Arkansas committee reviews emergency PBM rule, adopts study on local pharmacy ownership

The Joint Senate Insurance & Commerce Committee on the floor reviewed emergency amendments to Rule 118, the Arkansas Insurance Department rule that governs pharmacy benefit managers (PBMs), and voted to enter three interim study proposals (ISPs) into the record, including a study requested by Rep. Jim Wooten on pharmacy ownership and local participation.

Booth Ran of the Arkansas Insurance Department told the committee the rulemaking implements statutory changes that extend the PBM licensure act to self-funded employer plans following the U.S. Supreme Court decision in Rutledge v. PCMA. Ran said the emergency filing also incorporates the Pharmacy Audit Bill of Rights and departmental bulletins on appeals, complaints, invoicing and PBM "seasoning" practices into Rule 118. "We filed this rule last week with the executive subcommittee on an emergency basis," Ran said, adding the department will also file it as a permanent rule and hold a public hearing in July.

Why it matters: The amendments expand regulatory oversight over PBM activities beyond insurer-related plans to some self-funded plans and formalize protections for pharmacies facing PBM audits. Committee members pressed department staff on enforcement and public notice procedures.

Committee members asked several operational and legal questions. Representative Jim Wooten asked whether the department has been proactive in enforcement; Ran said the department has taken recent enforcement actions, citing fines against PBMs including ESI and Optum for amounts he described as "$50,000" and said additional enforcement matters are underway. Senator Irvin pressed whether the department expects PBMs to challenge application of provisions other than maximum allowable cost reimbursement; Ran cautioned Rutledge addressed only the maximum-allowable-cost issue and said PBMs may argue other provisions were not within the Supreme Court’s holding.

Members also raised public-notice concerns for rural pharmacies. Ran said the department posts proposed rules on its website, runs legal notice in the Arkansas Democrat-Gazette and provides a web link for public comment; he said the public hearing is scheduled for July 19 and the public comment window opens "beginning tomorrow" and closes in late July (transcript contains inconsistent dates for the exact closing day).

Votes and procedural actions: The committee approved the meeting minutes (Sept. 21, 2021) by voice vote and adopted two ISPs filed by Sen. Leding and an ISP referred by the Arkansas Legislative Council (Rep. Johnson) by voice votes to enter each into the record for study. Rep. Wooten made a motion to adopt his ISP on pharmacy ownership and local participation; Rep. Brown seconded and the committee adopted that ISP by voice vote. The committee took no final regulatory action today—the rule remains under review and will proceed through notice and permanent-rule procedures.

Representative Wooten described his requested study as modeling Arkansas options on laws similar to North Dakota’s ownership requirements and an Ohio study. He told the committee that chain pharmacies are consolidating and that local pharmacies face disruptive audits, citing an example in which an Arkansas pharmacy was fined several thousand dollars after an audit later ruled illegal: "He appealed this to the insurance department and sure enough, they ruled that it was an illegal audit," Wooten said, urging study of ownership, licensing and protections for locally owned pharmacies.

Next steps: The department will complete its emergency rulemaking procedures and post the proposed permanent rule for public comment and a July public hearing; ISPs adopted by the committee will proceed as studies. The chair said the committee expects further joint meetings in coming months and asked the department to prepare reports on uninsured/underinsured motorist claims and construction-cost estimate issues for future consideration.