Gov. Brian Kemp signed legislation Wednesday tightening rules on third-party companies that play a role in negotiating pharmaceutical drug prices between insurers and local pharmacies in Georgia.

The bill Kemp signed into law requires companies called pharmacy benefits managers (PBMs) to set drug prices within a national average, a move aimed at reining in excessively high prescription prices.

PBMs act as go-betweens for prescribers and insurance companies that contract with health insurers to negotiate lower drug prices for patients. But critics have long accused them of muddying the process, prompting increases in drug prices and unnecessary delays in filling prescriptions. 

Senate Bill 313, by state Sen. Dean Burke, R-Bainbridge, also forces PBMs to offer up full rebates to health plans that are typically given by drugmakers, rather than pocketing a portion.

And PBMs will need to submit to new audits by the state Department of Community Health as well as requirements for publishing data on prescription prices online.

The bill mirrored a separate measure introduced during the 2020 legislative session by state Rep. David Knight, R-Griffin, who called the drug-price rules a compromise between PBMs, insurers, pharmacies and state officials.

“[This] will be the toughest PBM legislation in the nation,” Knight said in June. “We can finally bring transparency to drug pricing and give choice to our patients.”

PBM representatives were less enthused by the bill’s signing Wednesday. The Pharmaceutical Care Management Association, representing PBMs, argued the new rules could increase drug prices and hamstring negotiating powers PBMs use to drive down costs.

“[The bill] takes a step in the wrong direction by undermining the tools that pharmacy benefit managers, PBMs, use to reduce drug costs,” said spokesman Greg Lopes.

Burke’s bill was among the top priorities for Georgia Senate Republican leaders in this year’s session, along with measures to curb the practice of surprise hospital charges.

It followed legislation signed last year aimed at preventing PBMs from steering patients to associated pharmacies with potentially higher costs.

This week, Kemp also signed legislation by state Rep. Sharon Cooper, R-Marietta, that seeks to bolster those rules on steering and relax some penalties for pharmacies that are audited by PBMs.

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