Lawmakers approve several crucial funding measures for state agencies, Sanders’ security detail, PBM fines
LITTLE ROCK, Ark. – Arkansas Legislative Council members signed off on several measures Friday in a committee meeting – impacting state prisons, Governor Sarah Sanders, and pharmacy owners & pharmacy benefit managers.
Despite some pushback from lawmakers earlier in the week over the procurement process the Department of Corrections used to accept a $1.5 billion medical contract with Wellpath LLC, the funding request was approved by the ALC.
However, legislators were adamant that in the future, the DOC and other state agencies using this procurement process will need to use a different method when deciding on contract bids; one that takes the state's money into consideration much sooner.
Secretary of Corrections Lindsay Wallace told legislators earlier in the week that the process the DOC used did not look at the price of the bids they were deciding between until they were down to the final three, based on a technical scoring system.
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In Friday's meeting, she clarified that the department has since gone back and compared the bids they received from every company, and, by chance, ended up with the lowest bid anyway.
"It is clear that we didn't meet your expectations, and the two provisions related to the next step were poorly written," Wallace told the committee Friday. "We believed that only taking the three top technical scores was the appropriate way to proceed, but since we've opened all our reports the result was the same even when we did consider the pricing."
The contract with Wellpath LLC. is for medical, dental, pharmacy and mental health services for inmates and offenders in the custody of the Department of Corrections. The $1.5 billion contract is said to last the state prisons up to the next ten years.
The committee also approved funding request, giving Arkansas State Police the $1.2 million Colonel Mike Hagar requested in order to provide enhanced security for Governor Sarah Sanders' protection detail.
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Specific details regarding the security measures are no longer available to the public under FOIA revisions made in a 2023 special session called by Sanders.
Though lawmakers, who do have access to the breakdown of the protection methods, have said the money would provide bulletproof vests for detail staff and equipment upgrades to the governor's mansion, noting that there has been an increased need during the current administration.
Additionally, the committee gave the final OK to the emergency rule associated with state law cracking down on pharmacy benefit managers accused of ripping off pharmacies in Arkansas for years.
According to state law, no PBM can pay a pharmacy below their cost to purchase a drug and below a fair and reasonable rate on top of that. However, pharmacists testified to lawmakers in a Thursday meeting that the law has not stopped the PBMs from ripping them off and putting their livelihoods at stake.
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The emergency rule, now in full effect, directs the Arkansas Insurance Department to issue PBMs up to $5,000 in fines per violation of that state law.
In Thursday's meeting, representatives from AID discussed with lawmakers some potential routes the state can take if PBMs do not pay those fines. One possibility would be increasing dispensary costs for prescriptions, meaning Arkansans could pay up to 3-4% in prescriptions to help keep pharmacies afloat.
While Senator Jonathan Dismang (R-Beebe) did not oppose the motion to pass this emergency rule, he did voice some concern over the possibility of increased prescription costs for Arkansans if PBMs do not comply with the fines.
"Everybody knows inflation's miserable, hopefully we're plateauing, but this is just going to add to that... or has the potential to," Dismang told AID spokesmen.
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AID General Counsel Booth Rand responded to Dismang saying he agrees with that concern and said the bulletins they will be sending out defining the standards clearly to PBMs will be crucial in this effort. He added that they will include the legislature throughout the process of implementing the rule.
Senate President Bart Hester (R-Cave Springs) told KARK/FOX16 after the meeting that, while the increased dispensary costs are a possibility, ideally the legislature will be able to enforce other measures holding PBMs more accountable to the fines if they do not pay.
He added that this would likely mean kicking companies out from doing business in Arkansas if they are found to be violating state law. If this becomes a problem, lawmakers will begin addressing it in the 2025 legislative session beginning late January.
