Community pharmacies ask judge to stop fiscal board from blocking implementation of regulation

By The Star Staff

A group of neighborhood pharmacies have written to U.S. District Court Judge Laura Taylor Swain, who is overseeing Puerto Rico’s bankruptcy process, to ask her to stop the Financial Oversight and Management Board from preventing the implementation of Act 82 of 2019, which would regulate pharmacy benefit administrators (PBAs) and pharmacy benefit managers (PBMs) on the island.

The letter was written by El Combate Pharmacy, Pharmamed Pharmacy, Allmed Pharmacy and El Eden Pharmacy.

“We are an important part of local small business pharmacies, in the same way, wholly owned and operated by families, individuals, and small businesses in Puerto Rico. As independent small businesses, our independent community pharmacies cannot leverage on Pharmacy Benefit Administrators (PBAs) and Pharmacy Benefit Managers (PBMs) the influence that big chain pharmacies, such as CVS or Walgreens, can,” the pharmacies said in their letter. “PBMs and PBAs are middlemen entities that force unfair practices upon small pharmacies and small businesses.”

Because these are “big corporate entities that control distribution and wholesale of drugs and medications to small retail entities,” very often the small pharmacies at the end of the chain end up receiving lower amounts in payments or discounts from PBMs and PBAs than the floor price for which they sell such products to the patient-consumer, the pharmacies said.

“The result of these unfair practices is that many times they force small pharmacies to close operations. Thus, independent community pharmacies are easy prey for PBAs and PBMs, which can result, and does result, in unjustifiably high prices for medications to the public,” the pharmacies said. “It is for this reason that our group of independent, locally owned and operated Community Pharmacies support the full enactment of Public Law No. 82 of 2019, to regulate PBMs and PBAs in Puerto Rico and reject the position taken by the Financial Oversight and Management Board for Puerto Rico (FOMB) opposing the implementation of Law No. 82.”

The oversight board rejected Act 82 because the island government had failed to provide formal estimates on the economic impact of the law, and because the government could not explain the reasons why the local law was not preempted by federal law. The dispute is part of an adversarial process in the bankruptcy court.

The objection raised by the oversight board regarding preemption was recently resolved by the U.S. Supreme Court in the case Rutledge v. Pharmaceutical Care Management Association, which was decided on Dec. 10. The top court, in an unanimous opinion written by Justice Sonia Sotomayor, rejected the argument from a PBM trade association that the federal Employee Retirement Income Security Act, preempts any aspect of an Arkansas statute that required PBMs to “tether” their reimbursement rates to the acquisition costs pharmacies pay.

Given the Supreme Court opinion, the oversight board’s request for a legal analysis on preemption is moot and no longer a valid point for opposing implementation of Act 82, the pharmacies said.

The remaining issues raised by the Puerto Rico government in a court complaint opposing the position of the oversight board toward Act 82 “rest to be resolved by your Court, upon addressing the controversies of fact and law regarding the alleged failure by the Commonwealth of Puerto Rico to provide to the FOMB ‘formal estimates’ of the economic impact of Law 82,” the pharmacies said in their letter.

However, the pharmacies said, a study of Act 82 by Advantage Business Consulting concluded that there was no fiscal impact that could render Act 82 objectionable in light of the fiscal plan and the commonwealth budget. The study concluded that Act 82 would have a positive impact on the government due to the collection of licensing and audit fees, and, mostly, from the potential savings to the government health plan as a client of PBMs, they said. It also found that Act 82 contains measures to promote the healthy management and oversight of government funds, which is in line with the objectives and directives of the oversight board.

“We respectfully submit this correspondence and the exhibits attached hereto for your consideration, hoping that these may be of assistance by illustrating for the Court the view that independent locally owned and operated Community Pharmacies in Puerto Rico hold in supporting the implementation of Act 82,” the pharmacies said.