March 28, 2024

Kentucky House of Representatives
700 Capital Avenue
Frankfort, Kentucky 68508

Dear Representative,

On behalf of 15,539 members and supporters of the Council of Citizens Against Government Waste in Kentucky, I urge you to oppose SB188. This legislation would create unnecessary regulatory barriers that will undermine the effectiveness of pharmaceutical benefit managers (PBMs) in Kentucky.

PBMs save money for patients by negotiating lower prices on behalf of large groups. More than 275 million Americans who obtain health coverage from their employers, unions, state government plans, and other sponsors rely on PBMs to administer their prescription drug plans. PBMs use various tools like rebates, pharmacy networks, drug utilization review, formularies, specialty pharmacies, mail-order, and audits to drive down drug costs, improve quality, increase patient medication adherence, and prevent fraud.

Provisions in the bill that restrict the use of preferred pharmacy networks, specialty pharmacies, and mail order pharmacies could cost the state of Kentucky $450 million in excess drug spending in the first year alone and more than $5 billion over the next 10 years. Changing the operations of PBMs to require them to implement prescription drug reimbursement mandates of the National Average Drug Acquisition Cost (NADAC) plus a $10.64 dispensing fee will increase operating costs that will be passed on to consumers.

The bill would also impact PBMs’ ability to manage specialty pharmacies. PBMs provide savings for patients by allowing a specialty pharmacy to ship a drug for a given patient directly to the health care provider rather than the provider buying the drug and billing insurance. Banning this cost-saving practice will limit benefits and increase costs.

For the above reasons, I urge you to oppose SB188, which would insert the government further into the healthcare system and result in higher costs and fewer choices for patients in Kentucky.

Sincerely,
Tom Schatz
President, CCAGW