Committee approves bill to lower costs for pharmacies

By: - February 8, 2023 2:17 pm
A Publix Super Markets pharmacy manager retrieves a a medication. (Joe Raedle/Getty Images)

A Publix Super Markets pharmacy manager retrieves a a medication. (Joe Raedle/Getty Images)

Over 20 pharmacies have closed across South Dakota since 2018. And over 55% of the state’s counties either lack a pharmacy or only have one.

The industry is facing a pharmacy technician shortage, and a looming pharmacist shortage.

South Dakota pharmacists believe a bill that would provide more transparency in prescription drug pricing by pharmaceutical companies is one of the ways to address those problems.

That bill, HB 1135, unanimously passed the House Commerce and Energy Committee on Wednesday after over an hour and a half of discussion and testimony at the Capitol in Pierre.

“We think it’ll slow the bleeding at least,” said Craig Matson, a lobbyist with the South Dakota Pharmacists Association.

Pharmacist and technician shortage threatens access to health care

The bill would “level the playing field” between independent pharmacies and pharmacy benefit managers, which act as the middleman in the drug supply chain between manufacturers and consumers, Matson said.

The managers act on behalf of insurance providers to pay retail pharmacies for drugs dispensed to patients. The companies were formed to ensure better prices for drugs, representing a wide number of insurance groups.

However, it is an “unregulated relationship,” said Rep. Mike Weisgram, R-Pierre, who is sponsoring the bill. He told South Dakota Searchlight in an interview that the top three PBMs control 80% of the market, giving them stronger negotiating power over pharmacists, forcing pharmacies to sign payment agreements and contracts that don’t adequately disclose prices.

“The standards are theirs to decide whenever they want to decide,” said Hugh Mack, a pharmacist from Redfield, during Wednesday’s committee meeting. “We can’t see the standard. They do the measuring and you do the paying back.”

Lindsey Osterkamp, who owns True Care Family Pharmacy in Sioux Falls, testified that her pharmacy loses tens of thousands of dollars each year due to retroactive fees and underpayments from the companies because of the lack of transparency in contracts and business dealings.

“If not for the egregious PBM practices … I could have hired another pharmacist years ago,” Osterkamp told legislators during virtual testimony. She is the sole pharmacist at True Care and works six-day weeks.

Proponents of the bill included several pharmacists and lobbyists from Avera, Hy-Vee (a grocery store chain that also operates pharmacies) and Wellmark health insurance. 

A similar bill introduced last year failed because it did not have the support of Wellmark, one of the largest health insurance providers in the state. Wellmark and South Dakota pharmacists collaborated on this year’s bill.

Opponents included a lobbyist representing the Pharmaceutical Case Management Association for the third-party payers, who said the bill would allow the government to overstep into business affairs and cautioned legislators that the bill could result in higher prescription costs for South Dakotans.

“It’s an attempt to legislate where profits should go — whether pharmacists should receive more,” said Dick Tieszen, representing PCMA. “If somebody’s going to get paid more, who’s paying?”

Another lobbyist representing health insurance plans partially opposed the bill as well due to some wording.

Proponents argued that regulatory efforts have been passed in several other states, including one passed in Iowa last year, without issue.

The bill now heads to the House floor.




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Makenzie Huber
Makenzie Huber

Makenzie Huber is a lifelong South Dakotan whose work has won national and regional awards. She's spent five years as a journalist with experience reporting on workforce, development and business issues within the state.