(The Center Square) – A bill requiring pharmacies to divest their pharmacy benefit managers could cost Tennessee’s TennCare, the state’s Medicaid program, and state employee insurance programs, but the impact is hard to predict, the Senate Finance, Ways and Means Committee was told Tuesday.
The number could reach as high as $24 million to the state, largely due to specialty drug costs. Specialty pharmacies affected by the bill can acquire the medications at 16% less, said TennCare director Stephen Smith. Dispensing fees for lower-volume pharmacies are higher than those for higher-volume pharmacies.
State and local government insurance plans administered by the state could see an overall cost of $29.1 million, with $14.5 million impacting the state and $10.1 million impacting local agencies’ share, said Jim Bryson, Tennessee Commissioner of Finance and Administration.
Bojan Savic, executive director of the Tennessee Fiscal Review Committee, said there is a disagreement about the cost.
“I would say the main reason for the disagreement is behind the assumption that pharmacies will close,” Savic said. “The assumption in the fiscal note is that those pharmacies have options to restructure, divest and that they can remain in operation, at least for the most part.”
Determining the bill’s impact is challenging because it would depend on business decisions, Savic said. And low-volume pharmacies could become high-volume pharmacies if others close, he said.
No matter how many pharmacies close, the state will likely be impacted.
“Even if we are off, let’s say our estimates are off 50%,” Smith said. “That’s still significant money, and yet, we’re not going to receive any dollars in the budget. We’re going to pay for it regardless.”
CVS Health, owner of CVS Pharmacy and pharmacy benefit manager CVS Caremark, said the bill could force the company to close 134 stores. The company has launched an advertising campaign opposed to the bill. The Pharmaceutical Care Management Association, representing pharmacy benefits managers, called the bill “dangerous.”
“Research in fact shows it will significantly increase drug costs and increase hospitalizations,” spokesman Greg Lopes said in a statement to The Center Square. “The bill does not improve access to prescription benefits, nor does it provide any safeguards for patients who would lose access to their drugs as a result of the legislation causing mass pharmacy closures. By shutting down pharmacies, the bill would create barriers to access, raise drug costs and make people sicker.”
The Tennessee Pharmaceutical Association is supporting the bill.
“Since 2017, big PBM mergers like CVS-Aetna-Caremark and Cigna-Express Scripts have tightened control over drug pricing and access,” The Tennessee Pharmacy Association said in a social media post. “Tennessee has lost 598 pharmacies, an estimated one‑third of all community pharmacies in the state.”
The bill received recommendations from three House and one Senate committee with bipartisan support. The Senate Finance, Ways and Means Committee did not vote on the bill on Tuesday but placed it on its calendar for March 24. The House version of the bill is in a Finance, Ways and Means subcommittee.
