Committee advances PBM bill defining dispensing fee and sparking debate over enforcement costs

Representative DeWitt presented House Bill 1236, saying the measure strengthens the appeals process for pharmacies and establishes a professional dispensing fee tied to the Louisiana Medicaid rate (stated in committee as $11.81). He said that if a pharmacy is reimbursed below its cost it "wins the appeal" and the PBM "must make the pharmacy whole." The sponsor said the bill builds on last year’s Act 474 and clarifies the dispensing fee rather than creating a new enforcement division.

Alan Boxberger of the Legislative Fiscal Office testified that the Louisiana Department of Insurance (LDI) told fiscal staff it believes it has authority under Act 474 to levy fees on pharmacy benefit managers to fund enforcement work, but that LDI currently lacks staff expertise and may need to add positions. Boxberger said the department could assess fees once it promulgates rules but noted a timing issue that could mean an initial appropriation or delayed implementation would be required.

Franco Pelka of the Department of Insurance told the committee existing provisions prohibit PBMs or plans from forcing pharmacists or patients to absorb the fee and said, however, that applying the bill’s language to plans could effectively bake the cost into administrative fees and, ultimately, premiums: "it would ultimately effectively be baked in, just not directly."

Independent pharmacy representatives supported the bill as a way to protect local pharmacies from being steered away from community providers. Matthew Cross of the Louisiana Independent Pharmacies Association said the measure prevents PBMs from passing the dispensing fee "on to the plan member or patient or their plan member or pharmacy or pharmacist" and emphasized the bill makes independent pharmacies whole for previously missed payments.

Phil Cristianelli of the Pharmaceutical Care Management Association, speaking for PBMs, urged the committee to remove a provision that would require PBMs to pay dispensing fees directly. He warned that mandating PBMs to carry that cost could be disruptive: "No other state in the country does this," he said, and argued forcing PBMs to pay would likely raise the total cost of administering benefits and could be passed back indirectly to plan sponsors or consumers.

Senator Cloud and other members expressed concern about independence and market harms to community pharmacies and cited examples of patients being steered to chain pharmacies. Committee members discussed amendment options to delay implementation or add statutory language clarifying fee-assessment authority so LDI could promulgate rules and begin fee collection without an up-front general fund hit.

After discussion of timing fixes (delayed implementation to a later date or explicit fee-authorization cross-references), Senator Stein moved to report the bill favorable and the committee voted to report HB 1236 favorable.

Next steps: HB 1236 was reported favorable by the Senate Finance Committee and will move to the next stage of the legislative process.