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HARTFORDBUSINESS.COM | MARCH 20, 2023 33 Editor's Take Lobbying spending highlights key focus on health care this legislative session N eed a tell-tale sign the state legislature is in session? Look out for published reports that tout an industry's economic impact or raise red flags about impending troubles. We've seen several in recent weeks, including one from the Connecticut Hospital Association, which released a study that concluded 2022 was the worst year finan- cially for Connecticut hospitals since the COVID-19 pandemic began, as health systems faced growing challenges from dramat- ically rising costs and inflation, workforce shortages, and treating sicker patients. Collectively, the state's hospitals reported $164 million in losses in fiscal 2022, the report said, including expenses that were $3.5 billion above pre-pandemic levels. Such reports are typical this time of year as groups try to protect their interests and funding at the legisla- ture. It's a way for interest groups to grab media attention and hone their messaging to policymakers who ultimately control the purse strings. The Connecticut Hospital Associa- tion (CHA) is one of the most active and powerful lobbying groups at the state Capitol. Through the early part of this year's session, which began Jan. 4, the CHA has spent the most money on lobbying, according to Office of State Ethics data. The group reported spending $270,473.76 between January and February of this year; second on the highest-spending list was utility giant Eversource, at $146,229.87. In 2021 and 2022, CHA doled out a combined $2.2 million on state lobbying, making it the third-highest spender during that two-year period, ethics data shows. That's not totally surprising, given that health care in general is one of the most lobbied issues at the state Capitol. Of the seven organizations that have spent the most money on lobbying so far this year, three are healthcare-related, including the Partnership for America's Health Care Future, which has doled out $116,666. The Partnership represents busi- ness groups, hospitals and health insurers that have pushed back nationally against a single-payer health insurance system. The Association of Health Plans, which represents the state's health insurers, ranked No. 7, spending $71,489.36 in January and February, ethics data shows. Overall, there are 265 organiza- tions registered to lobby on various healthcare issues this session. The stakes on healthcare policy grew higher in February when Gov. Ned Lamont unveiled several proposals that aim to rein in health- care costs and improve care quality and access. That's a major theme in 2023, as the healthcare industry in general remains in flux coming out of the pandemic. Affordability remains a problem, with the cost of health care continuing to rise, putting pressure on individuals as well as employers. It's a national issue that impacts Connecticut to a greater degree. According to the Kaiser Family Foun- dation, Connecticut annually spends approximately $12,500 per person on health care, about $2,300 more than the national average. Marketplace competition has been eroded as hospitals and other care providers continue to consolidate, and the small group fully insured health insurance market is reeling following last year's departure of two competitors, Harvard Pilgrim Health Care and ConnectiCare. Meantime, pharmaceutical costs continue to rise as the popula- tion in general is less healthy post pandemic. Lamont's proposals would impact health insurers, pharmaceutical companies and hospitals. For example, he wants to elimi- nate hospital facility fees charged at free-standing offices and clinics, and outlaw certain anti-competitive contracting practices used by health systems. He's also proposing to rein in aggressive marketing practices by pharmaceutical representatives. Lamont has called all stakeholders — including employers — to the table to help solve the various problems ailing the healthcare industry. It's unclear if his pleas will be heard. There are many competing interests at the bargaining table. The state's hospitals oppose some of the Democratic governor's health- care reform initiatives, while health insurers are largely in favor. The bottom line is this: If Connecticut doesn't better contain healthcare costs, it will be another area that erodes the state's economic competitiveness. More transparency needed on pharmacy benefit managers — the health insurance middlemen By Tony Sheridan E scalating healthcare costs affect the budgets of everyone — from young families with children to senior citizens and business owners. And in today's labor market, healthcare benefits are playing an increased role in the recruitment process for businesses of all sizes. The search for answers to healthcare cost increases often turns up the usual suspects: insurance companies, pharma- ceutical companies, physicians, hospitals — even patients who ignore opportunities to improve their health. Missing from this list, however, is a significant suspect who is right in the middle of healthcare providers and patients: pharmacy benefit managers, or PBMs. What is a PBM? PBMs are the middlemen hired by insurance companies to negotiate prices for prescription drugs with pharmaceutical manufacturers and pharmacies. Long criticized by health economists, the six largest PBMs are now the target of a Federal Trade Commission inquiry launched in June. The stated goal of PBMs is to create cost savings, but the reality is far different. Instead, they find ways to drive smaller pharmacies out of business and put costs back on patients while raking in billions of dollars in profit. PBMs are known for cashing in on almost every facet of the pharmaceu- tical supply chain, and their power has grown as mergers and acquisi- tions consolidate the industry. The FTC inquiry is focusing on the role of pharmacy benefit managers as they negotiate rebates and fees with drug manufacturers, create drug formularies and poli- cies, and reimburse pharmacies for patients' prescriptions. In this role, and over time, they have inserted themselves into the operations of the biggest health insurance companies and mail-order pharmacies as key players in the development of your workplace health benefit. PBMs have significant influence over which drugs are prescribed, which pharmacies patients can use, and how much patients ultimately pay at the counter. These middlemen shape health-benefit plans while operating in an unregulated environment that includes complex business relation- ships that are largely hidden from public view — and would be virtually impossible to understand if there were any level of transparency. In other words, employers likely are unaware that a good deal of their healthcare-benefit expense is not benefiting the health of their employees at all, but rather the bottom line of PBMs because of a lack of transparency and regulation. If you're wondering at this point who these PBMs are, the six largest include some familiar names: CVS Caremark; Express Scripts Inc.; OptumRx Inc.; Humana Inc.; Prime Therapeutics LLC; and Med Impact Healthcare Systems Inc. Greg Bordonaro Tony Sheridan OTHER VOICES