COLUMBUS, Ohio — With health care costs rising, Ohio lawmakers are considering a bipartisan bill that would require pharmacy benefit managers and insurers to pass prescription drug rebates directly to patients instead of keeping the savings.
House Bill 448, co-sponsored by Republican Rep. Tim Barhorst of Fort Loramie and Democratic Rep. Rachel Baker of Cincinnati, would mandate that rebates negotiated between pharmaceutical manufacturers and pharmacy benefit managers be applied to out-of-pocket costs for patients who are in the deductible or coinsurance phases of their health insurance coverage.
Pharmacy benefit managers — third-party companies that manage prescription drug benefits for health insurers, large employers and government programs — negotiate with drugmakers to secure lower prices in exchange for placing medications on their formularies. Those savings were intended to help reduce premiums, but patients who are still dealing with their deductibles often pay full price for medications despite those negotiated rates.
Barhorst explained in sponsor testimony before the House Insurance Committee in November that the current system has become “a funnel for profit at the expense of our constituents.”
“In most cases, PBMs and insurers are pocketing the savings they receive from the rebates that they themselves negotiate, while patients who are in their deductible phase or face coinsurance payment mandates do not get the benefit of these negotiated rates,” Barhorst said.
Baker, who also has a nursing background, shared a personal experience from her medical career during her testimony to illustrate the consequences of high drug costs. She described caring for a young patient with Type 1 diabetes whose family rationed insulin doses because they couldn’t afford the out-of-pocket costs. This often resulted in the patient getting sick and ending up in the hospital, which was much more expensive than a vial of insulin would have been.
“Not having the money up front to pay for inflated drug costs is a reality for many Ohioans,” Baker said.
“By passing on the negotiated medication savings to patients, more patients will be able to take their prescribed medications, resulting in better-managed chronic diseases, shorter durations of acute illnesses and avoidance of more costly complications like emergency room visits, urgent care visits and hospitalizations.”
The sponsors noted that several states have either enacted or are considering similar legislation. West Virginia and Arkansas have enacted legislation. Bills have also been passed in Indiana and New Mexico. Twenty other states have introduced similar legislation, including surrounding states Kentucky, Tennessee, Michigan, Illinois and Virginia, Baker said.
Opponents of the legislation, including PBMs and insurers, are expected to argue that the bill could increase premiums, Barhorst told the committee. But in states that have adopted similar policies — Arkansas and West Virginia — premiums have not increased beyond national trends, he said.
The proposal is pending in the House Insurance Committee and could receive further hearings once the General Assembly reconvenes in the new year.