President Joe Biden’s administration invited Gov. Andy Beshear to highlight the way Kentucky officials took bipartisan action to change how pharmacy benefit managers, or PBMs, operate in their state.
PBMs help manage prescription drug benefit plans, like the ones patients get through health insurance. These companies work out pricing deals with the manufacturers that make the medications and with the pharmacies that dispense the meds to patients.
Beshear was part of a White House roundtable discussion Monday afternoon in Washington, D.C., where speakers promoted potential reforms, including requiring transparency for certain PBM fees.
“The work on lowering health care costs for Americans is just getting started,” national economic advisor Lael Brainard said as the event began. “We see opportunities to unlock significant savings by increasing competition all along the pharmaceutical supply chain.”
Beshear spoke about how he began investigating PBMs’ drug-pricing methods when he was Kentucky’s attorney general. He made that move after another state agency raised concerns in a 2019 report about how PBMs charged the state Medicaid program for patient prescriptions.
“We cannot allow something that prioritizes profits over our people continue in the way that it has. So when I became governor, I tried to do more,” Beshear said Monday.
Kentucky’s government works with managed care organizations to provide Medicaid coverage. Beshear said those organizations, in turn, each subcontracted with different PBMs — a complicated arrangement for the state’s Medicaid program.
That changed after Kentucky’s Republican-run Legislature passed legislation in 2020 that significantly altered state policy on PBMs. Among other things, the law ended the subcontracting arrangement and instead had Kentucky’s Medicaid program forge its own contract with just one PBM.
“That single PBM that answered to us, and not to any other company, has allowed Kentucky Medicaid to maximize drug rebates and [has] saved our Kentucky families about $300 million since we've done it,” Beshear said Monday. “And it allowed us to understand more about how to get the right price.”
The 2020 legislation passed the state Legislature with broad bipartisan support, and Beshear signed it into law.
“I'm proud to say that these changes have made Kentucky a leader in health care for the United States,” he continued. “But the most important thing is it's made it more affordable and more accessible for our people.”
The Pharmaceutical Care Management Association, which represents PBMs across America, preemptively criticized the White House event Beshear joined Monday and said it only featured “people and groups with vocal anti-PBM agendas.”
“Rather than take the bait from Big Pharma and those with self-serving agendas, policymakers should hear directly from the PBMs who are actually negotiating against Big Pharma to lower drug costs,” the association said in a statement.
