White bagging, or alternative sourcing of medications, is when employers work with their preferred pharmacy partners to send an enrollee’s clinician-administered medication directly to the site of care, when it is both safe and cost effective to do so. This allows employers to bypass hospital pharmacy markups on expensive specialty medications, which according to studies are 200-400% on average.
A proposal introduced during the 2021-22 session would prohibit health plans, insurance intermediaries, PBMs and “affiliated partners” from buying expensive clinician-administered medications from any source other than a hospital pharmacy, granting hospitals a monopoly on these medications. The legislation expressly requires health plans to authorize, pay or approve a covered drug that is typically administered in a clinical setting in nearly every situation, and prohibits benefit limitations, higher copays or coinsurance, or penalties applicable to clinical administered drugs obtained from hospital pharmacies.
We are all aware of what will happen to the markup on these medications should it become illegal to purchase clinician administered medications from any other source outside of a hospital pharmacy.
Employers from around the state were instrumental in stopping the ban on white bagging from passing during the 2021-22 session, and it was not introduced during the 2023-24 session after members of Advancing Free Market Healthcare and other business organizations did work to explain to lawmakers how the bill is anti-free market and detrimental to employers and employees.
Unfortunately, we understand the author of the legislation is interested in bringing it back in 2025-26. This is a perfect example of why we continue to work to amplify the employer voice in health policy discussions, and why it is a long-term ongoing effort. Please consider joining Advancing Free Market Healthcare today, so we are stronger in standing up to the powerful industry interests working to squeeze more revenue from employers and employers. We don’t need any more legislation that would add costs to the system. Visit our Get Involved page to learn more.