pharmacy benefits

Big legislative fight remains over pharmacy benefits bill

Senate Speaker Randy McNally (R-Oak Ridge) presides over the chamber on June 1, 2020. (Erik Schelzig, Tennessee Journal)

As part of last week’s budget bill, House and Senate leaders set aside $3.8 million in recurring funding to pay for changes to state law regarding pharmacy benefits and pharmacy benefit managers, or PBMs. But securing funding is only part of the challenge for sponsors. Now they have to get their colleagues to actually vote to pass the bill.

The Tennessee Business Roundtable is one of the interested parties hoping to persuade lawmakers not to enact the measure. Patrick Sheehy, the group’s president, in a letter urges senators to vote against the bill sponsored by Sen. Shane Reeves (R-Shelbyville) because it constitutes “unnecessary government regulations that could increase the already-rising costs of employer-provided health care plans.”

UPDATE: The House Finance Committee advanced the bill to a full floor vote after House Speaker Cameron Sexton (R-Crossville) attended committee meetings to speak forcefully on the bill’s behalf.

Here’s the full letter from the Tennessee Business Roundtable:

Dear Senators:

Over the last several weeks, you likely have heard and read much from pharmacy, pharmacy benefit manager (PBM) and insurer interests, and from bill sponsors, about SB1617, legislation which proposes numerous new regulations on PBMs operating in Tennessee. We write to provide a perspective from many of the Tennessee employers who play a pivotal role as the ultimate payors in our state’s health care system on this legislation, and to outline why our organization does not support this bill in its current form.

We share some of the concerns of the bill sponsors and proponents because in the American health care system, employers, directly or indirectly, pay 100% of the costs of health care — by paying for the health benefits they provide to employees, paying corporate taxes which fund government-provided care, and paying compensation to employees, who in turn use those earnings to pay part of their health care expenses, as well as taxes of their own. This matters a great deal because over 50% of Tennesseans — about 3.5 million people — receive their health coverage through employer-sponsored health benefit plans.

At the same time, the ultimate payors — employers — lack effective control over many of that system’s structures and cost drivers. As Tennessee business operators have undoubtedly told you, the costs of employer-sponsored coverage continue to rise at unmanageable and unsustainable rates, and a primary driver of these cost increases is spending on prescription drugs. Employers and their plan administrators in Tennessee continue to struggle to understand, administer, and effectively manage these unsustainable cost increases; despite these difficulties, thousands of our state’s employers continue to offer health benefits because they truly value their employees.

At its core, SB1617 is a government mandate which would impose major restrictions on the few critical tools Tennessee employers do have to manage their employer-sponsored health plan designs and costs.

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