Ryan Gehrig (center), president of Mercy Arkansas Hospitals, testifies in favor of a bill that would allow nonprofit hospitals in Arkansas to hold retail pharmacy permits on Wednesday, Jan. 22, 2025. At right is Troy Wells, president and CEO of Baptist Health, who also spoke in favor of the bill before it was voted down by the Senate Public Health, Welfare and Labor Committee. (Mary Hennigan/Arkansas Advocate)
Lawmakers say they want legislation that satisfies the missions and finances of both hospitals and independent pharmacies
By Tess Vrbin , Arkansas Advocate
A proposed Arkansas law that would have allowed nonprofit hospitals to hold a retail pharmacy permit narrowly failed in committee Wednesday after more than an hour and a half of discussion and public testimony.
Arkansas is the only state in which the law currently prohibits nonprofit, tax-exempt, or governmentally funded hospitals from holding or acquiring interest in retail pharmacy permits.
Lawmakers have attempted for years to change this via policy proposals that intend to help both hospitals and independently owned pharmacies serve their communities, Sen. Jonathan Dismang, R-Searcy, the lead sponsor of Senate Bill 58, told the Senate Public Health, Welfare and Labor Committee.
A similar bill died in the House Public Health, Welfare and Labor Committee in 2023 and was sponsored by physician and committee chairman, Rep. Lee Johnson, R-Greenwood.
Four leaders at nonprofit hospitals supported SB 58 and said allowing nonprofit hospitals to contract with retail pharmacies will improve patients’ access to medication. Hospital pharmacies have access to specialized drugs that might be too expensive for independent pharmacies to stock, they said, and hospital pharmacies can be open 24/7 while independent pharmacies are unlikely to be open during nights and weekends.
These barriers to patients’ ability to adhere to their treatment plans after an emergency room visit or hospital stay frequently lands them back in ERs and hospitals, increasing costs for both patients and healthcare systems, said Ryan Gehrig, president of Mercy Arkansas Hospitals.
“I don’t know if anyone can argue that that’s not good for the patient when they could be home, on these meds and being productive,” he said.
The four committee members who voted to pass the bill were Sens. Ricky Hill, R-Cabot; Fred Love, D-Mabelvale; Scott Flippo, R-Bull Shoals; and chairwoman Missy Irvin, R-Mountain View, a co-sponsor of the bill.
Bills need five votes to pass eight-member committees. Republican Sens. John Payton of Wilburn, Clint Penzo of Springdale and David Wallace of Leachville voted against SB 58. Senate Minority Leader Greg Leding, D-Fayetteville, did not vote.
Sen. Jonathan Dismang (center), R-Searcy, presents a bill to the Senate Public Health, Welfare and Labor Committee on Wednesday, January 22, 2025. To the left of Dismang is James Welborn, Assistant Vice President of Pharmacy Services at St. Bernards Healthcare in Jonesboro. (Mary Hennigan/Arkansas Advocate)
Opponents of the bill and senators who voted against it said independent rural pharmacies might already be struggling financially and could be snuffed out by competition from hospitals’ in-house pharmacies.
The speakers who testified against the bill were John Vinson, CEO of the Arkansas Pharmacists Association; Lelan Stice, owner of the six Doctor’s Orders Pharmacy locations in Central and Southeast Arkansas; and Galen Perkins, owner of Express Rx, which has 26 pharmacies in eight states.
“We’re not opposed to hospitals being allowed a permit to care for their patients,” Stice said. “We are opposed to nonprofit entities unfairly competing in the market and [believe] that careful thought and consideration should be put in place to ensure fair competition in Arkansas.”
Republican Sen. Justin Boyd, a pharmacist from Fort Smith, filed Senate Bill 86 on Tuesday. It would allow hospitals to hold one retail pharmacy permit per location as long as it meets certain criteria, including the ability to dispense “emergency medications” on a 24/7 basis. The bill will be heard by the same committee that rejected Senate Bill 56.
Hospitals’ arguments and lawmakers’ doubts
Pharmacies’ financial solvency and capacity to serve patients have been at the forefront of Arkansas lawmakers’ concerns for months. In December, a legislative panel approved an Arkansas Insurance Department rule that requires pharmacy benefit managers (PBMs) to include dispensing fees in their reimbursements for prescription drugs.
PBMs are companies that serve as middlemen to negotiate prescription benefits among manufacturers, distributors, pharmacies and health insurance providers. They have been accused of underpaying pharmacies for their own enrichment, including in Arkansas.
Troy Wells, president and CEO of Baptist Health, said the state’s recent action against PBMs while pharmacies struggle underscores the need to pass Senate Bill 58.
“Wouldn’t it be reassuring that hospitals and health systems could step in and potentially meet this important need in our community?” Wells said. “We often find ourselves stepping in to meet community needs when no one else is willing to do it, especially in rural communities or other underserved areas in our metro communities.”
House Bill 1150, filed last week, would prohibit PBMs from holding permits for retail pharmacies, including mail-order operations.
Dr. Daniel Mackey, an oncologist at Mercy Fort Smith, told the public health committee Wednesday that he regularly relies on mail-order pharmacies for some patients’ chemotherapy drugs. This can delay treatment for weeks, while having pharmacies within hospitals would get patients their drugs within days, Mackey said.
Mica Knight, St. Bernards’ assistant vice president for transitions of care, agreed that hospitals would “bring dollars back into the state” by dispensing more drugs in-house.
Payton said one of his qualms about Senate Bill 58 was that it didn’t provide “assurances” that hospital pharmacies will definitely stock drugs that independent pharmacies can’t afford.
Penzo said he also did not want to pass a bill that might “put patients last” and “rob Peter to pay Paul” but hoped lawmakers, pharmacies and hospitals could come up with a compromise.
Leding said he also hoped for a compromise and did not vote on the bill out of support for local pharmacists. He added that the bill’s supporters “made a very compelling case” for it.
Dismang said he does not intend to amend the bill.
“This is about taking care of patients, and that’s my focus,” he said.
The Arkansas Advocate is a nonprofit, nonpartisan news organization dedicated to tough, fair daily reporting and investigative journalism that holds public officials accountable and focuses on the relationship between the lives of Arkansans and public policy. This service is free to readers and other news outlets.
Have a news tip or event to promote? Email White River Now at news@whiterivernow.com. Be sure to like and follow us on Facebook and Twitter. And don’t forget to download the White River Now mobile app from the Google Play Store or the Apple App Store.
Get up-to-date local and regional news/weather every weekday morning and afternoon from the First Community Bank Newsroom on Arkansas 103.3 KWOZ. White River Now updates are also aired weekday mornings on 93 KZLE, Outlaw 106.5, and Your FM 99.5.
