Unlocking $70M for Illinois Pharmacies: Your Guide to HB 1697

Joe Meinholz (00:06):

Hello, welcome to a webinar from the Independent Pharmacy Cooperative for Illinois independent pharmacy owners regarding the passing of Illinois HB 1697, the Prescription Drug Affordability Act. Today we have John Covello, the Senior Director of Government Relations with Independent Pharmacy Cooperative, and Garth Reynolds, the Executive Director of the Illinois Pharmacists Association. Today, John and Garth will be discussing the Prescription Drug Affordability Act and what you as an IPC member in Illinois need to do to get the benefits from this legislation. Gentlemen, welcome. Thank you for taking the time to discuss this law and how it will affect Illinois pharmacies.

John Covello (00:46):

Great. Thank you, Joe. I really appreciate you being able to do this recorded webinar for the benefit of all IPC independent pharmacy store owners in Illinois. As Joe stated, I’m John Covello, the Senior Government Relations Director for the Independent Pharmacy Cooperative. I work collaboratively with many states across the country advocating for policies and legislation to benefit our independent pharmacy store owners. I’m really thrilled that we’re able to do this today. I have my colleague and very dear friend, the Executive Director of the Illinois Pharmacists Association, Garth Reynolds, with us, and we’re going to be giving you some really important information that will help your bottom line in Illinois for your prescriptions. So Garth, I really thank you for making the time to do this. I know IPC as our government relations advocacy team and our communications team, we’ve been working together for almost a decade, and I know we’ve accomplished a number of things over the years that culminated in this. But I wanted to give you a chance to introduce yourself to our members before we talk about this really important legislative advocacy accomplishment that will benefit every independent owner in the state of Illinois. So thank you for joining me today, Garth.

Garth Reynolds (02:08):

No problem, John. And thank you very much for the opportunity to be with you today to talk about this important piece of legislation and also our partnership. As you stated, IPC and the Illinois Pharmacists Association have been working hard for PBM reform for well over a decade, and the fruits of our labor and advocacy are shown and moving forward with the culmination of this phase of PBM reform. As I will always say, once we’ve gotten this done, we still have more work to do, and that’s even the case with this.

John Covello (02:44):

So Garth, I think it’s good to start going through the slides of where we started and how we got here. I know you go back as an association all the way to 2008, but really I think when we started getting some serious laws on the books, even before the Rutledge decision in 2020, and how that, along with COVID, accelerated our ability to finally get legislators to pass significant policy reforms to PBMs in Illinois.

Garth Reynolds (03:17):

Yeah, exactly. And a lot of that started with what we’ll be talking about and coming back to at the core of this discussion today, and that’s our Critical Access Care Pharmacies. That program was started back in 2018 and helped establish a dedicated fund of $10 million a year for identified pharmacies both in rural and some urban areas to help supplement some of the losses that we’re seeing in these programs as we continue to have these discussions. We saw that advance with the enhanced professional dispensing fee being added to the contracts in 2019, even though they didn’t get it enacted until January of 2023. They did get retroactive payments, but legislatively, the biggest foundation that had to get laid was in 2019 with establishing that we defined PBMs and regulated them, establishing some base protections that then continued. Now, granted, COVID caused us to hit pause for a little bit, like it did everywhere else, while trying to address these issues, but in that time we kept talking with legislators, advocating, and telling our story. We asked the state to finally do their own homework and look at their own files to see what they could find.

And that’s what they did by asking the Auditor General in 2022 to do a performance audit.

John Covello (04:38):

Well,

Garth Reynolds (04:39):

That took a year, and what we saw is $200 million was found and spread over that time.

John Covello (04:46):

I see us now at a point that we came out of COVID more cohesive, more coordinated, and a lot more strategic in trying to capitalize on the Rutledge ruling that states could regulate in this area. And the acknowledgment finally from what our members produced during COVID, that pharmacies were critical to community health needs throughout the country, is something we’re finally realizing the challenges of.

Garth Reynolds (05:18):

And I think that also translated to the movement that we were able to have here, because not only with putting in audit reforms and more transparency, which got us to the point where we were in 2024, but also with changes in leadership at the Department of Insurance, with Director Gillespie coming in and bringing all her years of expertise working on the PBM side, saying we need to pull the curtain back, and then the leadership of Governor Pritzker making this a healthcare priority. That was really the spearhead point that helped drive this forward in 2025.

John Covello (05:52):

Well, and Garth, there’s an old saying in government and politics: personnel is policy. The changes from Governor Pritzker coming in, the people he put in his office, including former State Senator Mannar, who really was a champion in the legislature on these issues, and Director Gillespie coming from the healthcare and insurance industries, understanding what goes on in profit-driven dynamics — I think Illinois is a model. Why don’t we move on to talking more about this bill and how it creates the Independent Pharmacy Access Preservation Program.

Garth Reynolds (06:32):

Because when you start to really crack the cover on this bill, it is a massive piece of legislation.

John Covello (06:39):

And

Garth Reynolds (06:39):

The best way to look at it is to put it into three different buckets. First, looking at business practices, restoring fairness, and stopping abuses. Second, looking at data so the Department can continue oversight, which involves enforcement, transparency, and accountability. Finally, which is the main reason for our discussion today, is supporting pharmacy sustainability and preserving patient access. One thing discussed throughout this process is that we need to shore up the crumbling foundation of our pharmacy access system and correct the trend of growing pharmacy deserts.

John Covello (07:24):

What I saw coming out of COVID, culminating this year, is all the closures and reductions in services in Illinois, dramatically seen with Walgreens and CVS closings, Rite Aid gone, and other stores. Legislators are seeing the impact of store closures in their districts. It’s not just the closures, but also cutbacks in drugs and services. Insurers now call the remaining essential stores “keystone pharmacies.” We may do another webinar after January 1 on enforcement of PBM regulations and the Lifeline Pharmacy independent pharmacy program for Medicaid, including fee-for-service and managed care.

Garth Reynolds (08:39):

One thing I want to point out is the banning of spread pricing. PBMs cannot reimburse affiliated pharmacies more than they do anyone else in the network. This will correct some of the lower reimbursements and dispensing fees seen today.

John Covello (09:08):

This slide shows where they’re going to have teeth to enforce this. It gets to what you may colloquially call the lifeline program, a patient access preservation program for Medicaid.

Garth Reynolds (09:36):

Right. There are a couple of aspects. First, the annual pharmacy dispensing fee. The state will conduct a study, likely by local experts from colleges of pharmacy, to understand pharmacy and healthcare in Illinois. Participation is essential. The second point is clarifying PBM authority. Previously, PBMs and MCOs could bypass certain rules under HFS. Now, the Department of Insurance has authority over PBMs doing business in the state and they must follow the insurance code, including oversight actions.

John Covello (10:58):

This is important. About 11 states are applying this to state employee health programs. Success is being seen in 33 states applying cost-based reforms in Medicaid. Now, MAC prices, restricted networks, audits—all will have teeth in commercial and public employee contracts and Medicaid managed care. Departments will provide online tools for complaints about PBM abuses.

Garth Reynolds (12:12):

Yes. We need a complaint process that is actually usable. The current Illinois system does not properly enable pharmacists or patients to report PBM issues. We are showing the department best practices from other states.

John Covello (12:37):

We’ll help educate on effective online tools for PBM complaints so pharmacies, patients, and PSAOs can file them.

Garth Reynolds (12:55):

Exactly. PSAOs can aggregate data better than individual stores. Another major update is correcting the definition of Critical Access Pharmacy.

John Covello (13:18):

Yes. Let’s get into the Medicaid benefits.

Garth Reynolds (13:20):

Yeah. One of the biggest components here is that over the creation of the program, the original legislative definition only recognized pharmacies in counties with 50,000 residents or less. The rules recognized pharmacies in counties with 50,000 or more if they were in medically underserved areas. But the confusion between the legislative definition and rules excluded many pharmacies from enhanced dispensing fees. This new definition fixes that, which is a huge point coming January 1.

John Covello (14:15):

So Garth, if I understand correctly, St. Louis, Springfield, Peoria, Chicagoland, and other major metropolitan areas are now included in this program for pharmacies that previously weren’t eligible?

Garth Reynolds (14:40):

Yes. Some pharmacies may still not fit the criteria, but there’s a coverage program to include as many as possible.

John Covello (15:08):

We talked about the CAP program and the support infrastructure. This is important for members to understand which bucket they may fall into.

Garth Reynolds (15:19):

Yes. Apply for any and all programs. Don’t miss opportunities due to assumptions. A very small window is coming up for applications.

John Covello (15:58):

Explain the two buckets.

Garth Reynolds (16:00):

Critical Access Pharmacy fund was $10 million, now increasing to $45 million. Application details are being finalized with the Department. Even current participants must re-apply for the annual period.

Joe Meinholz (16:40):

That

Garth Reynolds (16:41):

Window is open now. Make sure you apply.

John Covello (16:57):

Everyone should submit an application this month.

Garth Reynolds (17:04):

Absolutely. Takes just seconds.

Joe Meinholz (17:16):

And it’s

Garth Reynolds (17:16):

A new program run by the Department of Commerce and Economic Opportunity (DECO). PBMs are assessed fees for covered lives. $25 million of these fees support additional pharmacy programs, including critical access pharmacies and smaller retail pharmacies.

John Covello (18:28):

This fund preserves access for independent pharmacies statewide, even those not in underserved areas.

Garth Reynolds (18:55):

Correct.

John Covello (18:56):

$70 million fund, exclusively for independent owners with 10 or fewer stores. Not going to CVS or Walgreens.

Garth Reynolds (19:39):

The DECO criteria include additional definitions beyond MUAs to help cover more pharmacies.

John Covello (20:05):

The definitions are broad enough for IPC members to likely qualify.

Garth Reynolds (20:29):

This helps lower costs for patients, improve access, sustain pharmacies, and ensure fair competition.

John Covello (21:05):

The process slide is critical: what pharmacy owners need to do to receive $15.55 per script.

Garth Reynolds (21:21):

Forms went out via memo from HFS. Complete online or via QR code by October 31. Dedicated email: [email protected]
.

John Covello (22:38):

Stores must provide basic info to Medicaid: address, NPI, Medicaid provider number, number of locations, and attestations.

Garth Reynolds (22:42):

Yes, takes less than a minute. No additional data required.

John Covello (23:18):

Different form for infrastructure fund.

Garth Reynolds (23:25):

Correct.

John Covello (23:30):

This ensures pharmacies get $15.55 per script. Most important takeaway.

Garth Reynolds (24:02):

Don’t leave your pharmacy out. Apply to keep it sustainable.

John Covello (24:15):

Anything else stores need to know?

Garth Reynolds (24:23):

Stay on top of notifications from IPC, IPHA, and PSAOs. Momentum is positive, but challenges remain.

John Covello (25:14):

IPHA is a great partner. IPC urges membership for support and advocacy.

Garth Reynolds (25:46):

Membership includes discounted group rates for staff. Annual conference in Lombard, Oct 9–12.

John Covello (26:39):

Members can see the benefit of being an IPC/IPHA member.

Garth Reynolds (26:45):

Yes.

John Covello (26:46):

Shows strength and progress through unity.

Garth Reynolds (26:57):

Absolutely.

John Covello (26:57):

Joe, back to you. Apply now; money is on the table.

Joe Meinholz (27:24):

Thank you John and Garth. Slides and webinar will be sent to everyone. Take action.

John Covello (27:41):

Great. Thanks everyone.