A proposed emergency Arkansas Insurance Department rule aimed at enforcing existing state law that requires health benefit plans and pharmacy benefit managers to reimburse pharmacists at fair and reasonable rates cleared an Arkansas legislative panel Thursday.

The goal is try to improve pharmacy reimbursements so the state doesn’t lose pharmacies and networks, said Booth Rand, general counsel for the Arkansas Insurance Department.

The Legislative Council’s Executive Subcommittee completed its review of the proposed emergency rule after it heard complaints from three pharmacists who said some of their prescription reimbursements aren’t fair and reasonable.

The Legislative Council will consider the proposed emergency rule Friday morning. The proposed emergency rule would become effective after the Legislative Council adjourns its meeting on Friday and would expire Jan. 18.

Rand told lawmakers that for about the past year, health insurance plans and pharmacy benefit managers have been reimbursing pharmacies in Arkansas “very close” to what it costs to buy ingredients without dispensing fees, or sometimes even reimbursing pharmacies below what it costs the pharmacies to purchase drugs.

“That is a very unsustainable model, given that pharmacies would be just filling prescriptions for nothing or

losing money,” he said.

The Arkansas Insurance Department has received a substantial number of complaints from pharmacies about low reimbursements affecting whether they stay in business, Rand said. He said the department gets about 1,600 to 1,700 complaints a month from pharmacies about prescription reimbursements.

Sen. Ben Gilmore, R-Crossett, said pharmacy benefit managers have been warning about a potential “staggering” cost of $350 million to $360 million as a result of a potential dispensing fee.

Based on surveys of health benefit plans that hire the pharmacy benefit managers, the projected impact of the proposed emergency rule is roughly a 3% to 4% increase in premiums, if there is a $9 dispensing fee, Rand said.

“Yes, it will increase drug costs if it does require a dispensing fee. It may not, depending what data is submitted,” he said.

Rand said Arkansas Insurance Department officials hope the impact of the proposed emergency rule on premiums is less than 3.5%. West Virginia didn’t see a premium increase with a $10 dispensing fee, he noted.

The proposed emergency rule also could potentially reduce premiums in some cases.

Rep. Jack Fortner, R-Yellville, said his constituents don’t want to pay more for their health insurance, but they also don’t want to lose their local pharmacies and he believes they would be willing to pay a little more to make sure local pharmacies survive.

Sen. Dave Wallace, R-Leachville, said he believes the proposed emergency rule is going to help save small rural pharmacies.

Sen. Kim Hammer, R-Benton, said state officials are trying to send a message to pharmacy benefit managers to “right the ship” with the proposed emergency rule.

House Speaker Matthew Shepherd, R-El Dorado, said the proposed emergency rule “puts in place a more certain process to carry out” a state law enacted in 2018 with time frames not spelled out in that law.

“Coming through the rule-making process you are also involving the Legislature in that,” he said, referring to the Insurance Department. “But essentially you have authority right now to carry this out with or without this rule change.”

Rand said department officials felt it is important to go through rule-making to provide notice both to the industry licensees and the Legislature.

He said the Arkansas Insurance Department has had “sporadic” enforcement of the 2018 law at times, but had an aggressive enforcement action this summer.

Under the proposed emergency rule, the state insurance commissioner finds that under Arkansas Code Annotated 25-15204 (b) (1) that a public emergency exists to require changes to pharmacy reimbursement standards from health benefit plans in order to ensure “reasonably sustainable network adequacy for pharmacy services” in the state. The state’s insurance commissioner is Alan McClain.

To ensure an adequate network of pharmacy services for a health benefit plan or to ensure a reasonably sustainable adequate network for such services, a health benefit plan “shall include a fair and reasonable cost to dispense to pharmacies in its administration of drug benefits under its health benefit plan” under the proposed emergency rule.

“This cost to dispense shall be uniform or equally applied to all pharmacies servicing the health benefit plan” under the proposed emergency rule. “No health insurer and no pharmacy benefit manager … administering drug benefits for health benefit plans shall recoup or recover any increased costs to dispense from a subscriber at the point of sale through increased cost-sharing requirement ratios or percentages (‘co-insurance,-co-payment or deductibles’) on the health benefits member.”

For calendar year 2025, each health insurer is required to file with the insurance commissioner no later than by Nov. 30 a written report describing each health care payer’s calculation amount and methodology for calculation, of the cost to dispense, under the proposed emergency rule.

The insurance commissioner shall be authorized to review, approve or deny, such cost to dispense calculation, in consultation with the actuary for the Arkansas Insurance Department under the proposed emergency rule. The insurance commissioner is required to issue a bulletin more specifically addressing the procedures, timing, objection procedures, format and other information for submissions required under the proposed emergency rule.

Rand said information from pharmacy benefit managers shows a steady number of pharmacies in Arkansas over the past two years, and information from the state Board of Pharmacy shows a declining number of pharmacies in Arkansas since 2013.

John Kirtley, executive director of the state Board of Pharmacy, said the number of community pharmacies with permits in Arkansas declined from about 743 to about 737 since 2013 as about 261 opened and about 267 closed during this period. The number of community pharmacies with permits in Arkansas peaked in January 2016 at about 800, he said.

In addition, he said there are currently about 678 out-of-state pharmacies with permits to ship into Arkansas and more than tripled since 208 in 2004.

Sen. Missy Irvin, R-Mountain View, said the proposed emergency rule will affect self-insured health insurance plans in Arkansas and she wants to get information from state officials about the fiscal impact of the proposed emergency rule on the state’s health insurance plans for public school and state government employees and retirees, and the state’s Medicaid expansion program.

The Legislative Council’s Executive Subcommittee approved Irvin’s motion for that information to be provided to the subcommittee next month.

The subcommittee also approved Gilmore’s motion for the Arkansas Insurance Department to provide several pieces of information — ranging to any fair and reasonable reimbursement rates approved by the insurance commissioner to any violations assessed by the department — on a monthly basis to the Legislative Council, starting in October, and to the Joint Budget Committee if the Legislature is in session.

In written correspondence with the Executive Subcommittee members, Sen. Jimmy Hickey, R-Texarkana, asked the subcommittee to refer the proposed emergency rule to the Legislative Council’s Employee Benefits Division Oversight Subcommittee and the House and Senate Insurance and Commerce committees, and to request a fiscal impact statement for the proposed emergency rule on the state’s health insurance plans managed by the state’s Employee Benefits Division.

Hickey questioned whether “this a true emergency.

“This issue has been discussed for months by various committees of the General Assembly, and should continue to include input from those committees,” Hickey wrote.

In addition, he contended “The language of the emergency rule as presented is vague without enough specifics to understand the potential impact to public and private health benefits in this state.”