Amendments Establishing Single Virginia Medicaid Pharmacy Benefits Manager Die in Conference

A pair of Virginia budget amendments that would have required the state to contract with a sole prescription management vendor to administer the commonwealth’s Medicaid prescription drug benefits died in conference last month. Some independent pharmacists said the conferees’ decision cost Virginia the chance to save over $30 million in the state budget, and the opportunity to increase prescription drug transparency and affordability for Medicaid enrollees.

Working as a pharmacist for over 30 years, Chesterfield resident Cindy Warriner said she’s been on the forefront of the prescription drug affordability and transparency crisis throughout her career. Not only has she found herself comforting patients because they can’t afford their medication, she said “unfair,” “non sustainable” and “forced” contracts negotiated by prescription management vendors — known as pharmacy benefit managers — mean many independent pharmacies also can’t afford to stay open.

Va. pharmacies say low reimbursement rates keep them struggling to stay afloat

Now a senior consultant for the Community Pharmacy Enhanced Services Network, a group of small and independent pharmacies, Warriner worked with pharmacy lobbyists to introduce a pair of budget amendments intended to help alleviate the problem.

Warriner said it was “extremely disappointing that the legislature didn’t prioritize access to medications for the most underserved population with a simple budget fix,” adding that doing so would have provided more transparency about how the state spends tax dollars that pay for Medicaid-covered medicines.

Amendments from Del. Mark Sickles, D-Fairfax, and Sen. Hackworth, R-Tazwell, informed by Warriner and other pharmacists’ expertise, would have required the Department of Medical Assistance Services to contract with a single prescription benefits manager to administer the state’s Medicaid prescription drug benefit.

Pharmacy benefits managers — the majority of whom are controlled by three companies — are the middlemen who negotiate contracts between health plans, drug manufacturers and pharmacies. While PBMs retain rebates and discounts set in their contracts, the exact dollar amount of savings passed on to consumers remains relatively unknown.

“If the state agency contracted with the PBM, there would be full transparency because then the agency would have the information and it would be public information,” Warriner said. “As it stands now, we don’t know where that money goes,” because state health plans contract privately with PBMs.

Sickles’ amendment stated that the Commonwealth would save $26 million by switching to a sole PBM. A 2019 General Assembly-directed study estimated that dollar figure to be at least $32 million.

Other states with laws similar to the amendment have seen increased savings. Kentucky passed a similar law in 2021 that saved about $56.6 million in state money in one year, according to the Kentucky Lantern. West Virginia also saw $54.4 million in savings after establishing a sole PBM in July 2017. Kentucky and West Virginia also pay pharmacies a standard dispensing fee of about $10 for each medication they fill, resulting in millions paid to pharmacies — a lifeline for those facing closure.

While Warriner said the Virginia amendment would have not guaranteed higher dispensing fees for pharmacies, which can be as low as $0, she hoped the additional transparency would have encouraged DMAS to raise them.

Warriner also said pharmacies are often reimbursed less than what they pay for medications due to a lack of transparency from drug manufacturers and PBMs, which is why having a standard dispensing fee that allows pharmacies to “break even” is so important.

Hackworth said independent pharmacies — especially in rural areas like the one he used to own in Southwest Virginia before it closed because he couldn’t afford to take any more losses— are under attack because of low reimbursement rates.

“There are more Medicaid payers than there are private payers, and so when the PBMs get in there… it’s the only business I’ve ever had that literally we would have customers walk in and I’d lose $5 on you, maybe $5 on this one and make $20 here and I lose $20 here; it’s crazy,” he said. “It was all the same dosages and medications.”

Gov. Glenn Youngkin will determine whether or not he will add the amendments back into the state budget when the General Assembly reconvenes April 17.

by Meghan McIntyre, Virginia Mercury

Virginia Mercury is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: info@virginiamercury.com. Follow Virginia Mercury on Facebook and Twitter.