Gov. JB Pritzker signed a pair of health care-related bills Tuesday that he said would put more controls on the pricing of pharmaceutical drugs sold through insurance plans while expanding insurance coverage for certain kinds of hospital costs.
“For too long our health care system has been infected by profit-seeking middlemen and predatory actors looking to make an extra dime at the expense of Illinois patients,” Pritzker said at a bill signing ceremony in Peoria. “Seniors have been forced to pay through the nose for life-saving medications. Families have had to delay or decline medically necessary treatments because they can’t afford it anymore. And family businesses like independent pharmacies have had to shut their doors.”
House Bill 1697, known as the Prescription Drug Affordability Act, will impose new restrictions on practices of pharmacy benefit managers, or PBMs, a powerful but little-understood segment of the pharmaceutical industry.
PBMs are companies that act as a kind of middleman between health insurance plans and pharmaceutical companies by negotiating drug prices and designing drug formularies that are intended to steer patients toward lower-cost medications.
But they have come under intense criticism in recent years for steering patients toward their own affiliated retail chain pharmacies, often to the detriment of smaller independent pharmacies, and for operating pricing systems that are designed to maximize profits for the PBMs rather than producing savings for patients.
Under the legislation, PBMs will be prohibited from steering consumers toward large pharmacies in which they have a financial interest. They will also be prohibited from engaging in “spread pricing” – the practice of charging health plans a higher price for a drug than the PBM pays a pharmacy for dispensing the drug.
The bill also establishes a grant program that will distribute $25 million a year in financial support for independent pharmacies, funded through a tax levied on PBMs operating in Illinois.
David Bagot, an independent pharmacist from Petersburg who is also president of the Illinois Pharmacists Association, called the bill “landmark legislation” that he predicted would be studied and replicated in other states.
“This bill represents the most comprehensive reform of pharmacy benefit managers we have seen in Illinois,” he said. “For far too long, these companies have used our nation’s drug supply chain to benefit shareholders and executives while driving up costs for people who rely on medications and driving pharmacies out of business.”
But the Pharmaceutical Care Management Association, the lobbying organization that represents PBMs, called the bill “misguided legislation” and predicted it would have little or no impact on the prices consumers pay for medications.
“Unfortunately, the legislation does nothing to address the fact that Big Pharma sets the price of the prescription drugs – and the price is the problem when it comes to some Illinoisans facing difficulty affording their prescription drugs,” the group said in a statement. “Lawmakers have passed 20 bills regulating and restricting PBMs since 2016, none of which have led to lower drug prices.”
Insurance coverage expansion
Pritzker also signed House Bill 3019, known as the Healthcare Protection Expansion Act.
Among other things, it prohibits state-regulated health plans from requiring prior authorization for outpatient mental health services. Last year, lawmakers imposed a similar prohibition for inpatient and emergency mental health services.
It also requires insurance plans to cover a patient’s travel-related expenses whenever they have to travel long distances to receive in-network care, a problem often faced by patients who live in rural areas of the state.
“Building on protections that make mental health care accessible for all Illinois residents, this law gives people more opportunities and flexibility to receive necessary services,” state Sen. Laura Fine, D-Glenview, a lead sponsor of the bill, said in a statement.
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