Bipartisan Lawmakers Introduce Save Local Pharmacies Act

A bipartisan group of lawmakers helmed by Sen. Aaron Rouse, D-Virginia Beach and Del. Katrina Callsen, D-Charlottesville, introduced the Save Local Pharmacies Act, which lawmakers will take up in this year’s legislative session, starting Wednesday.

Elkton Family Pharmacy, located about 30 minutes east of Harrisonburg, Va. The independent establishment is owned and operated by longtime pharmacist John Seymour. (Courtesy of John Seymour)

The proposal would realign Virginia’s Medicaid pharmacy benefit under a single state-contracted pharmacy benefits manager.

“Independent pharmacies are in an existential crisis,” said Blacksburg-area pharmacist Jeremy Counts when he called into a rural healthcare committee meeting last summer.

He highlighted how locally and independently-owned pharmacies tend to serve the rural areas of Virginia that national chains sometimes won’t. But low reimbursement rates make staying afloat difficult.

It’s something Sen. Travis Hackworth, R-Tazewell knows all too well as a former pharmacy owner.

“I know what it’s like to spend $10 to make $5 dollars back from Medicaid,” Hackworth said. He is part of the group of lawmakers who introduced the legislation, dubbed SB 875.

PBMs are middlemen that negotiate contracts between health plans, drug manufacturers and pharmacies. While PBMs retain rebates and discounts set in their contracts, the exact amount of savings passed onto consumers has been relatively unknown.

This means that sometimes pharmacies are reimbursed for less than what they pay for medications due to the lack of transparency from PBMs and manufacturers.

SB 875 would remove multiple health-insurance-plan-run PBMs, which lawmakers argue would bolster accountability and cost-effective management.

If it becomes law, the Department of Medical Assistance Services would be directed to assess actual drug pricing, rebates and administrative costs for analysis. This would allow the state to have oversight for cost efficiency. The new PBM would be tasked with protecting pharmacy access for residents in underserved areas.

Rouse noted how local pharmacies have been closing around Virginia, part of widening healthcare “deserts.”

“We need to cut the health insurance industry PBMs out of the equation to protect patients and pharmacists,” he said.

Sean Stephenson, Senior Director of State Affairs at the Washington, D.C.-based Pharmaceutical Care Management Association, said the association is “reviewing the legislation.”

“However, PBMs have a proven track record of lowering Rx costs in Virginia. PBMs will save Virginians $26.3 Billion over ten years across all insurance markets,” Stephenson said in an emailed statement.

A previous attempt to reduce PBMs in Virginia failed to clear budget negotiations last year despite bipartisan support from lawmakers.

Still, lawmakers are optimistic this year given successes in other states that have seen increased savings. Kentucky reported saving about $56.6 million in state money in one year after the passage of a similar law in 2021. West Virginia also saw $54.4 million in savings after establishing a sole PBM in 2017.

This Save Local Pharmacies Act is projected to be able to save Virginia about $39 million annually.

In addition to Rouse, Hackworth and Callsen, other bill sponsors include Sen. Russet Perry, D-Loudoun and Del. Terry Kilgore, R-Wise — stretching sponsorship and representation to all corners of Virginia. Their bill joins a slate of other health care-related bills that will be debated this session with a focus on rural health care access.

“The problem of ‘pharmacy deserts’ is not just a local health care issue but is a potentially rapidly evolving public health crisis,” Kilgore said.

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