By ANDREW ADAMS
Capitol News Illinois
aadams@capitolnewsillinois.com

CHICAGO — State officials kicked off the private renovation of the building which once served as the state government’s Chicago headquarters. 

The James R. Thompson Center, as it was known under state ownership, was sold in 2022 to a development firm that is renovating the building for its to-be occupant, Google. In exchange for the building, the state received $30 million and a $75 million office building on LaSalle Street in Chicago. 

The Silicon Valley-based tech giant intends to use the building for its Chicago offices after the $280 million renovation project is complete, which is expected to take several years. 

As of Monday, construction fencing had been erected, debris littered parts of the building’s 17-story atrium and parts of the building’s first-floor curtain wall were already gone. 

Renovations begin at the James R. Thompson Center. (Capitol News Illinois photo by Andrew Adams)

“It already looks better than when we owned it,” Gov. JB Pritzker quipped on Monday. 

The Thompson Center, built in 1985, gained a reputation for being difficult to maintain. At the time of its sale, the governor’s office said the state spent $17 million annually on the building due to “operational inefficiencies” and that bringing it up to standard would have cost more than $325 million. 

The building, which housed offices for the secretary of state, governor, attorney general and other state agencies, was known for being an unusual and, at times, uncomfortable place to work due to its open design and difficult temperature regulation. 

The exterior facade of the James R. Thompson Center is pictured in Chicago. Under plans announced by its to-be occupant Google, the facade will be replaced in the coming years. (Capitol News Illinois photo by Andrew Adams)

“I can guarantee you there is no one more excited about today than me,” Raven DeVaughn, head of the state’s Department of Central Management Services, said Monday. “Because I know now that when I have a property management issue at CMS, it is not the HVAC system at the Thompson Center.” 

The renovation design is being handled by Jahn, the architecture firm founded by the building’s original architect, Helmut Jahn, and now led by his son Evan Jahn. Renderings released by Google in December show that it will retain its atrium, although its ground-floor colonnade will be redesigned. 

The building will also be LEED Platinum certified, according to Karen Sauder, Google’s Chicago site lead. 

Over its 39-year history, the building has gained fans despite its operational problems and polarizing design. The postmodern building featured uncommon colors meant to evoke the red, white and blue of the U.S. flag, new-age materials, and a design that radically reinterpreted traditional elements of other civic buildings.

The interior of the James R. Thompson Center, with exposed stairs, structural supports and its prominent elevator shaft, is visible from the ground floor of the 17-story atrium. (Capitol News Illinois photo by Andrew Adams)

Paul Gapp, Pulitzer Prize-winning architecture critic for the Chicago Tribune, called it “the most cerebral, the most abstract, yet easily the most spectacular building ever constructed in the Loop” when it opened in 1985. 

Architectural historian Elizabeth Blasius co-founded Preservation Futures, a Chicago-based preservation firm, after her experience as part of the James R. Thompson Center Historical Society. Blasius was part of the team behind a 2020 push to place the building on the National Register of Historic Places. 

“You have this really nice encapsulation of an era of architecture, when governments were sort of building really grand public buildings,” Blasius said. “James R. Thompson, who championed the design of the Thompson Center, was a Republican administration that wasn’t really afraid to spend money on a building that was really supposed to say something very clear about state government’s presence in Chicago.” 

Gov. JB Pritzker (right) and Chicago Mayor Brandon Johnson (left) together sign a panel that once hung on the James R. Thompson Center in Chicago. After being sold by the state, the building is being renovated to make space for its next occupant: Google. (Capitol News Illinois photo by Andrew Adams)

Blasius noted that while her efforts to grant the building legal protections through either a national or local historic designation were unsuccessful, she views the current project as a “win for preservation,” citing the early looks at the renovation plans and the fact that building demolition is often harmful for the environment. 

Still, she will be watching what the building’s developers and Google do with what was once public space, such as the building’s plaza, food court and other public amenities. 

While Sauder reaffirmed Monday that passengers will continue to have access to the train station that runs through the building once Google moves in, much of the public’s use of the building remains uncertain under private ownership. 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

Chicago mayor Brandon Johnson spent Wednesday in Springfield where he met with state leaders on a number of topics, including funding for Chicago Public Schools.

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Chicago Mayor Brandon Johnson is looking to get a little help funding Chicago Public Schools. The mayor was in Springfield on Wednesday trying to get state lawmakers to pony up more state tax dollars.

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As legislative session nears its end, policy platform part of ongoing clean energy debate

By ANDREW ADAMS
Capitol News Illinois
aadams@capitolnewsillinois.com

A group of lawmakers and influential environmental advocates are calling for broad changes to the state’s energy industry and a massive increase in state oversight of Chicagoland’s transit system, which faces a projected $730 million budget shortfall. Advocates for the policy platform, which is broken up into three bills, describe much of it as a follow-up to the 2021 Climate and Equitable Jobs Act, a landmark energy policy that set emissions goals for the state and massively altered the state’s energy sector.

The proposals, unlikely to be passed in their current form this year, reveal how influential lawmakers, including the chairs of the Senate Transportation Committee and House Energy and Environment Committee, are approaching looming transit problems and navigating the state’s energy transition. The measures seek to require gas utilities to have net-zero carbon emissions by 2050, include more consumer protections in utility planning, and require the state to use an entirely zero-emission fleet of vehicles by 2048.

In addition, one proposal in the package would massively reform oversight of the state’s largest transit system, creating a new “Metropolitan Mobility Authority,” replacing the Regional Transportation Authority and giving the state more control over the Chicago region’s transit. The platform is backed by the state chapter of the Sierra Club, the Illinois Environmental Council, the Natural Resources Defense Council and the Illinois Clean Jobs Coalition.

The legislation was introduced early this week, with less than a month of the legislative session to go. Advocates said much of the package is meant to encourage conversations between regulators, state officials and groups in the private sector. “This is about a transition to a cleaner electric grid, and cleaner heat for our homes,  and more savings that go with those,” Jack Darin, head of the Illinois Sierra Club said on Tuesday, May 7.

Transit reforms

The new Metropolitan Mobility Authority would be created through House Bill 5829 as a new agency responsible for overseeing the Chicago Transit Authority, Metra commuter rail service, and PACE bus service. Dubbed the Clean and Equitable Transportation Act, it was first publicly announced by Sen. Ram Villivalam, D-Chicago, on Monday, May 6.

The proposal stems from what Villivalam called “ongoing conversations” with business, labor and local governments, as well as a pair of reports from the region’s current oversight authority and the state’s regional planning organization. “It’s time to put pen to paper. It’s time to be bold in our vision for what a world-class public transit system should look like,” Villivalam said at a Monday news conference.

The notion of a new board has been picking up steam among influential planners and researchers in recent months. The state’s Chicago Metropolitan Agency for Planning proposed the idea, among several other potential policies, in December at the request of the General Assembly.

Last week, the Civic Federation, a non-partisan research organization with a long history of involvement in Chicago and state politics, released a paper calling for a similar reform.

Oversight of the MMA would be similar to the existing board of directors for the RTA, but with three new seats added, all appointed by the governor. Currently, the board is made up of sixteen members appointed by the Chicago Mayor and county board members in Cook, Kane, DuPage, Lake, McHenry and Will counties. Additionally, the CTA and suburban transit systems would be abolished and their functions would be absorbed into divisions of the newly created agency.

Laura Wilkison, the senior director of policy at CMAP who led the team that wrote the recommendation for structural reform, said the financial state of the region’s transit must also be considered. Last year, the leadership of the RTA raised alarm bells when its executive director told state lawmakers the organization is facing an annual $730 million budget gap in 2026 and beyond. RTA officials warned that the state might need to step in and provide funding or reform the funding mechanisms for the beleaguered agency. “We are very aware that it is going to be a difficult, hard conversation and that we need to have that in order for the transit system to survive,” Wilkison said.

CMAP estimated in its December report to state officials that the system needs $1.5 billion in new annual operating funds to resolve its ridership, reliability, and governance issues. The planning group proposed raising this money from a variety of sources, including raising a regional sales tax that’s currently used to fund RTA, introducing a new vehicle registration surcharge in the region and a possible expansion of tolls. While some of these reforms can happen with internal policy changes, many of them require state approval.

The system has also faced a slow recovery in ridership in the years since the height of the pandemic. In 2023, the three systems provided 330 million passenger trips, just over half of its peak in 2012, when the system saw 659 million trips, according to RTA data. In 2019, the final year before the pandemic, the system saw 550 million trips.

The CTA specifically has faced criticism over reliability issues on bus routes and some train lines as well as questions over its hiring practices and workplace safety. Two weeks ago, Gov. JB Pritzker called for an “evolution of leadership” at the agency after being asked a question about a Block Club Chicago investigation into the on-the-job death of a CTA bus driver. “Change is going to have to come, there’s no doubt, to these agencies,” Pritzker said Tuesday, May 7. “But I’m not endorsing any particular proposal at the moment.”  The governor added that he hopes to see more proposals to address issues within Chicagoland transit “so that we can consider what direction to take.”

In addition to the governance reform, the bill would require the newly formed MMA to purchase only zero-emission buses after 2026 and require transit planners to consider the “social cost of carbon,” a monetary estimate of the damage done by emitting greenhouse gasses, when considering new projects.

Limiting natural gas

The second piece of legislation in the environmentalists’ package, Senate Bill 3935, would institute a “heat decarbonization standard,” requiring gas utilities to reduce their carbon emissions each year, beginning with a 24 percent reduction in 2031 and 100 percent by 2050. “We must reduce pollution in our buildings,” bill sponsor Sen. Celina Villanueva, D-Chicago, said Tuesday. “We must begin a managed transition away from dirty, expensive gas.”

The legislation also puts new emissions standards on natural gas building heaters and would require all water heaters sold in the state after 2030 to emit no nitrogen oxide gases. That pollutant can cause harmful health effects and can contribute to the formation of greenhouse gases. “Not only is gas expensive, but burning it in our homes produces dangerous pollution,” Villanueva said, later noting that heating affordability is among the topics that her office receives the most calls and emails about.

Madeline Semanisin, an advocate for building decarbonization at the NRDC, said the proposal’s late introduction this year was intentional and that advocates are “really just getting the conversation started this year,” adding that reform will be necessary to meet the state’s commitments to decarbonization. Many of the specifics of how that transition would be managed and regulated could come from a later state-backed study of the subject outlined in the bill.

Matt Tomc, head of regulatory affairs for Ameren Illinois, said he looks forward to reviewing the legislative package and that Ameren will “continue to have conversations with key stakeholders” on the subject. In addition to the shifts in emissions policy, the legislation would also create a “State Navigator Program” to guide people on how to receive financial assistance to pay utility bills or upgrade to electric heat. The legislation would also require gas utilities to phase out fixed charges on customer bills, requiring that all charges be tied to how much gas a customer uses each month. “We can’t meet our climate goals and address public health issues by maintaining the status quo,” Semanisin said.

Many of the groups advocating for these changes, including the NRDC, are also participating in the Illinois Commerce Commission’s “Future of Gas” proceeding, which is a series of workshops that is meant to inform future policy. That process is not expected to finish until next summer.

Electric grid changes

The final portion of the policy package is Senate Bill 3637, which would require utilities to file plans with state officials every three years that outline how the utility intends to reduce customer costs and environmental impacts. The bill also would require the Illinois Power Agency, when considering where utilities purchase electricity, to consider the “social cost of carbon” when comparing renewable and non-renewable energy prices.  “It will require new commitments from all of us to ensure that our electric grid is strong, reliable and affordable,” Rep. Ann Williams, D-Chicago, said at a news conference Tuesday.

The bill would also require utilities to offer a new “time of use” rate for electric customers, which sets the consumer price of electricity based on the time of day it is used. Williams noted on Tuesday that the electric system also needs to expand its transmission infrastructure, which has been the subject of tense debate over the past year as utilities have attempted to take control over building what could be billions of dollars of new power lines.

Editor’s note: This story has been corrected to reflect that Senate Bill 3637 is the final bill in the legislative package. The description in the final section has also been updated to reflect that bill number. The story has also been updated with the correct name for the Natural Resources Defense Council. Capitol News Illinois regrets the errors.

Cole Longcor contributed reporting to this story.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

Advocates seek $50M to keep programs operating

By PETER HANCOCK
Capitol News Illinois
phancock@capitolnewsillinois.com

SPRINGFIELD – Advocates for community-based after-school programs say as many as 40,000 youths statewide could lose access to tutoring services, recreation and other extracurricular activities this summer unless Illinois lawmakers approve an infusion of funds to keep them going. “The time is now for legislators to act to save after-school (programs),” Susan Stanton, executive director of Afterschool for Children and Teens, or ACT Now, said at a Statehouse rally Tuesday, May 7. “We literally only have weeks left before programs have to shut their doors. Staff will be laid off and families will be in crisis.”

ACT Now is a coalition of groups such as local YMCA chapters, Boys and Girls Club, and other community-based organizations that provide academic enrichment activities and other services during non-school hours for children and teens, particularly those attending high-minority, low-performing schools. The programs that are at risk receive federal funding through the U.S. Department of Education’s Nita M. Lowey 21st Century Community Learning Centers program.

That money flows through the Illinois State Board of Education, which awards competitive grants to local programs. Those grants are made in three-year or five-year cycles. At the end of that cycle, the grants can either be renewed or the organization can reapply through a new competitive grant process.

The problem facing many programs whose grant cycles are expiring is that in 2023, ISBE miscalculated how much money was available and made commitments to award more grants than the state could fund. As a result, many programs whose grant cycles are expiring cannot get them renewed because there is not enough funding available. Advocates are seeking $50 million in state funding to make up for the anticipated shortfall.

Stanton said programs serving about 6,000 students were forced to close at the end of the previous fiscal year, and without an injection of state funds, another 40,000 students will lose access to services after June 30 this year.

State Sen. Ram Villivalam, D-Chicago, has proposed legislation that would commit $50 million a year in state funds for the 21^st Century Community Learning Centers. “It’s not enough for us to say we support quality, safe and vibrant learning environments for our youth. We have to provide funding for that to happen,” Villivalam said. “I believe … that investing in childhood education is an investment in our future communities, and not something we should take lightly.”

Gov. JB Pritzker’s budget proposal calls for about $234 million for after-school programs, most of which would come from federal money. Stanton said that is a different program that sends funds for after-school programs directly to school districts, not to the community-based organizations that receive 21^stCentury Community Learning Center funding.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

By DILPREET RAJU
Capitol News Illinois
draju@capitolnewsillinois.com

As state lawmakers hold hearings targeting the role of pharmacy benefit managers – an influential arm in how the health insurance industry prices prescription drugs – multiple state agencies are considering how to better regulate the industry.

Often referred to as pharmaceutical “middlemen,” PBMs act as third-party intermediaries who negotiate the availability and price insurance companies or pharmacies pay for prescription drugs from pharmaceutical manufacturers. In determining the drugs covered by a given employer insurance plan, the companies can ultimately dictate what drugs are available to patients and pharmacies alike.

PBMs have received growing scrutiny on both a state and national level for the effect many claim they have on driving up drug prices. Local pharmacy owners testified at recent committee hearings that they are being squeezed by PBMs through the price of acquiring drugs wholesale and dispensing them, often at no profit or even at a loss. Over 40 percent of local pharmacies in Illinois – about 300 locations – have closed since 2013, according to the National Community Pharmacists Association.

“On almost every brand name medication that you fill, you lose money,” Michelle Dyer, pharmacist and owner of Michelle’s Pharmacy in Macoupin County, told the House Health Care Availability and Access Committee this week.

It was one of multiple recent hearings on the companies, and it followed last week’s review of a scathing audit of the state’s oversight of the industry. In part, the audit from 2023 found state regulators had scant documentation required for effective oversight of PBMs.

Joe Butcher, of the auditor general’s office, told lawmakers on the Legislative Audit Commission that the Illinois Department of Healthcare and Family Services failed to collect documents relevant to state Medicaid spending, which it is responsible for overseeing. Without necessary documents, Butcher said, the state cannot adequately exercise oversight authority.

“HFS was not engaging in monitoring practices of PBMs as mandated by the Illinois Public Aid Code, which establishes several provisions for monitoring PBMs,” he said.

HFS Director Elizabeth Whitehorn, who was appointed in January, said she was not sure how HFS failed to obtain documentation from entities under its watch.

“I don’t want to speak for what the department did or did not do before I was here,” she said. “I don’t know if the department ever asked for the contracts and they were not provided, or if the department simply didn’t ask for them.”

Whitehorn told lawmakers the department will soon file a new rule to help the department supervise PBMs, in part by requiring PBMs to divulge more information about their potential conflicts of interest. That will kick off a rulemaking process through which the department plans to submit the rule by June to the Joint Committee on Administrative Rules.

Corporate consolidation

Many PBMs, part of an industry that launched in the 1960s as prescription drugs became a consistent part of health plans, started as independent companies but were purchased by drug manufacturers in the 1990s.

Three publicly traded PBMs – CVS Caremark, Express Scripts and Optum RX – control about 80 percent of the U.S. PBM market, and the top six companies have over 95 percent, according to the Journal of the American Medical Association.

The state’s newly appointed insurance director, meanwhile, indicated her willingness to help regulate the industry, citing the consolidation of ownership as detrimental to patients. Ann Gillespie, a former CVS Caremark employee, was elevated to insurance director from the Illinois Senate by Gov. JB Pritzker last month.

Read more: Pritzker names Sen. Ann Gillespie new head of state insurance oversight agency

“Corporate consolidation has exacerbated the situation, turning the existence of independent pharmacies from just a competitive market issue into a health care access issue,” Gillespie said at the House committee hearing Tuesday.

Gillespie also said the Department of Insurance is willing to “design and implement additional regulatory tools” with the General Assembly.

“PBMs have continually sought to evade scrutiny and accountability,” she said. “As legislators and regulators across the country have sought greater transparency, PBMs have also challenged state regulatory authority in the courts, creating additional barriers to stall regulatory efforts.”

Attendees at recent committee hearings referenced House Bill 4548, which aims to change Illinois’ insurance law so state government can better regulate PBMs. Proposed changes include having PBMs disclose the net cost of drugs covered by a health benefit plan, and restricting PBMs from ushering patients toward using pharmacies owned by associated companies.

Last year’s audit recommended consistent monitoring of PBMs, including requiring an annual report, which is outlined in HB 4548. The bill also outlines measures requiring PBMs to pay pharmacies a dispensing fee and reimburse them at a rate equal to the national average drug acquisition cost dictated by Medicaid.

The bill remains in a procedural committee in the House, making it unlikely to pass by the General Assembly’s end-of-May adjournment.

The Federal Trade Commission is also in the midst of an ongoing antitrust probe of six of the largest PBMs, five of which are owned by insurance companies themselves. Last year, the FTC withdrew prior statements of support for PBMs. And at a White House event in March, FTC chair Lina Khan said companies are not cooperating with the probe. 

CVS Health, which has the largest share of the market, disputed the claim, according to news reports; but Rep. Natalie Manley, a Joliet Democrat who chairs the Illinois House committee that’s probing PBMs, criticized the lack of attendance by PBM executives at her committee’s first hearing on the industry last month.

“If there were 10 people here from the PBMs, I would put them right here and give you some backup,” Manley told a lobbyist from the Pharmaceutical Care Management Association, a national trade association representing a vast majority of PBMs.

“We need these questions answered, I’m not sure why they’re not here,” she added. “This was their opportunity to answer some of the accusations that are being lobbed at them.”

Only one PBM lobbyist and the president of Vivid Clear RX, a PBM subsidiary of Hy-Vee supermarkets, joined last month’s House committee hearing. One employee from the Blue Cross Blue Shield-owned PBM Prime Therapeutics also eventually testified.

The number of PBMs represented increased at this week’s hearing as another Prime Therapeutics representative and general counsel from Express Scripts joined a trade association lobbyist.

Jennifer Halsey, professor and director of ambulatory pharmacy services at the University of Illinois Chicago, said at last month’s hearing insurance companies are making billions while people in need are unsure if they can afford their prescriptions.

“We continue to see that insurance companies and PBMs make billions of dollars in profit alone every single year, and those profits increase year after year,” Halsey said. “I understand they have shareholders, but how do we make sure that patients have access to care? If we don’t get to the point where the pharmacies are being reimbursed at a reasonable rate, there will no longer be pharmacies for patients to go to.”

Manley said she expects “many more months” of hearings regarding PBMs.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

Oswego Community Unit School District board and Superintendent Andalib Khelghati on Monday, May 6, recognized several students from Oswego High School and Oswego East High School who were awarded medals at the recent SkillsUSA State Leadership and Skills Conference.

The State Leadership and Skills Conference brings together more than 2,000 career and technical education students who compete hands-on in 100 trade, technical and leadership fields, according to a news release from District 308.

Students competed in the following areas: Baking and Pastry Arts, Culinary Arts, Restaurant Service, Cabinetmaking, Carpentry, TeamWorks (Construction) Entrepreneurship (four-person team).

Students who received gold medals at the state level have qualified to compete at the SkillsUSA National Leadership and Skills Conference in Atlanta, Georgia, from June 24-28.

“It is through programs and opportunities like this where student excitement for career-readiness classes is grown,” Khelghati said in the release. “We are proud of all of our students who competed, demonstrating valuable skills and talents that will be useful in their future careers.”

Congratulations to the following students:

First Place - Gold Medalist (Qualified for National Competition):

• Kristen Gubricky (OH) - Culinary Arts
• Phoenix Goldstein (OH) - Restaurant Service

Second Place - Silver Medalist:

• Daniel Overstreet (OH) - Cabinetmaking
• Cody Crisp (OH), Jake Dillon (OH), Zach Pulfer (OH), Anthony Thompson (OH) - TeamWorks (Construction) / four-person Team

Third Place - Bronze Medalist:

• Dominic De Matteis (OE) - Cabinetmaking

Other Participants:

Baking & Pastry Arts:

• Katelyn Thilk (OH)
• Quinn Wille (OH)

Cabinetmaking:

• Zach Barnes (OE)
• Charles Bumke (OH)
• Owen Dougherty (OH)
• Jimmy Fitzgerald (OH)
• Caleb Fortson (OH)
• Anthony Koszala (OE)
• Bryson Norwood (OH)
• Christian Parello (OH)
• Collin Ross (OH)
• Kaleb Stumpenhorst (OH)
• Jack Wolcott (OH)
• Caleb Vesely (OH)

Carpentry:

• Cody Lindquist (OE)
• Kyler Peterson (OE)

Entrepreneurship four-person Team:

• Aiden Emanuel (OH), Alexander Robledo (OH), Matisyn Moss (OH) and Vincent LaMantia (OH)

image/jpeg JZQB7YPDCRDYBFUQXMMKG7JFHE.JPG

As state lawmakers hold hearings targeting the role of pharmacy benefit managers – an influential arm in how the health insurance industry prices prescription drugs – multiple state agencies are considering how to better regulate the industry.

Often referred to as pharmaceutical “middlemen,” pharmacy benefit managers, or PBMs, act as third-party intermediaries who negotiate the availability and price insurance companies or pharmacies pay for prescription drugs from pharmaceutical manufacturers. In determining the drugs covered by a given employer insurance plan, the companies can ultimately dictate what drugs are available to patients and pharmacies alike.

PBMs have received growing scrutiny on both a state and national level for the effect many claim they have on driving up drug prices. Local pharmacy owners testified at recent committee hearings that they are being squeezed by PBMs through the price of acquiring drugs wholesale and dispensing them, often at no profit or even at a loss. Over 40% of local pharmacies in Illinois – about 300 locations – have closed since 2013, according to the National Community Pharmacists Association.

“On almost every brand name medication that you fill, you lose money,” Michelle Dyer, pharmacist and owner of Michelle’s Pharmacy in Macoupin County, told the House Health Care Availability and Access Committee this week.

It was one of multiple recent hearings on the companies, and it followed last week’s review of a scathing audit of the state’s oversight of the industry. In part, the audit from 2023 found state regulators had scant documentation required for effective oversight of PBMs.

Joe Butcher, of the auditor general’s office, told lawmakers on the Legislative Audit Commission that the Illinois Department of Healthcare and Family Services failed to collect documents relevant to state Medicaid spending, which it is responsible for overseeing. Without necessary documents, Butcher said, the state cannot adequately exercise oversight authority.

“HFS was not engaging in monitoring practices of PBMs as mandated by the Illinois Public Aid Code, which establishes several provisions for monitoring PBMs,” he said.

HFS Director Elizabeth Whitehorn, who was appointed in January, said she was not sure how HFS failed to obtain documentation from entities under its watch.

“I don’t want to speak for what the department did or did not do before I was here,” she said. “I don’t know if the department ever asked for the contracts and they were not provided, or if the department simply didn’t ask for them.”

Whitehorn told lawmakers the department will soon file a new rule to help the department supervise PBMs, in part by requiring PBMs to divulge more information about their potential conflicts of interest. That will kick off a rulemaking process through which the department plans to submit the rule by June to the Joint Committee on Administrative Rules.

Corporate consolidation

Many PBMs, part of an industry that launched in the 1960s as prescription drugs became a consistent part of health plans, started as independent companies but were purchased by drug manufacturers in the 1990s.

Three publicly traded PBMs – CVS Caremark, Express Scripts and Optum RX – control about 80% of the U.S. PBM market, and the top six companies have over 95%, according to the Journal of the American Medical Association.

The state’s newly appointed insurance director, meanwhile, indicated her willingness to help regulate the industry, citing the consolidation of ownership as detrimental to patients. Ann Gillespie, a former CVS Caremark employee, was elevated to insurance director from the Illinois Senate by Gov. JB Pritzker last month.

Read more: State senator resigning to lead Illinois state insurance department

“Corporate consolidation has exacerbated the situation, turning the existence of independent pharmacies from just a competitive market issue into a health care access issue,” Gillespie said at the House committee hearing Tuesday.

Gillespie also said the Department of Insurance is willing to “design and implement additional regulatory tools” with the General Assembly.

“PBMs have continually sought to evade scrutiny and accountability,” she said. “As legislators and regulators across the country have sought greater transparency, PBMs have also challenged state regulatory authority in the courts, creating additional barriers to stall regulatory efforts.”

Attendees at recent committee hearings referenced House Bill 4548, which aims to change Illinois’ insurance law so state government can better regulate PBMs. Proposed changes include having PBMs disclose the net cost of drugs covered by a health benefit plan, and restricting PBMs from ushering patients toward using pharmacies owned by associated companies.

Last year’s audit recommended consistent monitoring of PBMs, including requiring an annual report, which is outlined in HB 4548. The bill also outlines measures requiring PBMs to pay pharmacies a dispensing fee and reimburse them at a rate equal to the national average drug acquisition cost dictated by Medicaid.

The bill remains in a procedural committee in the House, making it unlikely to pass by the General Assembly’s end-of-May adjournment.

The Federal Trade Commission is also in the midst of an ongoing antitrust probe of six of the largest PBMs, five of which are owned by insurance companies themselves. Last year, the FTC withdrew prior statements of support for PBMs. And at a White House event in March, FTC chair Lina Khan said companies are not cooperating with the probe.

CVS Health, which has the largest share of the market, disputed the claim, according to news reports; but Rep. Natalie Manley, a Joliet Democrat who chairs the Illinois House committee that’s probing PBMs, criticized the lack of attendance by PBM executives at her committee’s first hearing on the industry last month.

“If there were 10 people here from the PBMs, I would put them right here and give you some backup,” Manley told a lobbyist from the Pharmaceutical Care Management Association, a national trade association representing a vast majority of PBMs.

“We need these questions answered, I’m not sure why they’re not here,” she added. “This was their opportunity to answer some of the accusations that are being lobbed at them.”

Only one PBM lobbyist and the president of Vivid Clear RX, a PBM subsidiary of Hy-Vee supermarkets, joined last month’s House committee hearing. One employee from the Blue Cross Blue Shield-owned PBM Prime Therapeutics also eventually testified.

The number of PBMs represented increased at this week’s hearing as another Prime Therapeutics representative and general counsel from Express Scripts joined a trade association lobbyist.

Jennifer Halsey, professor and director of ambulatory pharmacy services at the University of Illinois Chicago, said at last month’s hearing insurance companies are making billions while people in need are unsure if they can afford their prescriptions.

“We continue to see that insurance companies and PBMs make billions of dollars in profit alone every single year, and those profits increase year after year,” Halsey said. “I understand they have shareholders, but how do we make sure that patients have access to care? If we don’t get to the point where the pharmacies are being reimbursed at a reasonable rate, there will no longer be pharmacies for patients to go to.”

Manley said she expects “many more months” of hearings regarding PBMs.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

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