NC lawmakers mull big changes to health insurance, prescription drug industries

A handful of bills to overhaul key parts of the insurance and pharmacy industries in North Carolina moved ahead Tuesday at the statehouse, where powerful companies are jockeying for the rules they prefer.

A rewrite of state laws governing Blue Cross Blue Shield of North Carolina, the state’s largest insurer, cleared its first committee Tuesday on a divided vote. A separate bill regulating pharmacy benefit managers, which large insurance companies use to negotiate drug prices, moved forward as well, continuing years of fighting between these groups and independent pharmacies around the state.

A third measure to speed up the prior authorization process that insurance companies use to determine whether they’ll cover medical care cleared the House Health Committee too.

The pharmacy benefit managers bill, House Bill 246, would outlaw “spread pricing,” which PBMs use to smooth out drug prices that would otherwise differ from pharmacy to pharmacy, as well as other industry tactics. Independent pharmacists say these companies, which handle some 80% of prescriptions around the country, use anti-competitive practices to generate profits as middlemen in the pharmaceutical industry.

Rep. Wayne Sasser, a pharmacist by trade, said the largest of these groups made more than $14 billion last year.

“Pretty evident most of that money’s not flowing through to the rate payers,” Sasser, R-Stanly, said Tuesday.

Insurers say they’re keeping drug costs down by using PBMs, and that this bill would increase costs.

“We negotiate discounts with drug manufacturers, we negotiate discounts with pharmacies,” said Connor Rose, lobbyist for the Pharmaceutical Care Management Association. “We’re the only entity in the supply chain whose role it is to reduce drug prices.”

Like other legislation, the PBM bill has multiple stops before it becomes law, and its fate is unclear. But this General Assembly session is moving faster than previous ones, compressing timetables and limiting debate. Only one member of the public was allowed to speak during Tuesday's House Health Committee meeting, and committee members were limited to one question per bill because leadership wanted to vote on eight bills – several of them complex – in 50 minutes.

The Blue Cross bill has generated one of the biggest lobbying pushes of this legislative session. The company wants to reorganize, placing itself under a holding company subject to less regulation from the North Carolina Department of Insurance. Insurance Commissioner Mike Causey, an elected Republican who heads that department, opposes House Bill 346 and told lawmakers Tuesday that it would let Blue Cross raise premiums with less accountability and transparency.

“This is a bad bill for consumers,” Causey said.

But the bill has bipartisan support, including from key legislative leaders. Rep. John Bradford, the bill’s lead sponsor in the House, said the company needs these changes to compete with other insurance giants, like Aetna and UnitedHealthcare. As for-profit companies they don’t have to get government approval to buy companies or make other investments, which Blue Cross must seek from the Department of Insurance under current North Carolina law.

“Which creates a non-level playing field,” said Bradford, R-Mecklenburg.

Bradford said he expects this bill to morph at its next scheduled stop, a House Insurance Committee meeting tomorrow, and Gov. Roy Cooper called Tuesday for changes in the bill, though his office was not specific.

“The goals should be comprehensive insurance coverage with access to health care in every area of the state at the lowest price, and the governor encourages the legislature to improve this legislation in order to be in full alignment with those goals," Cooper spokeswoman Sam Chan said in an email.

The pre-authorization measures are in House Bill 649, which would mandate new review timetables for insurance companies. It too has bipartisan support and moved easily through committee Tuesday.