California Places Patients First

Thursday, September 27, 2018

Asm. Nazarian

AB 2863 Passes Prescription Drug Savings Directly to Patients

(Sacramento, CA) California Governor Jerry Brown has signed into law AB 2863 – Pharmacy Benefit Manager Clawback. AB 2863 aims to curtail prescription drug overpayments, also known as “clawbacks,” when commercially insured patients’ copayments exceed the total cost of the drug to their insurer or pharmacy benefit manager (PBM).

“Patients should always pocket any available savings on their prescription drugs, not corporations,” stated Assemblymember Adrin Nazarian. “This law aims to curtail the problem of high prescription costs by ensuring that consumers are made aware of and pay the lowest available price for their medications.”

AB 2863 will:

  • Require pharmacists to inform consumers about the lowest price for their prescription drug.
  • Limit the amount a health carrier or pharmacy benefit manager (PBM) may require a beneficiary to pay at the point of sale for a covered prescription to the lowest available cost, whether it is the applicable cost-sharing amount or the retail price.
  • Prohibit a health carrier or PBM from requiring a pharmacy to charge or collect a copayment from a beneficiary that exceeds the total submitted charges by the network pharmacy.
  • Require the amount paid for a prescription to be applied to the beneficiary’s deductible and out-of-pocket maximum if the beneficiary opts to pay the cash price.

Americans spend more on prescriptions than people in any other country—with costs continuing to rise. According to Consumer Reports, in 2016 total drug costs went up 6.3 percent compared with the year before, about three times the rate for other goods and services, per the Department of Labor. The amount consumers have to pay out of pocket is also rising, from about $25 billion in 2000 to a projected $67 billion in 2025. No other developed country comes close to the United States’ level of spending.

There are a lot of players in the healthcare system leading to these rising costs, from the drug manufacturers to the health insurance companies to their intermediary, the PBMs.

PBMs process prescriptions, determine which are covered, or if they will require a co-payment from the patient. PBMs also bargain down prices with drug manufacturers, excluding some drugs and preferring others in return for discounts.

Consumers assume the cost-sharing amount provided by their health plan is the cheapest available price for their medication, but this is not always true. The consumer pays the amount negotiated, even if that amount exceeds the price of the drug without insurance. In these instances, the pharmacist is required to remit the excess payments back to the PBMs.

A recent USC Leonard D. Schaeffer Center for Health Policy & Economics study found that 23% of filled prescriptions in the United States involved a patient copay that exceeded the average reimbursement paid by the insurer by more than $2.00. In 2013, total overpayments amounted to $135 million in the study’s sample, or $10.51 per covered life. With over 200 million Americans commercially insured in 2013, the USC study suggests the overpayments may account for a not-insignificant share of overall drug spending and out-of-pocket costs.

Adrin Nazarian represents the 46th Assembly District, serving the San Fernando Valley communities of Hollywood Hills, Lake Balboa, North Hills, North Hollywood, Panorama City, Sherman Oaks, Studio City, Toluca Lake, Valley Glen, Universal City, Van Nuys, and Valley Village.

CONTACT: Brian Stedge, (646) 469-3808, Brian.Stedge@asm.ca.gov