Alabama Senate passes pharmacy benefit manager reform legislation

March 20, 2025 – MONTGOMERY, AL - The Alabama Senate passed a pharmacy benefit manager reform bill. Pharmacy benefit managers (PBMs) are third party businesses who handle the prescription drug plans for businesses.

Senate Bill 252 (SB252) is sponsored by state Senator Billy Beasley (D-Clayton). SB252 is PBM reform legislation requested by the pharmacies.

A pharmacy benefit manager (PBM) is a third-party administrator that negotiates costs and payments between drug manufacturers, pharmacies, and healthcare insurance providers. PBMs serve as intermediaries, helping to manage prescription drug programs for commercial health plans, self-insured employer plans, Medicare Part D plans, and other healthcare payers.

The pharmacists are getting his two ways: from competition from mail order pharmacies, that are taking an increasingly larger and larger share of the prescription drug business, and corporate PBMs who won't reimburse the pharmacy for their full cost of filling the prescription.

Beasley owned the small-town pharmacy in Clayton, Alabama for over fifty years.

"The PBM business industry has taken advantage of the role that they play," said Sen. Beasley. "We are losing almost one drug store per week going out of business because they are not getting paid the cost of filling their prescriptions for their patients. If we don't pass this legislation it is going to get worse."

Beasley said that one drug store in Alabama got a phone call on Saturday from a family where one member had had surgery and needed pain medicine. It was Saturday night and all the pharmacies in that town were closed.

"He goes down to the drug store to fill a pain relief prescription," said Beasley. "The prescription cost him $1.48. The PBM industry allowed him to charge $1.23."

Beasley said, "Once again the PBM industry took advantage of the independent small town drug stores."

Senator Larry Stutts (R-Lineville) said, "Multiple other states have done reform similar to this – some of them even stronger that this. It worked there and there is no reason this type of reform won't work here."

There is concern from some members that this legislation will cost the state money for its own prescription drug costs.

"It is actually going to save the state money because of the state employee cost for prescriptions," said Sen. Stutts. "20 years ago prescription drug costs were a low single digit percent of the healthcare dollar. This last year they were 22 percent of the healthcare dollar. Clearly what we are doing isn't successful at controlling drug costs and controlling healthcare costs."

Senator Chris Elliott (R-Josephine) offered an amendment to move the date for the implementation of this legislation to 2026.

'Senator Beasley, I appreciate your work on this," said Sen. Elliott. "You and I both have friends on both sides of the issue and you have done a masterful job charting a middle ground here."

"If we don't do something to help the retail drug store keep his drug stores open where he can provide services to his patients, we are doing a disservice to the people of Alabama," said Sen. Beasley. "The people of Alabama depend on their local community drug stores whether it is in a small town or whether it is in a urban city like Birmingham, Mobile, Montgomery, Dothan. They have community pharmacies scattered throughout the large cities."

Beasley said that Eufaula, the largest city in his native Barbour County, used to have seven pharmacies, today they have one and that the owner of that pharmacy is having to close the drug store in his hometown because the PBM industry is not reimbursing him properly.

"The drug cost $100 they may reimburse $80," said Beasley. "The drug may cost $400 and they reimburse $320. It is happening in every county in Alabama. You can't stay in business filling prescriptions and losing $80. It is happening in every county in Alabama."

Beasley explained that as a former independent drug store owner you have to sign the agreement with the PBM to be a network pharmacy or you can't do business with most of the customers.

"CVS was the first one I signed a contract with," Beasley said. "I signed with Express Scripts, Medco, Humana." "The Pharmacy Benefit Manager industry - they don't consider the cost of doing business in Alabama. If we don't pass a pharmacy benefit manager reform legislation they are going to continue to run over the local drug stores."

Beasley said that some drug store owners, "Don't have enough money left in their bank accounts to restock the shelves or even to pay the salaries of their employees. Many of them can't afford to offer healthcare insurance to their employees. The Pharmacy Benefit Manager Industry doesn't care."

The Elliott amendment failed.

Senator Andrew Jones (R-Centre) offered an amendment to delay implementation of this bill for 90 days.

Senator Greg Albritton (R-Atmore) was concerned that short of a window would move some of the cost of this to the current budget year which ends on September 30.

"This is a poor poor policy if we adjust the budget that we have already passed," said Senator Albritton.

Jones withdrew his amendment and offered to change the date to October 1 (the start of the 2025 fiscal year).

"The implantation of the reimbursement will not cost the consumer," said Sen. Beasley. "Nothing in this measure will cause any pain to the citizens of Alabama."

Senate Pro Tem. Garlan Gudger (R-Cullman) offered a compromise amendment to settle both sides of the debate. That compromise amendment passed and then SB252 passed the Senate 32 to 0.

Gudger released a statement on Thursday after the legislation regulating pharmacy benefit managers that was approved by the Senate.

"The compromise bill simply states that pharmacies cannot be forced to sell prescription drugs for prices lower than those it cost to acquire them," said Sen. Gudger's office. "As a result of negative reimbursements, more than 50 independent pharmacies have already shuttered their doors this year in towns, communities, and crossroads across the state."

"Everyone understands that consistently selling a product for less than you bought it is a recipe for bankruptcy, closure, and economic failure, but small-town drugstores and independent pharmacies in every area of the state are forced to do exactly that under the current regulations," said Gudger. "The legislation approved by the Senate is a pro-business measure that simply levels the competition for businesses of all sizes ranging from hometown, mom-and-pop pharmacies to the largest retail drug chains. Most importantly, it shields consumers from having to pay higher costs at the cash register for the medicines they need to remain healthy and survive."

"The only opposition to the legislation comes from special interests making annual revenues in the billions of dollars and profits in the hundreds of millions each year," continued Gudger. "Small independent pharmacists are among the most trusted and respected individuals in our communities, especially in the rural parts of Alabama, and it is our job to ensure they operate under fair and impartial regulations."

This issue has been debated for years with pharmacists: Beasley and Sen. Tom Butler (R-Madison) leading the effort.

"Sen. Billy Beasley, Sen. Andrew Jones, Sen. Larry Stutts, and Sen. Tom Butler devoted years of work to solving this stubborn problem, and they deserve our deepest thanks for finding a commonsense solution that protects consumers, pharmacists, and businesses alike," Gudger said.

The bill now goes to the Alabama House of Representatives for their consideration.