State government will be heavily involved in the health insurance industry next year if proposals before the legislature's Insurance and Real Estate Committee become law.

The committee, which has already filed legislation to create a state-run health insurance program, now wants the state to have a role in the prescription drug marketplace.

CBIA's Michelle Rakebrand discusses prescription drug bill
"Mandates are driving up small business healthcare costs." CBIA's Michelle Rakebrand talks with reporters at the state Capitol.

HB 7174 creates the Connecticut Prescription Drug Program, which allows self-insured employers to buy prescription drugs for their employees through purchasing power the bill gives the state comptroller.

The program would be run through the comptroller's office and provide a drug discount card to participants.

CBIA's Michelle Rakebrand told the committee Feb. 28 that granting the comptroller broad purchasing power and the ability to charge operational fees restricts the well-established practice of engaging pharmacy benefit managers and health insurers.

Alternatively, the bill gives the state the option to contract directly with PBMs.

'No Fiscal Sense'

PBMs administer prescription drug plans for commercial health plans, self-insured employers, and state and federal government employee plans.

PBMs are projected to save consumers up to 30% or $654 billion on drug benefit costs over the next decade.

In economic terms, PBMs realize these savings from their ability to aggregate demand to gain leverage in the market, something that no state can feasibly do on the same scale.

These savings go a long way for employers who contribute to their employees' healthcare costs through cost-sharing.

If we are serious about saving small employers money on healthcare, we should be focusing on reducing mandates.
— CBIA's Michelle Rakebrand
With prescription drug costs accounting for 10% of overall healthcare spending, employers rely on the negotiating power and expertise of PMBs to reduce drug prices.

Giving that power to a state entity, or having the state contract with a PBM with an additional administrative cost, makes no fiscal sense, Rakebrand said in urging the committee to reject HB 7174.

"The mandates in this state are what drive up the cost of healthcare," she said.

"And that's what we should focus on if we are serious about saving small employers money on healthcare."

For more information, contact CBIA's Michelle Rakebrand (860.244.1921) | @mrakebrand