JOHNSON CITY, Tenn. — A Tennessee bill to prohibit pharmacy benefit managers from owning pharmacies passed a House subcommittee Wednesday. It’s sponsored in the Senate by Bobby Harshbarger of Kingsport.
READ THE BILL | HB1959/SB2040 FAIR Rx Act
CVS is intensifying its opposition against the bill, which would prohibit the company from owning both its pharmacies and Caremark, a pharmacy benefits manager. The company issued new TV ads and posted signs in local pharmacies.
“It would essentially close every CVS, every Minute Clinic. We have distribution centers and a lot of people who work throughout the state, and all of those people would be without a job,” said Nikki Starnes, district leader for CVS Pharmacy.
News 5’s Caleb Perhne asked, “Why is the solution to close the pharmacy rather than separate the two?”
Starnes replied, “The penalty of the bill is to revoke the license. That’s the only penalty that’s in there is to pull the license away from the facilities, which includes our mail order and our specialty. What it doesn’t address is any of the PBM concerns you’ve heard from some of the other business leaders.”
The concerns highlighted at a hearing in Nashville included a state audit that found Caremark reimbursed CVS’s own pharmacies at a rate as much as 16,000 percent higher than competitors and that a third of Tennessee pharmacies have closed in the last decade.
“PBM practices, whether it’s steering patients to their own affiliated pharmacies, restrictive formularies, punitive audits, have really limited competition, confused patients,” said Anthony Pudlo, CEO of the Tennessee Pharmacists Association.
Meanwhile, a CVS patient said she feared what would happen if she had to switch providers.
“They do not have the expertise that specialty pharmacy can offer to my mom, which would negatively impact her care,” Natalie Elliot Handy said of her local independent pharmacy.
Rep. Sabi “Doc” Kumar asked speakers at the hearing, “Do you have a solution?”
“There are other regulations that we see in other states around Any Willing Provider Networks, around anti-steering to owned pharmacies and those types of things that can accomplish the same goal and not just shut down a business,” said Ben Heiser, CEO of Lumicera Health Services, a specialty pharmacy owned by the PBM Navitus.
While CVS is the most well-known PBM/pharmacy combo, they aren’t alone. The parent company of Express Scripts said on its website that the bill would end its home delivery service.
The companies issued the same warning about a similar bill in Arkansas, but a federal judge granted a preliminary injunction, citing discrimination against out of state businesses and federal pharmacy contracts for veterans.
The bill now heads to the House Insurance Committee.
Following the interview with Starnes, a spokesperson for CVS Health issued this statement to News 5 in response to the question about why separating CVS’s pharmacies and Caremark isn’t an option:
“CVS Caremark serves employers and unions across the country, providing prescription drug coverage for 87 million patients in all 50 states. No matter where they call home or where their travels take them, these patients should be able to access the health care they need. Caremark currently contracts with both independent and chain pharmacies across every state, ensuring its members have convenient access to pharmacies in all 50 states.”