Closed independent pharmacy in Harrisburg. (Capital-Star photo by Vincent DiFonzo)
With hundreds of pharmacies closing across Pennsylvania, pharmacists are asking state lawmakers to pass a bill that would give the Commonwealth a bigger role in how it pays for drugs dispensed to Medicaid patients.
Their plan would sideline intermediaries in the pharmaceutical supply chain known as pharmacy benefit managers, or PBMs, who have come under increased scrutiny in recent years.
The bill, sponsored by the co-chairs of the Community Pharmacy Caucus, Sens. Judy Ward (R-Blair) and Lisa Boscol (D-Northampton), is based on an Ohio law that officials say has saved this country tens of millions while increasing fees for pharmacists for the medicines they dispense.
Over the past few years, the issues facing community pharmacists have become the focus of many lawmakers. According to a group called Pennsylvanians for Protecting Pharmacy Access: Since 2020, over 1,000 pharmacies have closed across the Commonwealth.
And they blame the PBM.
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Critics say middlemen have driven up drug costs and reduced pharmacy profits, leading to a wave of pharmacy closures across the country. They have also faced scrutiny from state lawmakers and federal regulators.
When an insured patient picks up the script, paying only a possible co-payment, the PBM reimburses the pharmacist on behalf of his or her insurance plan. But pharmacists say the rates they receive have been falling steadily for years and there is little they can do to stop it.
Each of the three largest PBMs is owned by the largest companies in the country, each of which also owns its own insurance and pharmaceutical companies. These three – CVS Caremark, Express Scripts and Optum Rx – manages approximately 80%. all prescription drug claims filed by insured Americans.
Pharmacists say this means they are forced to accept low reimbursement rates offered by PBMs, which could mean losing money on the drugs they dispense or being unable to accept insurance from vast numbers of potential patients, some of whom exploit drugs that bring profits to pharmacies.
A spokesman for the Pharmaceutical Care Management Association, an industry group representing the nation’s largest PBMs, did not respond to a request for comment. However, the group has long maintained that PBMs support local pharmacies and strive to ensure their patients have adequate access to pharmacies.
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Ward and Boscola’s bill seeks to give some pharmacists fair rates for dispensing drugs to Medicaid patients. According to the state Department of Human ServicesAbout 23% of Pennsylvanians are on Medicaid.
Medicaid plans are offered by many insurance companies, each of which may contact a PBM to handle the prescription benefits side of their plans. Instead, under the Ward-Boscoli bill, the Department of Human Services (DHS) would hire one company to handle prescription benefits for all Medicaid plans. It would also require pharmacists to be reimbursed for drugs based on the national average cost of acquiring them and pay a fee for dispensing the drugs.
The aim is to stop pharmacy closures by ensuring that companies do not operate at a loss due to low reimbursement rates.
For many Pennsylvanians, especially in rural areas, pharmacists are one of the few health care professionals they can see free of charge close to home and get medical advice.
“I represent rural areas,” Ward told the Capital-Star. “Pharmacies here are just dying out… So it’s not like you have to go across town, sometimes you go to the next county to get your prescriptions filled, which creates all kinds of problems.”
“I’m usually a free-spirited and entrepreneurial person, so let’s allow for more competition,” Ward added. “But it didn’t work in this case. So we think a single PBM can provide better control.”
Boscola, co-author of the Democratic bill, says the move could also save the state money.
“Ohio moved to a single PBM model and saved money Administrative costs alone amounted to $333 million in just two years,” she said. “With this change, $700 million in dispensing fees went directly to pharmacists. Our pharmacies across the state have been sounding the alarm for years and it’s time to finally take action.”
The bill was drafted with input from supporters of the Pennsylvania Pharmacy Association and the Philadelphia Association of Retail Druggists, two industry groups representing independent and petite chain pharmacies across the commonwealth.
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Ward along with Sens. Wayne Langerholc (Clearfield) and Pat Stefano (Fayette) are sponsoring a bill that would would give the Pennsylvania Attorney General greater authority to mediate between pharmacies and PBMs in contract disputes between them and consider the impact on local communities.
As it stands, pharmacies will have little recourse if a vast PBM terminates their contract, leaving many patients unable to benefit from insurance coverage for drugs purchased at their store. This solution would give the Attorney General’s office the power to review contacts when they are renewed or terminated.
In 2024, lawmakers passed a bill aimed at stopping PBM practices described as anti-competitivebut it was true lack of key regulations required by pharmacists. Lawmakers have raised concerns about this the state is not doing enough to enforce the fresh law while pharmacists indicated the need for further reforms.
The bill does not directly affect drug reimbursement rates.
