COMMISSIONER'S CORNER

AUGUST 2024

As costs of pharmaceuticals continue to rise state and local government are turning more attention toward Pharmacy Benefit Managers. Over the past several years this has led to a wave of new regulations in Wyoming.

What are Pharmacy Benefit Managers?

Pharmacy Benefit Managers (PBMs) are third party companies that function as intermediaries between insurance providers and pharmaceutical manufacturers. When insurance companies began offering prescription drugs as a health plan benefit in the 1960s, PBMs were created to help insurers contain drug spending. Originally, PBMs decided which drugs were offered in formularies and administered drug claims. In the late 1980s, PBMs filled the need for a way to keep rapidly rising drug prices in check. Today, PBMs create formularies, negotiate rebates with manufacturers, process claims, create pharmacy networks, review drug utilization and occasionally manage mail-order specialty pharmacies.

According to the National Association of Insurance Commissioners, today, there are 66 PBM companies serving more than 270 million Americans. The three largest, Express Scripts, CVS Caremark and OptumRX control approximately 89% of the market. PBMs work in conjunction with drug manufacturers, wholesalers, pharmacies and health insurance providers but play no direct role in the physical distribution of prescription drugs, only handling negotiations and payments within the supply chain. When a new drug is available, the manufacturer negotiates with wholesalers who then sell and distribute the drugs to pharmacies. PBMs negotiate agreements with drug manufacturers on behalf of insurers and are paid rebates by drug manufacturers. Pharmacy Services Administrative Organizations (PSAOs) negotiate reimbursements with PBMs on behalf of pharmacies. PBMs then pay pharmacies on behalf of health insurance providers for drugs dispensed to patients. PSAOs represent and offer services to independent pharmacies and PBMs represent health insurers.

Pharmacy Benefit Managers and Wyoming:

In 2016, the Wyoming legislature passed law that addressed Pharmacy Benefit Managers. The law can be found at Wyo. Stat. Ann. §26-52-101 et seq. The initial laws established a licensing requirement, direction regarding audits by PBMs on pharmacies and MAC (Maximum Allowable Cost) pricing. In 2023, the legislature passed additional law regarding transparency and in 2024 passed legislation regarding prompt payment of claims.

The Department of Insurance was granted authority to review complaints from pharmacies regarding possible lack of compliance with the laws. A pharmacist who believes a PBM has not been compliant with the laws can file a complaint on the DOI website. The complaint form can be found here: File a Complaint ↗. When a complaint is filed it is assigned to the Pharmacy Benefit Program Manager for investigation. This position was appropriated for the department by the legislature in 2023. Since 2019, the department has investigated eighteen complaints. Most of these complaints were with regard to MAC pricing for prescriptions. However, recently there have been complaints regarding PBMs charging claim filing fees.

The Department of Insurance will continue to work with PBMs and pharmacists to enforce Wyoming’s laws regarding PBMs. If you are a pharmacist and have questions regarding the law in Wyoming or need assistance filing a complaint, please reach out to our office at 307-777-7401.

Jeff Rude, Wyoming Insurance Commissioner

2023 HIGHLIGHTS

During the 2023 legislative session, the DOI monitored eighteen bills. Of those eighteen, ten were passed into law.  You can view the bills and the changes that were made by visiting the Legislative Service Office website and select 2023 bills. The 2024 session is a budget session, but we expect to follow a few bills through the process.

The DOI also did extensive outreach during 2023. Public Service Announcements are published each month in statewide papers. Some of the topics in 2023 were choosing an agent, preparing for severe weather, and information regarding the Medicaid unwind. Additionally, the agency did presentations and articles for Cover Wyoming, AARP and AWIA.

In 2023, the agency brought in over $50 million to the general fund from licensing fees and premium taxes. The agency also collected $55,736 in fines. These fines were collected from both agents and companies.

The agency was also busy with licensing applications and form reviews. The licensing section issued 42,773 licenses and manually processed 5,026 applications. The Rate and Form filing section reviewed 1,520 Life & Health filings and 2, 225 Property & Casualty filings. The licensing section consists of three employees and the rate and form filing section has five employees.

Our legal section was busy revising rules. They revised Chapters 10, 64, 54, 55, 28 and 68. Once again you can find these rules on the Secretary of State’s website. They also handled eighty public records requests and opened 65 administrative matters.

The agency also has a complaint section. This section handles complaints regarding improper denial of claims; delays in claim handling; cancelation or termination of an insurance policy or misrepresentation of policy coverage or misappropriation of premiums paid to an agent or broker. The section cannot act as legal representation, recommend an insurance agency, agency or policy, determine property value, regulate rates, make an insurance company insure you, decide who is as fault for an accident, force a company to pay your claims or decide the amount of loss. During 2023 the section received 1,459 complaints and closed 1,453.

Also of significance this year is the DOI successfully passed NAIC accreditation. The NAIC Financial Regulation Standards and Accreditation Program (Accreditation Program) serves as the backbone of the U.S. national system of state-based regulation. The Accreditation Program defines baseline standards deemed essential for effective solvency regulation in each state. Accreditation assures states are regulating their domestic multistate insurers according to national standards agreed to by the NAIC. For the insurance industry, accreditation means insurers will not require additional independent exams from the other states in which the insurers do business. 

Jeff Rude, Wyoming Insurance Commissioner