Ever-Broadening Actions Will Increase Prescription Drug Spending by Nearly $5 Billion

(Nashville, TN) — The Pharmaceutical Care Management Association (PCMA) today released a report finding that recent legal changes taken in Tennessee would increase prescription drug costs for employers, health plan sponsors, and workers by nearly $5 billion.

The analysis, prepared by Visante on behalf of PCMA, analyzed the recently enacted Public Chapter 1070 that restricts the use of preferred pharmacy networks. Researchers estimate that Chapter 1070 will likely cost businesses and employees in the State of Tennessee nearly $200 million dollars in its initial year of implementation and increase spending by more than $2 billion over the next 10 years.

Additionally, the analysis reviewed draft proposed rulemaking from the Tennessee Department of Commerce & Insurance (TDCI) that would mandate the disclosure of proprietary information in contracts between pharmacy benefit companies and health plan sponsors. Enacting this provision will hinder the ability of pharmacy benefit companies to successfully negotiate with drug companies, and researchers found that it could result in more than $200 million in excess drug spending in the first year and more than $2 billion of the next 10 years.

The cost analysis finds that recent legal changes in Tennessee place unnecessary costs and burdens on employers. As a result, drug spending will soar in the state and make it even more challenging for Tennesseans to afford their prescriptions in today’s inflationary environment. PCMA urges the state to address the changes and protect the ability of employers and workers to manage drug spending.

The methodology used to create the cost projections in Tennessee is based on the January 2023 paper, “Increased Costs Associated With Proposed State Legislation Impacting PBM Tools,” prepared by Visante for PCMA.

Read the full report HERE.

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PCMA is the national association representing America’s pharmacy benefit companies. Pharmacy benefit companies are working every day to secure savings, enable better health outcomes, and support access to quality prescription drug coverage for more than 275 million patients. Learn more at www.pcmanet.org