(Photo by Christina Estes - KJZZ)

Melrose Pharmacy owner Teresa Stickler fills an order.

The Centers for Medicare and Medicaid say prescription drug spending in the United States nearly hit $330 billion in 2016. Some of those transactions could have cost consumers less if they’d paid in cash rather than rely on insurance co-pays. Right now in Arizona, if there’s a cheaper option available some pharmacists are prohibited from telling you. But that could soon change.

One Pharmacist's Story

At Melrose Pharmacy in Phoenix, the vibe is pure vintage.

“I kind of consider it like your 1950’s soda shop kind of feel,” said Owner Teresa Stickler.

But, she is dealing with a modern issue: pharmacy benefit managers, known as PBMs. They act as middlemen between insurers and pharmacies. Insurers pay PBMs to negotiate better prices with drug manufacturers and pay pharmacies on their behalf.

“I have to be careful,” she explained.

Christina Estes/KJZZ

A bill at the Arizona Legislature would prohibit "gag clauses" that keep pharmacists from sharing cheaper drug options.

Stickler said she has to be careful because some of her contracts with PBMs contain so-called “gag clauses”.

She can’t reveal details, but during a House health committee hearing State Rep. Maria Syms (R- District 28) explained a gag clause this way: “That precludes a pharmacist from telling the consumer when they walk into the door that there is a lower priced alternative from their insurance, for example, if they wanted to pay cash.”

Syms is sponsoring House Bill 2107, which says PBMs cannot penalize pharmacists for sharing information that could save patients money.

“There are pharmacy owners who have spoken up and had their contracts pulled,” said Stickler.

Stickler says contracts with PBMs are critical, especially for independent pharmacies like hers. She fills about 4,000 prescriptions each month.

The bill also addresses another moneymaker, referred to as “clawbacks." When a patient’s co-pay is higher than the pharmacist’s cost, some PBMs have been accused of pocketing the extra cash.

“I’ve seen some that are a hundred dollars extra that the patient’s paying over what I get paid,” Stickler said.

The Pharmaceutical Care Management Association says PBMs administer prescription drug plans for more than 266 million Americans. The group says PBMs are projected to save insurers and consumers up to 30 percent on drug benefit costs over the next decade.

What's Happening At The Legislature

Christina Estes/KJZZ

HB2107 would also ban PBMs from requiring pharmacies to charge or collect a co-pay that is higher than the charge submitted by the pharmacy.

“I feel like this PBM issue is one of the most complicated issues we face as a health committee,” said Rep. Heather Carter (R- Dist. 15) who chairs the House Health Committee. “Since the first day that you are elected and then assigned to the Health Committee I guarantee somebody has come to your office to talk to you about PBMs.”

Mergers between PBMs and mergers with PBMs and pharmacy chains started about 15 years ago. Today, three companies control an estimated 80 percent of the market. One of the big three is CVS Health and Jay Kaprosy is its lobbyist in Arizona.

“There is agreement about clawback and gag and I think we can all agree that language ought to move forward,” he said during a recent House Heath Committee hearing.

While Kaprosy said CVS Health supports giving pharmacists the freedom to share cost saving options and banning PBMs from collecting co-pays that are higher than pharmacies’ costs, there’s disagreement over enforcement.

“Despite the testimony here, this is not a consumer bill,” he said. “This is all about the relationship between a PBM and a pharmacy.”

Neither CVS Health nor Express Scripts, another major PBM, wanted to see language in the bill that would allow Arizona’s Attorney General to investigate allegations and take action. That line was ultimately dropped — not what Melrose Pharmacy owner Teresa Stickler wanted to hear.

(Photo by Christina Estes - KJZZ)

Melrose Pharmacy in Phoenix is among about 150 independent pharmacies across Arizona.

“There are multiple states that have been trying to get laws enacted on behalf of independent pharmacies,” she said. “When they pass these laws there’s still not an enforcing body you can complain to.”

Any formal complaint process involving a government agency will have to wait. The bill — unanimously approved by the House and now headed to the Senate — deals only with gag clauses and clawbacks.

Still, Stickler considers it a victory for about 150 independent pharmacists across Arizona and their patients.

PBMs have increasingly come under scrutiny, especially from independent pharmacists who formed a coalition called Pharmacists United for Truth and Transparency (PUTT). The group’s website says it is dedicated to “exposing widespread abuse and manipulation by pharmacy benefit managers (PBMs).”

PUTT Spokeswoman Monique Whitney said, “Unfortunately, Arizona is really behind the rest of the country in terms of this type of legislation.”

Earlier this week, Arkansas Governor Asa Hutchinson said he would call a special legislative session after the fiscal session ends to address pharmacy reimbursements. Some lawmakers want to require PBMs to be licensed by the Arkansas Insurance Department.

In Kentucky, a state Senate committee recently approved a bill that would take money that currently goes to PBMs, and return it to the state so that it can administer its own pharmacy benefits program for Medicaid patients.