Devon Herrick

As drug coverage has become more common, special interests (mainly pharmacy trade groups) are pressuring lawmakers to impose self-serving regulations on health insurance drug plans.

Under the guise of protecting consumers, proposals in more than half a dozen states would likely benefit local drugstores at the expense of consumers. For instance, health plan members are often rewarded with lower cost-sharing if they use mail-order pharmacies for regular medications. Yet, proposals in Hawaii, Indiana, Kansas, New Hampshire, New Jersey, New York, Oregon, South Carolina and Texas could make it more difficult to offer you big discounts for ordering prescriptions from the drug plan’s mail order pharmacy – or even punish you if you don’t.

One industry insider compared this to your local book store lobbying the state legislature to make it illegal for you to buy a book cheaper on Amazon than at your local bookstore.

Another pharmacy trade association initiative urges lawmakers to move regulation of drug plans from the state insurance commissioners to the state boards of pharmacy. These pharmacy boards are staffed to a considerable degree by pharmacists and identify more closely with pharmacy interests. This is like letting the fox guard the henhouse. When Mississippi transferred regulatory authority over drug plans from the state’s insurance commissioner to the Board of Pharmacy in 2011, the Federal Trade Commission warned state lawmakers that doing so could undermine drug plans’ ability to negotiate lower prices with pharmacy networks (that was probably supporters’ intent). Although a similar initiative failed in Oregon in 2012, the issue is back again this year. Hawaii and Oklahoma are also considering this.

Insurers and drug plans need some way to ensure that the prescriptions they reimburse drug stores for are legitimate charges. Hawaii, Oregon and Texas are debating making it harder for drug plans to audit the drugstores that that bill them. Imagine being forced to pay credit card bills without the ability to easily verify whether the charges are actually for purchases you’ve made.


Devon Herrick

Devon Herrick is a health economist and a senior fellow at the National Center for Policy Analysis (NPCA).