Lawmakers support PBM fines, Sanders’ security detail, and many critical budget measures for state agencies

Little Rock, Arkansas – During a committee meeting on Friday, members of the Arkansas Legislative Council approved a number of bills that will affect state prisons, Governor Sarah Sanders, pharmacy owners, and pharmaceutical benefit managers.

The financial request was granted by the ALC in spite of some opposition from lawmakers earlier in the week about the procurement procedure the Department of Corrections employed to obtain a $1.5 billion medical contract with Wellpath LLC.

Legislators, however, insisted that going forward, the DOC and other state agencies that use this procurement procedure would have to choose contract bids using a separate methodology that considers state funding far earlier.

Earlier this week, Secretary of Corrections Lindsay Wallace informed lawmakers that the DOC’s selection procedure, which was based on a technical scoring system, did not consider the offer prices until they were narrowed down to the last three.

She explained in the meeting on Friday that the department had since compared the proposals from each vendor and had coincidentally come up with the lowest price.

Wallace informed the committee on Friday, “It is evident that we fell short of your expectations, and the two provisions pertaining to the next step were poorly written.” “We thought it was best to proceed by considering only the top three technical scores, but now that we’ve opened all of our reports, the outcome remained the same, even after we took pricing into account.”

The Department of Corrections has a contract with Wellpath LLC. that covers medical, dental, pharmacy, and mental health services for offenders and prisoners under its control. The state prisons are expected to benefit from the $1.5 billion contract for the next ten years.

Additionally, the committee granted funding requests totaling $1.2 million to Arkansas State Police. Colonel Mike Hagar asked for more security to be provided for Governor Sarah Sanders’ guard detail.

Sanders scheduled a special session in 2023, during which FOIA modifications were adopted that prevented the public from accessing specific specifics about the security measures.

Despite this, lawmakers—who do possess access to the detailed explanation of the security measures—have stated that the funds will be used to modernize the governor’s mansion’s equipment and buy bulletproof vests for detail personnel, citing a rise in demand under the present administration.

The committee also approved the emergency rule linked to the state law that cracked down on pharmaceutical benefit managers who were allegedly defrauding pharmacies in Arkansas for years.

State law prohibits any PBM from paying a pharmacy less than what it costs to buy medicine and less than what is fair and reasonable on top of that. At a meeting on Thursday, pharmacists told lawmakers that the law hasn’t stopped PBMs from taking advantage of them and jeopardizing their livelihoods.

Now that the emergency regulation is fully implemented, PBMs who violate that state legislation may be fined up to $5,000 by the Arkansas Insurance Department.

Legislators were briefed by AID personnel on several options the state may pursue in the event that PBMs fail to pay the penalty on Thursday. To assist keep pharmacies solvent, one option would be to raise the dispensary charges for prescription drugs. This would mean that Arkansans would have to pay up to 3-4% more for their prescriptions.

Senator Jonathan Dismang (R-Beebe) expressed some concern about the likelihood of higher prescription expenses for Arkansans if PBMs do not comply with the sanctions, even though he did not oppose the motion to pass this emergency rule.

Dismang informed AID spokespeople, “Everyone knows inflation is terrible, hopefully we’re plateauing, but this is just going to add to that… or has the potential to.”

In response to Dismang, AID General Counsel Booth Rand stated that while he acknowledges the worry, the bulletins that AID will be sending out to PBMs outlining the criteria in detail will be essential to this endeavor. He went on to say that the legislature will be involved at every stage of the rule’s implementation.

Although higher dispensary charges are a possibility, Senate President Bart Hester (R-Cave Springs) stated that the legislature should ideally be able to impose additional measures that hold PBMs more accountable for the fines if they fail to pay.

He continued by saying that if businesses are found to be breaking state law, this would probably entail prohibiting them from conducting business in Arkansas. If this turns into a problem, legislators will start working on a solution in the late January 2025 legislative session.