Department of Insurance Could Use More of Its Authority to Strengthen PBM Oversight

An evaluation of the Louisiana Department of Insurance’s oversight of Pharmacy Benefit Managers (PBMs) recommended the Department make more use of its authority to strengthen its enforcement of the State’s rules and regulations governing PBMs.

Auditors found that while the Department has the discretion to conduct regulatory reviews of PBMs, it has not conducted any. Regulation of PBMs is important, auditors noted, because their role has increased to include conducting drug utilization reviews, developing a drug plan formulary, determining which pharmacies are included in a prescription drug plan’s network, deciding how much network pharmacies will be reimbursed for their services, and operating mail order and specialty pharmacies.

The number of PBMs operating in Louisiana rose from five in 2007 to 32 in 2017.

In addition, auditors said, the Department did not collect sufficient supporting documentation before closing 25 of 42 complaints filed against PBMs. As a result, the Department cannot ensure it resolved the complaints accurately. Based on survey responses from pharmacists across the state, auditors said, it also appears some pharmacists may not file complaints because they believe the Department does not fully investigate them.

Of the 498 pharmacists who answered the survey, 258 indicated they did not believe the Department was sufficiently addressing their complaints about PBMs. The survey was sent to 9,692 pharmacists across Louisiana.

Auditors suggested as well that the Department consider developing guidelines within its rules and regulations that specify consequences, such as fines, when PBMs violate state laws. For example, auditors found that between 2011 and August 2017, the Department validated 14 complaints in favor of the complainant, not the PBM. However, the Department did not fine the PBMs for the violations.