being in a contract. This whole thing sounds like a lawyer's relief act, and ultimately a lot of things are, I just, I, I worry about, uh, those people that are on the front lines in this particular case, uh, the pharmacists, especially the smaller independent pharmacists who in many cases, whether it's a perfect world or not, they are the healthcare provider in some of these areas like Southeast Arkansas that you just mentioned. So I'm, I'm just look, I'm looking for a balance. We may not find it, but I'm, I'm gonna support the rule, but I, I know that we're gonna be revisiting this. I don't know if you saw President Trump has spoken out about the, the PBMs specifically and probably other disruptors to a real market. But anyway, thank you for your comments. Thank you, Mr. Chairman. Thank you. Resenting Maddox. Well, I guess as the only attorney in the room, I've got to speak now. Um, now, and I, I don't want to put you on the spot, but I do, just for some context, so these employers who came to you. Did they, are they stipulating that their plan is not paying fair and reasonable? Uh, no, not at all. OK, so they think they're paying fair and reasonable. They're paying what they're paying the bill that shows up. Do they know if it's fair and reasonable? Do they know what NADAC is? I can assure you they, unless it's the HR person, uh, they do not executives I'm talking to, all they know is the ticket. What is the price most likely higher and it seems to be out of control so they're hiring PBMs I guess to manage these. They're doing anything they can to try to mitigate the cost increase in your conversations with him, did they bring up overpayments to affiliate pharmacies? Did that come up at all? OK. um, so. not there, so they just don't know. They just told you, hey, we can't pay $10 more for a dispensing fee or something. 10 bucks is going to is going to hurt. But of course if they're paying fair and reasonable, there's no, there's no cost increase, right? OK, curious about that, and I, I mean I have to bring up when you bring up free markets, there's not a bigger free market advocate in this room than me. Um, I'm a small business owner, but just so we can all remember, I can't imagine my competitor across the street, setting my pay and paying me what he thinks is reasonable and paying me less than he's paying himself. I have no defense for the what's happening. have no defense for where I live. That's what the independent pharmacists are telling me. I've been asking for this data for 3 meetings now. I can't get it. So that's all I'm trying to find out. So, I, I'm all for free markets, but this is a, this is not necessarily like free market, so thank you. I think that's the basic problem it's not. OK. I thought we'd agree on that. Thanks, Randy. Senator Penzo Representative Wootton. Mr. Zook Thank you for being here and being last. What percent of the increase. Over the past 7 to 10 years that you talked about. Has been Because of pharmacy pricing. Inquiries about how much of the plan increases. Can you say we're directly caused by the pharmacies. Well Coincidentally, there's a piece in Arkansas business that just came out today that it's The cost of, of pharmacy, the pharmacy costs for health insurance, group health insurance plans have gone up to somewhere above 20% now for years it was in the 5 to 10% range. Now it's up in the low twenties to mid-twenties. Well, that includes all costs. I'm talking about prescription, the prescriptions are 20 to 25% fee that the pharmacists, I have no idea about that. You don't have any idea. No idea. But, but the plan, but There has been increases on the plans, not necessarily the pharmacy, right? Right. Yeah, would, would you answer this question for me? What am I gonna tell my constituents when they call me and complain. About the fact that there's not a pharmacy in their community or they don't have access to the pharmacy within a reasonable difference. What would you answer them? Uh, I would not attempt to be in a position to have to answer that representative. I don't know what, I don't know that there's a good answer. Um, it's like what do you, what do you tell a pregnant woman who County that there's no OBGYN available. That's another problem that needs to be addressed, and I agree there's 32 hospitals that offer maternity of birth here in our own state. I don't have to tell you that. But what I am saying is that, that's the question I've got to answer. And, and, and some of them, it's not gonna make any difference about the cost they've got to have the medicine. So they'll have to drive. 2030, 40 miles. So we've got a serious situation that we're trying to, as some have put it, put a band-aid on today, but everything changes, does it not? Absolutely be different a month from now. Thank you, Miss. Representative Acre. Not yet. Go live, right. Uh, thank you, Mr. Chair. Thank you, Mr. Zuck. Um. I, I heard some testimony there where you had an employer who said that their drug cost has gone up 77%, and we've got pharmacies here that see dramatic and erratic decreases in reimbursement to the pharmacies. So obviously, there's a huge disconnect between what the employer is paying and what the pharmacy is receiving for physically rendering the service that their employees are receiving. And I think that's where the rule aims to advocate on behalf of the employer. Your members, your HR divisions are over lever. bridged by an opaque system that they do not understand. You've admitted that as much yourself whole committee has taken at length to basically display that. What this would do is be allow them. Basically require Turn over the data and see where they're being over leveraged. Mr. Buckman's here earlier unaware of the over affiliate payments. I filed those. I filed complaints with real claims data. We're an employer. Is getting ripped off by having the affiliate paid more than local mom and pops. And there's no way to see into that without the data. The rule wants them to turn that over, show where if we're gonna trust, we're gonna verify. And I think that your members should welcome the opportunity for them to finally stop being over leveraged by an opaque system. And uh, I mean. To that end, I think you're doing your members a disservice by advocating against transparency for their behalf. Well, let me, let me be clear, crystal clear. I'm advocating for transparency. I'm advocating for the data and for the PBMs or whoever that's, that should be providing the data under current law. Uh, something, something is out of whack, clearly. Thank you, Mr. Zook, seeing no other question, we appreciate you coming. Thank you and thank you I appreciate your testimony. OK, now we're looking at, uh, Simon Robertson. From Highlands on ecology, please state your name and who you're with for the record. Simon Derisov with Highlands Oncology Group in, uh, Northwest Arkansas. Thank you. Proceed. Thank you. uh, thank you, Chairman, uh, thank you, committee members. I'll be as brief as, uh, I can be, uh, you guys all seem to be PBM experts after this session, um, so, uh, my job at Highlands Oncology and my job for the past couple of years at other facilities has been to negotiate contracts with PBMs with insurance companies, uh, and also from the employer side visibility into that that as well, so I kind of sit on the fence between both. So it was very interesting to listen to all the commentary today, and I just have Uh, a few pieces of information and I'm in support of the rule, um, and I'll explain why I'm in support of the rule, even though I agree with a lot of the deficiencies that you guys have brought up and uh I also believe that no rule is perfect, you know, we kind of refine these as we go along, uh, or that's what it seems like to me. Um, so we run 4 pharmacies, but I'm not here, uh, to advocate for dispensing fee for these pharmacies to be honest, the medical side subsidizes those operations. The reason we have to have pharmacies is because At this point in time, a lot of the local pharmacies do not carry the drugs, so their reimbursement has been, uh, lowered every year, um, I would love for all our patients to get any medication that they need. Around the corner, but unfortunately, um, I guess is all the local pharmacies have been pressed, um, their funds have dwindled. They're not carrying a lot of these high dollar oncolytic drugs, and so we've had to take on that burden and uh we're running 4 pharmacies. We're dispensing, uh, wherever, wherever we can, uh, the medications that we can, and you know the medical side is helping fund that operation and to fund the staff that are performing those duties. Um, I, I believe that's the word. The network adequacy issue is it's not counting pharmacies that are closing. It's looking at what are they able to provide the citizens of Arkansas and what is being picked away from them and sent to mail order, uh, pharma, uh, sorry, mail order affiliate pharmacies, that's a hard word to say, um. As far as complaints, um, I have the opportunity to file at least 5 complaints a day to the Arkansas Insurance Department about steering, blatant violations of the law where they're telling me to send a prescription to their affiliate pharmacy. I don't. I, you know, I, I'm respectful of the Arkansas Insurance Department's time. I try to aggregate the cases. Maybe I'll file 2 a day or maybe 2 a week. Uh, also, uh, you have to understand clinically, um, we can't wait 2 weeks, 3 weeks. For an approval that Arkansas Insurance Department has to work really hard to get an overturn, and they do. They have a lot of success, but, uh, at the end of the day our patients are special. They're sitting and they're waiting and we don't have that liberty, so at that point when you're making that decision, you make the right decision, who cares? It goes to the mail order pharmacy, but that in turn hurts the employer because we know that they're gonna get charged more than what our pharmacy contracted to do. So I just wanted to point that out and then uh I do believe that the rule, although it's not perfect, uh, it's probably the best way to go about it because it at the end of the day, it creates kind of a barometer of how bad are you violating? How bad is this plan acting or how bad is this PBM acting and I would hope that that barometer comes back to us and when that PBM says, hey, I got to raise your rates. The state of Arkansas is making me do it. Well, I know what I would do. I would push back and I would say, hey. Let's take a look at my rebate dollars. Let's take a look at what you're going to do to take out of that. Let's renegotiate that contract, you know, there's a different structure there, uh, and so I mean I can't speak for every every employer in the state of Arkansas, but to me it's a good gauge, and then, you know, I think that the Arkansas Insurance Department leaving that flexibility for themselves. I think the intent is to get everyone down to 0. If, if you're, if everyone's good, then there is no dispensing fee, but at the same time you're not punishing the good actors and. While you're pursuing the bad actors and um, so yeah, and I think that. The reason there's not much of flexibility there is because if you look at the PBM contracts, they're crazy. So, you know, there's, there's some contracts that I have where they've tried to weasel in maximum an average payment like. You know, uh, all y'all run businesses. What is that? You know, I can't pinpoint a prescription of what I'm gonna get, and so those are kind of hard. Uh, the other problem with mail order pharmacies is, uh, we have a lot of patients that we do send the script over and then that, that pharmacy that's out of the state won't take copay assistance. So that patient is having to pay thousands of dollars out of pocket because they can't use the manufacturer coupon. I had one the other day that the Arkansas Insurance Department worked about 2 weeks ago. That patient saved $4000 on the first fill by us being able to fill it here. I think that that's important. So, um, yeah, I, I don't think we're gonna fix all the problems overnight, but I I hope you guys take into consideration what I what I mentioned, uh, I've been commenting, commenting to the AID as well, you know, one of the big questions was fair and reasonable. I like to borrow from the feds. The feds have the ASP standard, ASP plus 6. That was one of my recommendations. Take that into consideration in the federal government has what they consider fair and reasonable. Maybe not perfect, but can be used as a barrier. Um, and then also, I think, you know, we have to take into consideration and I'm no attorney, but what can Arkansas do while the feds slow roll this cause there's so many initiatives in Congress right now targeting PBMs, but they're moving very slowly, so the, the next question is what can the state of Arkansas do to protect its consumers and what does not step over federal regulation. Thank you Thank you, sir. Do you take any questions? Yes. Central dismay. Just on the complaints that you've had to file with the insurance department, how quickly are they responding to those and how many of those have come to a resolution. Uh, I think the, uh, average res resolution time is about 11 to 2 weeks, uh, we have to remind the PBM, um, and follow up the AID does set deadlines and they do tell them we expect a response at this time. This is a cancer patient, but even then, uh, most of the time it goes ignored. This is on the steering steering issues. OK, so below cost, uh, we go ahead and fill it. We have that luxury that local pharmacies don't, where we're kind of Spreading the cost, uh, from our medical operations, uh, I feel very bad for the local pharmacies cause they don't have that, I mean, I guess they can sell, you know, snacks and stuff, but that, that goes nowhere you're covering that, uh, and so, yeah, my, my intent is and we're we don't have a facility in every town, so we do have patients that have to drive a long way because sometimes we're the only pharmacy to pick it up and we do see a lot of patients that have been into the ER and that's exacerbating costs on the medical side, and no one's looking at that. Because the two sides are handled separately, um, but yeah, if, if a patient can't pick up their meds locally, a lot of times they just abandon their treatment, so our preference is to enable them to do that, uh, so, you know, it's kind of weird like we're competitors, we're supposed to be competitors in a healthy market. One pharmacy versus another, but I'm up here advocating for them. OK, all right, thank you. Representative Maddox. Very briefly, um, and I should probably know this, I think Senator Dismay just hit on it a little bit, but could you walk me through exactly what you mean by they're trying to steer you. Well, tell me what, what you mean by that. I, I don't really understand that. Yeah, so they, every PBM has a formulary of drugs that they cover, and it looks like we're a network, but they have a separate formulary for, uh, drugs that must be ordered from their mail order pharmacy. All the big, all the big names do it, um, caveat there is, there are a few PBMs that are better actors, they don't have that, so let me, when I say every PBM, I'm talking about the top 3. So just to clarify that, um, anyway, so when we run that script in our in our system or we try to get an off it. back with uh pharmacy out of network or uh must call specialty pharmacy to fill, and that instructs our uh staff to call. A credo or a specialty pharmacy owned by uh that company and then they basically will fill it. OK, so are you saying the majority of the PBMs are steering, trying to steer business away from independent pharmacies? 5 a day at least 5 a day that you say I'm also a specialty pharmacy, so we're probably, we probably see more of that so thank you. Seeing no other questions. Thank you for your testimony. Oh, Senator Irving, that one. Sorry, of, of the resolutions, what is the resolution? Do you get paid? Are they, are they making up the cost? What, what's the resolution? So far it's been single fills and so for like 30 days and then we have to go back to them now they're, you know, now they know that we're the squeaky wheelers' tightened up and they're pretending that's under ERISA, that it's, you know, it's a benefit design, uh, and. I disagree with that, but I'm hoping that, you know, we'll we'll prevail because it is. We have patients that have told me outright, I don't want it filled via mail. I want to pick it up here. Like, or anywhere locally in that you're getting of your complaints that you're, you're, you're getting resolutions and are is AID then contacting the PBM and saying, hey, you've done something wrong here. You need to make this guy right. that that that has happened, that's happening. So, so that process is happening and it's occurring, and it's working somewhat. It's kind of broken down now they're starting to respond back, uh, the PBMs are responding back and say this is benefit design. Uh, the last 3 came back with that. It's a benefit to because the insurer, the self-insured company, has signed a contract with them that states that contractual agreement. That that they have decided that they're going to use whatever pharmacy, right? Is that what you're saying? That's what they're telling you. It's a design, it's a benefit design and a lot of, a lot of employers aren't really sure what they're signing. So when the PBM gives them an offer, uh, it's like, here I'll process your claims at 3%, but this mail order, uh, option must be enabled, or you can sign this other this other contract for 8%. And so, of course, the employers are like, oh yeah, that, that sounds like a good good deal because they're not pharmacy specialists, you know, they're, I mean, they've signed the contract. I mean, I, you can't, I mean, that, that's, that is now a legally binding contract. Yes, that's right. So, I mean. So there, there's, when that has occurred, that's a legally binding contract, then the answer that they've given you is based on a legally bound contract and situation that can then cannot be resolved in the manner that you want it to be resolved because that really binding contract is the final resolution. So I just wanna make sure we're, I, I just wanted to understand, we do have a process of complaints. We do have resolution. and absolutely if you need to be made whole, then that is occurring. But if they can't make you whole because of a contractual agreement between this employer and this health insurance company, then that, that is a legally binded contract. And so there's, we can't make a resolution for you that will make you happy, because that will trumpet. Well, Senator, uh, if one slight correction, it's not for me. Uh, these complaints are. about our patients when they see the drug on the shelf and they so I, I don't file any complaints unless a patient might brings it up on their, on their own when our pharmacy says unfortunately, I can't fill this for you. We're going to have to send your script to this other pharmacy. OK, well, thank you for that, but I'm OK with a pharmacy making a complaint too. I mean, I, I mean, I think that's the way that the system that we've put in place and like to your point, we have enacted this regulatory structure whereas they were never regulated before, and I support that. I think that they should be regulated, but to the degree of which I think is what we're discussing today. So I, I appreciate that you said that, but I also think that you also have the ability to file a complaint just as a pharmacist. So, uh, thank you. Thank you Thank you for your testimony. Next we have Brad Lawson with Walgreens. Speaking far. All right, good evening, everyone. Uh, number one, I just wanna thank you all for, uh, your, your, uh, attention today. I know it's been a long day, probably some stomachs are growling. I'll try to keep it as uh as short as possible, but, um, number one, what an honor to sit right here in front of you in front of that great seal of the state of Arkansas to advocate for a profession that has done so much for me. Um I am a uh long term resident of Central Arkansas, life term res uh time resident for Central Arkansas. I graduated from Arkansas State University. With a bachelor's degree in chemistry, uh, then transferred down to UAMS here in Little Rock, um, and received my doctorate pharmacy. I have been providing direct patient care in Arkansas for 20 years. Um, I'm, uh, honored to have the opportunity to lead pharmacy for Walgreens, um, across the state. Walgreens has a long history of providing um Trusted healthcare services to, uh, our country for 120 years in Arkansas we have 81 locations, 1600 employees and 250 of those are pharmacists. We are Walgreens is an unaffiliated non-vertically integrated pharmacy. We do not own a PBM. We are not owned by a PBM. Um, the information you're gonna hear, you've heard a lot of the same information, um, but really you wanna land that point as one of the biggest things to identify that we as Walgreens are subject to the same reimbursement challenges as our local independent colleagues and we stand in solidarity with them in proponent in um as a proponent for Rule 128. Uh, concerning PBMs, 80% of the drug market is um housed under 3 PBMs, uh, who also own their own pharmacies. This leverage allows them to force low reimbursements. Um, that do not reflect the actual cost to purchase or dispense medications to local independent pharmacies and unaffiliated pharmacies like Walgreens. Walgreens loses money on many of the prescriptions and services we provide on a regular basis. Um This leverage also allows for patient steering. We just heard that, uh, we are losing patience because of specific PBMs requiring them to use their own vertically integrated pharmacies in which they have financial stake. PBMs also practice price spreading, so we, we talked about this spread pricing, so they're they charge insurance companies one amount, uh, and pay pharmacies another amount. Uh, this exacerbates the financial challenges uh for the unaffiliated pharmacies like Walgreens, um, that are forced to accept lower reimbursement rates. These unfair and unreasonable business practices uh require pharmacies to provide less services to our patients, um, and ultimately could end up in closing doors. This puts our patients at the greatest risk of creating healthcare desert. We've talked about that time and time again today, uh, with access. Um, and and unfortunately, this is also disproportionately affects those underserved communities. In 2019 across the US 7000 pharmacies closed. Uh, this last fall, we brought it up earlier, Walgreens announced the closure of 1200 locations over the next 3 years. We heard Doctor Vincent talking about, uh, in Arkansas we've closed 40 pharmacies over the last 2 years. This last year, Walgreens has closed 6 Arkansas locations across the state. And I take each one of those personal. They're made up of pharmacists that care about their communities. Technicians that show up every day. We are proud profession. We want to be a sustainable profession and work within a sustainable business model. PBMs must offer consistent, predictable, and reliable reimbursements that's the same for independent unaffiliated pharmacies as it is for pharmacies in which the PBM's own financial stake. PBM should not be allowed to steer patients away from the patient's preferred pharmacy. We've heard a lot of testimony today about potential increase in costs and premiums. For Arkansans and employers. I would challenge that, that's a choice that the PBMs are making. If they choose. To prioritize their spread over patients' health and keeping pharmacies open. The status quo, the business model that we have right now is not sustainable. PBMs extract more value out of the pharmaceutical industry, uh, pharmaceutical supply chain than anyone else in it, including those of us who actively provide patient care. The point of this reform is not for a PBM model to stay at is, but to return back to um, but, but as they return back. Value to the supply chain, costs will stabilize. A permanent rule is urgently needed in Arkansas to address these unfair and unreasonable business practice, practices and is crucial in protecting pharmacies, patients access to medications in the services pharmacies provide. This Arkansas legislature has proven itself as a leader and trailblazer in the US when it comes to PBM regulation. I remember standing in that doorway right there. Under the exit sign in 2018 when this entire building was full of white lab coats and my, my heart was just filled with pride. pride for my profession. Prior for my state. Cry for my elected officials. Um, and I did what any red-blooded Arkansan would do, and I, I go to social media to discuss my, uh, my, my, my pride. So I took an excerpt from my own personal media, uh, social media post in 2018. I'd like to read today. I'm extremely proud of our profession. And our state leaders and continuing this dialogue that negatively affects all Arkansas pharmacies big and small. And all Arkansas taxpayers. Thank you to Scott Pace and all my fellow pharmacists that were in attendance today. I look forward to further conversations and the creation of solutions that will prevent the closure of integral community businesses across the state. tag behind the Rx curtain. We're here, the, the, the steps that we've taken previously have led us here today. Thank you for the role that you've played. In supporting our profession. But we've seen behind that pharmacy curtain, and it's not pretty. The curtain is suffocating. The integral community healthcare providers, but unfortunately, the patients are the ones that are hurt the most. I implore you to keep the work alive. So that years later when we look back on this time, we find ourselves on the right side of history. Thank Are you willing to take any questions? Do I have a choice? Yes, sir, you do. I'm ready. Yes, sir. Thank you. What is the net worth of Walgreens? I, I don't have that. Off the top I can, I can read it to you. Sure. As of December 13, 2024, Walgreens, Boots Alliance has a net worth of $8.98 billion or market cap. Thank you. Yes, ma'am. Representative Ads. So to follow up, um, Walgreens stock and my, I'm not certain, but it's probably gone from $60 a share to what, 10? 11 over the last 5 years in the last 5 years, right, um, it's cratering, and you blame some of that on PBM's reimbursing Walgreens less than they do their own. pharmacies. I think ultimately everything comes down to reimbursements. A lot of the issues we have, um, but ultimately it's, it's about a sustainable business model that reimburses pharmacies fair and reasonable for the, the medications and services we provide. Thank you. Yes, sir. Representative Wootton. Thank you, Mr. Chairman. If thy painted with a wide brush when I mentioned Walgreens a few ago. I apologize. I, uh I like Senator Irwin, look, look at the profitability of the stock in that type of thing. But you make the very point that we're trying to take care of with the rural 128, and that is to control a fair market price out there and price controls do not do that. So my question of you, do you consider that the PBMs have unfairly discriminated against your company and other druggist and pharmacist in Arkansas. Representative and I was hoping I would get a chance to speak with you. Uh, my wife is from your dream hometown. I'm in BB, Arkansas. So Bevi runs deep in our family. Um, Uh There's no doubt that unaffiliated, non vertically integrated pharmacies like Walgreens, like Independent pharmacies are reimbursed at a different rate than those that are vertically integrated and and which PBMs have financial stake. So that would be considered price discrimination. If you, those are yours, yes, sir. Thank you. Thank you, Mr. Chairman. Representative Acer. Hey, Doctor Low. Um Well, I guess thank you for being here today. Uh, it is troubling, um, as we've had rural pharmacies mentioned that oftentimes Walgreens in certain areas really is the only reprieve for independent pharmacies to offload those unsustainable reimbursements, um, and to see Walgreens not be able to sustain that, to see their stock plummet 80% over the last 5 years and to see real closures limit that access as someone who actively competes. With your business model, I, I do acknowledge that there is real tangible value that you're able to provide that we're not able to provide and I guess I apologize for offloading too many of those patients cause apparently it's had a dramatic negative effect here in Arkansas, but this does end with access and I just want to thank you for being here today and for your testimony. Thank you, Representative Anchor. A no other questions. Thank you for your test. Oh. Representative Yeah, yeah, I know you can't, so just, just, just ask Brad. Yes, ma'am. Oh, you're on now. We had a Walgreens that's been. They're forever Quite a while. Um They had sputtering kind of pharmacy service there for a while. like a year. Now they no longer offer pharmacy service. The doors are still open. So then I transferred to the next. closest Walgreens. It was a big the biggest store, really, the biggest pharmacy in the area. They have now completely shut down. So I now have a different Walgreens. We're blessed to have numerous pharmacies in the North Pulaski area. However, um, it concerns me now that these businesses have gone away. Because most likely it was due to low reimbursement because they were very active. Would you say that the. Is it probable that these pharmacies have had these kinds of struggles due to low reimbursement on their drugs, on drug prescriptions. Uh, I'm, I'm very data-minded, um, as a scientist through school, uh, if I was gonna create an algorithm, I would put reimbursement rates in the denominator. Of, of the, um. The situation at hand, everything rolls up to reimbursements and creating sustainable business model. So, so pharmacies, Walgreens pharmacies are not only closing in rural areas. They're they're, I mean, closing in rural areas, they are closing in our major metropolitan areas here in the state. Yes, ma'am, 6 this past year, 1 in Jonesboro, 4 in central Arkansas and 1 in Ashdown, Arkansas. It creates a tremendous inconvenience for me who can drive and walk and do all those things. I can walk most of the time except right now I'm on a scooter, but um. But for people in rural areas, it's devastating. Absolutely, and, and it's not just the, the patients are the most important thing, but, uh, those are, those are pharmacists, those are technicians, those are team members that are displaced when there's not another pharmacy close that they could go to. So, um, but ultimately the patient, um, the patients abs Absolutely, and, and it's not just the, the patients are the most important thing, but, uh, those are, those are pharmacists, those are technicians, those are team members that are displaced when there's not another pharmacy close that they could go to. So, um, but ultimately the patient, um, the patient ab has the biggest risk, um, when it comes to that of becoming non-adherence to their medications and, um, that's, that's the biggest role that pharmacists play is allowing patients to to live longer, healthier lives. Thank you for your testimony. Thank you. San Irving. Thank you again, steering is illegal. Already under Arkansas law. Correct? Yes, ma'am. OK. That's correct. Spread pricing is illegal under Arkansas law, correct? Yes, ma'am. OK. Again, it has been testified to. And we have repeatedly stated that the laws that we have in fact in place, which you have testified to be in supportive of, which I also voted for, created a regulatory presence that had never been there before, correct? Yes, ma'am. 4 PBMs. Correct, and it also created the illegal activity. Of Deering and spread pricing, correct? Yes, ma'am. OK, so those have been in effect. Again, this rule has nothing to do with that. This rule allows for additional costs that's going to be directly impacting to patients. That's what this rule does. The PBMs are not going to be affected by this rule. At all. So we're talking about a regulatory function. Absolutely, making sure that all that happens. This rule goes beyond that and directly impacts patients and the cost that they're going to have to pay for every single prescription that is filled. Every single one. And so, I just want to make sure, as I'm being threatened right now by people. Literally being threatened. The patience and the consumers have to be accounted for. They have to be, uh, we can discuss your stock. We can discuss your, we can discuss all that, but at the end of the day, I'm a policymaker. I will not yield to threats. I will not be yielding to people that are calling me horrible names right now in emails that are being sent to me. I'm not going to yield to that. I'm a policymaker that is trying to understand how we are from a statutory position to now a rule that I do not believe the two meet. That is my job. That is my responsibility. And so I just want to make sure we're very clear and that you acknowledge, yes, we have now regulatory laws on the books, and these things that you've testified to are already illegal, and we need to uphold the law and make sure that whatever is happening illegally needs to be enforced. 100% agree with you on that. But again, that is outside of this rule. And so, I just want to make sure that it's clearly stated. About the policy that we're discussing right here, right now, and what is already on the books. Thank you. Senator Irving, thank you so much for your support of our profession and our patients across the state. Um, I, I agree with you, um, I, I do think that Um A lot can be done by little people. And I think Arkansas has proven that time and time again in the fact of um PBM legislation and reform that we can be trendsetters, and we can, we can do the right thing, um, in, in my opinion, I think the, the rule, uh, is a step forward, uh, in furthering PBM reform. Well thank you for acknowledging the rule, but Today is not PBM reform. It's Rule 128. Yes, sir. So thank, thank you for your testimony. Thank you. Last on the list is Loretta Olsing. I'll let her rep pronounce that when she gets up there. Can you please state your name for the record. Thank you. It is Loretta Bossing. Great job. Thank you so much for having me here today, um, means a lot to me to be the rare voice of the patients, um, I am a patient advocate. I started a petition that has over 230,000 supporters to stop the forcing to mail order pharmacies. We have over 900 supporters here from Arkansas and I'm honored today to represent them. Several here from Arkansas has written have written statements in support of me being here. I do understand that this is about reimbursements to our local pharmacies and keeping their doors open. I am also the mother of a child whose life relies on medications every 12 hours after he received a life saving liver transplant from a 3 year old little girl. Due to the flu Unlike the lobbyists here today, I'm not here because I get paid to do this. I'm here because I deeply care about the declining state of pharmacy and medication access here in Arkansas. And if I can get your attention for just a moment, maybe I can stop the people who will be suffering and who are suffering here in Arkansas and the children from the pain and suffering, the eye, and many other patients and caregivers have witnessed firsthand, and it was all for the profits of the PBMs like OptumRX. CVS Caremark and Express Scripts. My advocacy began when I experienced the severe consequences of choosing mail order pharmacy. Uh, 1102 degree day, I see my son's liquid oral transplant medications and only a bag. Without any temperature control. At the time I had no idea that the temperatures in the truck's mailbox could soar to 120 to 170 degrees, risking the efficacy of medications, but weeks later, when my son ended up in transplant rejection, again in the life that we had just fought so hard for, was on the life again and watching him scream and cry in agony as they tried to insert the PIC line. I began to wonder if the heat had affected the medications, and I promised myself at that time I will never again use mail order pharmacy unless I could prove it was safe. But then we were forced to it. The letters from our insurance told us that we had no choice. Use my order or pay full price. I was stunned. It felt wrong. It felt monopolistic, but I thought this can't be allowed in America. I ignored the letters. Then one day I went to fill my son's prescription. I found out that we can no longer use our pharmacy. We didn't have enough medications to wait for mail order, the pharmacy benefit manager's response to the medication rejection was at the hospital pharmacy was an inappropriate place to fill my child's medications. I will tell you today that hospital pharmacy was the most appropriate place. They worked well with my son's physicians over 100 of, of different providers, you know, handled his care um during the time of his transplant and after they could ensure that his medications were handled properly. But we had no choice but to trust Sivos pharmacy with my son's life. They assured me they shipped the medication safely, but they arrived on a hot day, no protection. When I called them, eventually they would admit that they shouldn't exceed 86 degrees, but they reassured me that they would use extra bubble wrap. During the extreme weather and one pharmacist even offered me the option to drive 260 miles one way to get the medications. But this medication's 5 minutes from my home. I contacted the FDA hoping for support. They told me to discard my son's medications, and you can also read about this in NBC and New York Times, um, the response I received is that the FDA doesn't regulate the issues. So my doctor appealed for us to use the hospital pharmacy, CVS refused. Even worse, they lied to the employer claim that they'll store the medication safe, but they, they didn't. They said it would be OK to store outside those recommended temperature ranges and even the CVS pharmacists admitted that it wouldn't be. A cycle of frustration continued. I filed a complaint with the Department of Insurance, which was later forwarded to the US Department of Labor. It was confirmed that they get complaints like mine, but although it's unethical, it's not illegal. PBMs and their insurance companies partners don't disclose the mass number of complaints and suffering continues. Eventually I found a solution. It was media, so now I get my son's medications locally and they deliver safely in a temperature controlled vehicle. It was special treatment. It was then I realized that I had to become an advocate, and I contacted my husband's employer, which is owned by Koch Industries, um, at the time, and I was bracing for the possibility that my husband might be fired for my strong voice. I was surprised when the corporate HR actually thanked me for my advocacy, and they too agreed that transparency would lower drug prices. That was by far my only surprise. I started The petition, and I quickly uncovered also their massive complaints. I was far from the only one, but I was really shocked to learn that these same companies that are forcing us to mail order oversee their competitor reimbursements. And they're closing. They are absolutely closing. We see this across our nation. I do not know how anyone can deny that we are losing our pharmacies both independent and chains. But I realized then what good would it be? To stop the forcing a meltwater pharmacy if all of our pharmacies close due to below cost reimbursements. As I connected with more patients, I realized the amount of patient harm in America's pharmacy and medication access was in trouble. PBMs claim that pharmacy steering is a tool that they use to lower drug prescription drug costs, but across the nation, we know that's just simply not true. Many patients would agree that the only tool these companies are using is similar to a rusty scaffel. And uh not unqualified surgeon's hands. And it's cutting away at the quality of care in favor of profit. We hear the claims that they're improving adherence, but we see the truce. Check out the Better Business Bureau complaints one star ratings. This situation is just not a crisis for patients, a crisis for pharmacists as well. Many corporate chains have a higher rate. Many pharmacists say that that's due to the understaffing. As a result, many are choosing to leave the industry, some who are multi-generational pharmacists. And students, many are refusing to even enter the profession. That's that's an absolute consequence of delayed legislative and regulatory action. As independent pharmacies close across our nation, patients are forced to travel further to access care. But PBMs in a corporate partners continue to claim that everything is fine, as if devastating impacts of entire communities and, and counties without a pharmacy or just a minor inconvenience that we're just supposed to accept just a simple sacrifice for their billion dollar profits and as if insurance companies and PBMs profits are just more important than keeping the critical life saving doors of our local Community pharmacies open. PICA will continue to say that the number of local pharmacies are increasing as we heard today, but this claim is misleading, as pharmacies and underserved in rural areas are closing. Urban and rural areas. While pharmacy opening are often mostly in the wealthier neighborhoods and it's leaving those in our nation that need the access the most without. So let's not let them continue to get off the hook so easily with that statement. Health insurers, PBMs, and stakeholders involved. We trusted you. When we paid our premiums, we did not expect for those premiums to be used against us to pay our local independent pharmacies or any pharmacies below their cost. There's no business that should be allowed. Or expected to Survive when they're only allowed to be paid not even the cost of the product and a life saving product at that. And so many are forced to close. If one pharmacy closes due to this, it's an injustice in America. And it's abuse of their power. Independent pharmacies have proven to be an essential part of our healthcare system and public health. During the pandemic, they provided vaccines and treatments more effectively than large corporate farm pharmacies, offering a lifeline of motor services failed and continue to fail. Please don't allow PBMs or lobbyists to take away this any longer. When I first started PBMs and Pickman claims that they, that simply allowing pharmacists to tell us the cash price. I just want you to remember this. They would also tell us that that would raise health care costs. But once these gag clauses were removed, lives were saved, and many now pay less for medications without using their insurance thanks to the removal ga clauses. Now PBMs claim that simple actor today, you know, that ensuring our pharmacies are reimbursed enough to cover their costs will raise prices. They just can't find it in the billion dollar profits to pay our small locally owned independent pharmacies more. It was well known today that they're not going to uh take anything from their profits, even though in my family's experience, as we were forced to mail order pharmacy, they reimburse their own pharmacy over 10 times more than the 2 months, when we were allowed to use the our local pharmacy. There's where you can get the money to keep the doors of our local pharmacies open. Drug pricing manipulation. That results in a billion dollars profits. That's their number one tool. People standing at the counter, they're trying to get their medications that their lives depend on. Finding out that it's not covered or they're only told about the medications on the formula that are hundreds of dollars. You know, it's even when there's a large generic available. This may have been the cause for the death of a young man named Cole who lost his life because he went to a corporate chain pharmacy and they only told them about the medication that was hundreds of dollars more. It wasn't until after his father, who was on the same medication, learned about the lower cost generic when he went to a local independent pharmacy that they realized what happened to their son. So Unlike corporate chains, another reason why it's important that we save independent pharmacies and make sure that they keep their doors open as they have the time to help us when drug prices are high and we're having to navigate how are we going to get our child's life saving medications in an affordable way. Allowing PBMs to reimburse pharmacies less than the cost of drugs, it's hurting patients, and independent pharmacies save lives. Oh, when the chain pharmacies are too understaffed that when meltwater fails. Under reimbursement means that lifeline, we're losing it. PBMs, they claim that they also have thousands of pharmacies and network, but it means nothing to us when we go to get our medications filled, and we're told we can't use that pharmacy. We cry out for help, but too often the answer we get is that our children's lives and ours just must be sacrificed for billion dollar profits of the insurance and PBM industries. We don't that and we don't believe their claims that the corporations, pharmacies are safe for more affordable. Many are giving up hope. And our legislator's ability to protect us from harm. I knew that the patients' stories were vast and heartbreaking. I was not surprised about what happened in the last couple of weeks. Um, when it comes to the amount of patient stories, but what I was surprised about. Was that so many patients in our nation feel abandoned and hurt. Patients they felt hopeless and helpless in securing medications or even a pharmacy for the children, but I refuse to give up on our government, which is why I'm here today. Yes. We're gonna have to wrap it up. We need to get to the point of how it affects this rule. Thank you. So my husband's a veteran who fought hard to defend our nation in the front lines, the most dangerous places, and we believe in our government's ability to defend and protect Americans in harm ways. For example, like our locally owned pharmacies being able to serve their their patients and patients like my son and to be able to serve their communities. Let's leave our children. With a better system, one that their lives are valued more than just solely being used as a siphon for corporate profits. Let's show them that they can have hope in American's government to protect, serve justice and stop the monopolistic below cost reimbursements that they obviously know. they're doing. Against what this rule, you know, this role was supposed to protect these local pharmacies and they're obviously under reimbursing their local our local pharmacies, they're paying their own pharmacies more and they show absolutely no care. Thank you very much for your testimony. I see no questions for you, so thank you for coming. Thank you. With that being said, We're back to, uh, Mr. Grant Wallace. Who's consideration of state employer contribution for plan year 2025. Grant Wallace, director employee benefits division, what you have before you is uh a proposal to have the state I'm sorry. What'd you say, Mr. Grant? Yes, yes, we're finished with the first we've done our review. According to this, uh, the action on the rule is a response that the committee heard the presentation to the rule and met its obligation. Go ahead, Mr. Grant. So what you have before you is the proposal or a recommendation from the employee benefits division. For the state match to be $660 per budgeted position for calendar. Going into plan year 2025, which is January to December. I'd be glad to answer any questions. Representative Wootton. Mr. Wallace. Did you address $20 million. Involved in funding phantom employees. We are still studying alternative approaches, we've had 4 months, you've had a year. The hack has been in place for 2 week sessions, and you hadn't done anything. Are y'all gonna do something? I understand what I'm hearing is it's the governor's office that's delaying some action taking place on these employees. We've talked about money and money and more money today, but we're talking about $20 million. Just in salaries for 400 employees for just last year. That doesn't include the other 400 from before. So when are y'all gonna have a plant? Well, respectfully, sir, the, uh, you have a plan. What when are you gonna have a plan? I don't want ifs ands and I want to know when you're gonna have a plan. I can only speak to the health insurance. I don't I am not involved in the conversations around the budget position. Are you not funding them? We are funded by them. Did you, did you take, did you take money out of the, of the $660. For the 400 employees that we're paying and in my opinion, it's pure fraud. And I know that offends some in here. My name some may even feel threatened, but I'm telling you, it's fraud. And if you had an employee that you caught paying an employee that didn't exist you'd have them prosecuted, right? Is that right? I'm not in a position to to make that decision. Well, who would? The governor. I, I'm not sure who would you not make a recommendation to the secretary. Of when it comes to funding, when it comes to funding employee benefits and, and that, this has been a long-standing funding stream mechanism and was decided by the legislature a long time ago. I was tasked a couple of months ago, I guess you can put it off on us because we've failed to recognize it. We have not been truthful and transparent with the taxpayers of this state to exactly what the real cost of health insurance. is Is that not true? Do we have a number anywhere. There is a number that's just for employees who are paid by the state and receive the $660 you're talking about. I don't have that available with me. I can get it. I, I just, I don't have it right now. But have we told the public? That this includes 400 employees. They are not nonexistent. I, I, I've not, I, I, OK. Thank you, Mr. Chairman. My points made. Thank you, Representative. Any other questions from the committee? Saying that. Thank you, Mr. Wallace. Committee, I'm instructed that we need a motion for favorable advice. Do I hear such a motion being met. Yes, sir. Well, I'm, I'm hoping for a motion on this one. Well, let's get through this first, OK? my Right OK, we have a motion for favorable advice on item D. Is there a second? 2nd, all in favor. And he opposed. Motion carriers, thank you. OK, we're gonna back up the item C now. Senator Hickey. You know My only thing with Adam C is, is I agree with what your comment was if, if there's not a motion. However, I think, I think the importance is, is that this body is just given the opportunity to make a motion if they need to. OK, but we didn't have a motion, but I will ask now for a motion. All these hearings. With no discussion, we just want to hear it and not make any motions or decisions or a vote. With, with, with, with us hearing this, it just goes on to rules rules will actually be the one that does the vote on it. We have to review it. So do we give a positive review or a negative review or just say that we're reviewing it? We're just saying we're reviewing it like it was gonna be if you make a motion, it can be whatever, whatever way you want it to be. I'd like to hear a discussion from the body from just this group to see what their thoughts are. I don't want to just slide it by and say, yeah, we said that, see you, um, if that's what the body wants, I guess that's fine. Representing Maddox. Well, just for clarification and staff can correct me if I'm wrong, I certainly can be. My understanding is, no matter what we do, it's gonna be on rules Thursday. We can vote on it. We don't have to, but we have performed our statutory obligation by what we've just done. So, but we'll defer to the body, but that we've performed our obligation as you. It just sped by so fast I wasn't sure what what that was all Marty or someone wants to correct me, I, I believe that's correct though. Well That is, that is correct. I think she's affirming that we're good. Yeah, she's affirming, we are correct. Central Hickey, do you have anything else? No, but I'm, I'm gonna be very clear here as far as, as far as everything that we've done, I think, I think that we at least have to slow down for this body to have the opportunity to make a motion. I don't have a motion, but if somebody else here wants to make one, I just think that they, they needed, they needed to be a for this to be correct. I think they needed to be afforded the opportunity to make that motion. And then if they didn't, then of course it would still be reviewed, but that was, that was the part that I was struggling with. Again. I don't have a motion here, but if somebody else was, I think that they, they needed that opportunity. Thank you for that, and that's not. Say what I did back to you a while ago whenever you stopped me the first time. Yes, sir. Thank you, Mr. Chair. There was any lunch? I'm fine. I just want to make sure we're clear on what we're doing. Thank you. So we all get along? Everyone's good, so we're gonna move on to Adam E. Public Service commission. Oh, sorry, Senator Irving. Right, I mean, I just think for point of discussion back on item C, there was a lot of back and forth. I, I don't. I think we've met our statutory obligation to review. However, no, I think it's important that no no motion to review or recommend what's made. And I think that needs to be clearly stated in the chairman's, um, report. I agree with you. OK PSA. Miss Danny, please introduce yourself for the record. Thank y'all for staying with us all day. Thank you for having us. Uh, Danny Hofer, chief of staff. Dole Webb, chairman of the Public Service Commission, and I have an opinion on the PBMs. No, I'm just kidding. Please go ahead. Thank you, Mr. Chair. Uh, good evening, chairs committee. We're grateful to be here today with this opportunity to present the APSC's pipeline investigative report to this committee. We took a multifaceted approach, uh, to reviewing and ultimately preparing the report now in front of you all, um, including meetings with the APSC's pipeline Safety Office review of that office's processes and procedures, review of inspection reports, uh, of our pipeline safety off it or from our pipeline safety office. Annual ratings of our pipeline safety office given by the US pipeline and hazardous Materials Safety Administration. Review of filings by Summit and other parties as part of their rape case review of filings by Summit and other parties in the sale and acquisition case and other materials available to the APSC. Following that review, 5 findings were made. The APSC does not find deficiencies in its pipeline safety offices oversight of Center Point, Arkansas and Summit, and instead finds that the pipeline safety office has gone above and beyond in its charge to regulate the safety of gas pipelines in Arkansas. Number 2 The IPSC has not found evidence, neither in its dockets nor in other readily available information that Center Point, Arkansas was noncompliant in its maintenance of its pipeline infrastructure. Number 3, the APSC has not found evidence, neither in its dockets nor in other readily available information that Summit has been. And or is noncompliant in its maintenance of its pipeline infrastructure. Number 4, the APSC has not found evidence, neither in its dockets nor in other readily available information that Summer summit overinvested in its pipeline infrastructure. And number 5, the APAC has determined that whether or not Summit overpaid for the assets purchased from Center Point, Arkansas, that summit shall not be able to recover any goodwill in excess of book value from Arkansas ratepayers. And we stand, um, open to any kind of questions that you guys might have for us. Representative Eubanks. Thank you, Mr. Chair. Uh, I'm trying to remember back to the The last meeting that Precipitated some of this. Study, but I'm trying to remember, I thought that Summit had stated that, you know, they found that the condition of the infrastructure was such that they had to make Uh, such a large investment in, in that. So I guess I'm If they made that statement. I'm a little confused with the answers to these questions here, uh, because I believe also in that meeting, uh, it was stated that, uh, Public Service Commission has a responsibility to, uh, for the pipeline safety so that The inspections should have shown whether or not The infrastructure was deficient in any way, so. There again, I'm, I, I guess I'm a little confused that, uh, you know, you, your study has shown this, but they've made that state, they made the statement. If I recall correctly, and, uh, And now we're trying to collect some of that on the backs of the right pairs was what it appeared to me. So I don't recall that Summit was actually in attendance or testified at that meeting. I do recall that there were, um, a number of members who reference conversations they had. And you're, I think you might be correct there because I was in a meeting with the, the summit CEO, uh, the, Day prior to, so I, I stand corrected on that. No, um, I, I wanted to make sure that, that I was tracking correctly. Um. What I can offer to you in terms of our investigation into this. Summit did not stay anywhere in testimony. For their rape case that, um, There was anything beyond normal, uh, Wear and tear, the normal business, uh, you know, expectations of needing to update pipeline and other infrastructure that was out of the ordinary, um, and our pipeline safety office, uh, provided a lot of extensive Uh, inspection records, uh, I did not include those in the report because truthfully, I did not want this report to be burdensome, but I am certainly willing to provide anything you'd like to see, but going back, um, the last 5 years of Centerpoint ownership and all of, uh, summit's ownership up to this point. Uh, there's been a lot of inspections done. I can actually pull a number for you in terms of that. And our pipeline safety office did not find. That there was, I don't need to hear that, but Follow up, Mr. Chair. Uh, I guess. If I remember correctly, they said they were going to invest $500 million. Is that the right number that summit stated that they were going, they needed to invest in Arkansas infrastructure, and I, I guess my question is, whatever that amount was, it seems exorbitant and if that wasn't absolutely needed to, for pipeline safety or make the infrastructure safe. I don't know how you justify the rate increase. I'm flipping through our report right now to find um specific numbers. I believe it was that the number was actually in the the 300 million, um, but I can tell you in terms of our review. We didn't find anything outside of the course of normal business operations, things that would be prudently replaced or repaired. But we also didn't find, so, so we didn't find anything that was, um, exceptionally non-compliant, unsafe, something that should have been caught and replaced previously. Uh, but we also didn't find records or inspections or suggestions that, um, That there was imprudent overspending. In fact, I, I do have, let's see if I can pull a number here, um. I do have a another question though when you, the, uh, now the rate increase just applies to the transmission portion of the bills that the uh Our, our constituents will receive. Is that correct? It's because There, there's different Items broken out on, on, on the bill, the cost of the gas and etc. etc. etc. So the rate increases for the transmission portion of of. I didn't mean to cut you off. I thought you were numb of the bill, um, so what it, it, it, it applies to the base rates is what it applies to. Um Explain that. So your base rates are going to be, um, Sorry, I'm trying to think of an explanation for your base rates or something that's not flowed through a writer, which isn't include the cost of the gas. That's a separate the cost of the gas. You're absolutely correct. So the rate increase isn't on everything that's listed on, on, on the statement. That is correct. And like I stated in that other, uh, the last meeting, this is gonna put a pretty good hardship on a lot of, uh, particularly poultry growers in the state of Arkansas, anybody that's hooked The. Increase Mr. Representative, I'd like to say that. And you know this just because someone says they're going to spend a certain amount of money doesn't mean that they spend that, and it's our responsibility to check to see what they spend, and if it was reasonable and prudent in the delivery of gas in the state of Arkansas, but you have proved a rate increase of what, 24%? 24%, but you have to, and I know you realize this, we have 4 parties contesting the right increase, all of those, those four parties. Uh, entered into a settlement which If we don't have an advocate for a different amount, it, as a judicial body, we can't find something when we don't have the evidence so that we did the thing, the what the main thing that we could do is to reduce the impact of that increase. Until the full impact until the spring months so that the full impact will not help, not happen in these winter months. Anything else from you, Representative? You know Seeing no one else in the queue. Thank you. Thank you. Thank you. We are adjourned.