THE FACTS ABOUT HB238

This bill mandates a new government-imposed fee of $10.64 on every prescription

filled for those with private health insurance.

Further, the bill absolutely requires that this new cost be passed through by the
Pharmacy Benefits Managers (PBMs) to the consumer and the health plan. As a
result, this legislation imposes an increased cost for prescription drugs that must be
paid by your constituents and the employers across the state.

Any statements by the Alabama Pharmacy Association and its members that this bill
does not mandate increased costs for the consumer are simply not consistent with the
bill that they drafted, they asked to be filed and they are promoting.

The Bill Requires that a New Government-Imposed $10.64 Fee

be Passed Through to the Consumer

HB238 places a new $10.64 dispensing fee on each prescription. This new cost is
not estimated or speculative. It is stated directly in the legislation on page 18, line
485.

That section prohibits a PBM from “reimbursing an in-network pharmacy for a

prescription drug in an amount that is less than or exceeds the actual acquisition
cost to the pharmacy for the prescription drug plus a professional dispensing
fee that is equal to the professional dispensing fee paid by the state under
Title XIX of the Social Security Act.” Page 18, Line 485
 Next, the bill requires this new cost to be passed through to the employer health plan.
It specifically prohibits a PBM from “charging a health benefit plan a contracted price
for prescription drugs that differs from the amount the pharmacy benefits manager
pays the pharmacy for the prescription drug.” Page 8, Line 199; Page 18, Line 49.

In other words, the PBM must charge the employer the exact same amount that the
bill requires the PBM to pay the pharmacy. This means that the legislation requires its
new government-mandated costs be passed through to the employers and employees
who pay the premiums.

FACT: HB238 requires a new government-imposed fee of $10.64 and requires that
fee to be passed through to your constituents either at the counter or in their
premiums.

The Bill Requires Advanced Notice of Fraud, Waste and Abuse Investigations
Allowing Bad Actors to Conceal Their Crimes

HB238 requires that a pharmacy be given advanced notice of an audit in any

instances of suspected fraud, waste, or abuse. Page 20, Line 546.

That section prohibits a PBM from “[i] Initiat[ing] a fraud, waste, or abuse investigation
without first notifying the pharmacist or pharmacy . . .”

Alabama is still dealing with the devastating impacts of the opioid crisis - caused by
the same pharmaceutical manufacturers who set the prices of prescription drugs and
relentlessly pushed those drugs to an unsuspecting public.

Unfortunately, HB238 would - perhaps inadvertently - create a safe-haven for the pill-
mills and bad actors that are still out there - putting more Alabamians at risk.

FACT: HB238 will make it harder for law enforcement to crack down on the few - but
very relevant - bad actors who are poisoning our communities with addictive drugs.
 This Bill will Increase Litigation Costs by Deleting a 2021 Negotiated Provision that
ERISA Plans are not Covered by Parts of this Legislation

Typically, large self-funded plans are exempted from State regulation under ERISA.

Several years ago, the Supreme Court threw this issue into chaos with its decision in
the Rutledge case. That decision has resulted in conflicting decisions from Circuit
Courts.

In 2021, when the Legislature last addressed legislation brought by pharmacists, LSA
reviewed the Rutledge decision and made a determination as to which portions of the
passed bill were preempted by ERISA, thus saving employers from having to litigate
that issue.

This bill, however, deletes that language, which would require employers to go to court
and expend significant resources to receive a decision that was already reached by the
legal experts upon which the Legislature relies every single day. Page 14, Line 371.

Requiring employers to go to Court to prove they should get something they clearly are
entitled to adds even more costs to an already costly bill.

FACT: ERISA preemption is an issue the legislature dealt with and resolved in 2021
and it should not reverse course and impose new costs for employers to obtain the
protections they are entitled to.

This Legislation Is Government Price Fixing that

Guarantees One Class of Businesses a Profit

The notion that the Alabama Legislature would consider setting the price of anything in
order to guarantee one particular type of business a significant profit is hard to fathom. But
that is exactly what HB238 would do.
 Under this legislation pharmacists would be guaranteed a profit on every single sale
they make - regardless of how well they managed their business or how hard they
negotiated the purchase price of their merchandise.

Because they are guaranteed their acquisition costs PLUS a $10.64 dispensing fee
they have no incentive to negotiate a lower acquisition cost from their wholesaler. Page
3, Line 78; Page 18, Line 488.

When you to this the fact that the main representative of independent pharmacists in
Alabama is APCI - which helped write this bill AND has an exclusive wholesaler
relationship with McKesson, the largest pharmaceutical wholesaler in the U.S. - the fix
quite clearly seems to be in.

McKesson can charge its exclusive pharmacies whatever it wants, and those
pharmacies are guaranteed to be reimbursed that their cost PLUS $10.64 for each
prescription. Everyone wins - the pharmaceutical manufacturers, the wholesaler, APCI
and the pharmacies. Everyone except the health plans and the consumers.

McKesson and the pharmacies are assured their profits. The consumers are assured
more costs for their healthcare.

FACT: HB238 takes an unthinkable leap in public policy by using the state
government to set prices in the private market. Such an unprecedented step should
be rejected.

FACT: Our analysis shows that this provision alone will result in increased costs of
$275 per person/per year, or $1,100 for a working family.

FACT: Similar, although much more limited legislation was passed in Tennessee
and constituents are already seeing higher prices at the counter.

With the facts before you, AAHC urges you to oppose the harmful and disastrous affects
HB238 would have on your constituents, employers, and every other Alabamian who is
impacted by this bill.