The state House passed a comprehensive bill Friday aimed at regulating pharmacy benefit managers and helping local pharmacists. The bill received near-unanimous support, with only four members voting against it.
Pharmacy benefit managers (PBMs) are intermediaries in the pharmaceutical industry. They are hired by insurance companies to administer the prescription drug side of health plans and theoretically save them money. This is how they negotiate drug prices with manufacturers — often receiving gigantic kickbacks in exchange for getting their products on an insurance plan’s list of approved drugs.
They are also responsible for reimbursing pharmacies when patients pick up their prescriptions, if they pay anything at all. Many pharmacists say they often get less than they paid for some of the most pricey drugs on the market.
Lawmakers, regulators, pharmacists and physicians blame pharmaceutical benefit managers for increasing the cost of medicines AND pushing independent pharmacies out of the market.
“The practices set forth by some PBMs actually create more barriers to good health care for patients who really need it,” Rep. said. Valerie Gaydos (R-Allegheny), co-sponsor of the bill. “Some PBMs are good. Some also engaged in certain nefarious practices that increase the cost of prescription drugs. And that is what this bill is trying to solve.”
The bill, authored by Reps. Gaydos and Jessica Benham (D-Allegheny), targets numerous pharmacy benefit management practices that have been criticized by pharmacists and health care advocates alike.
It would ban so-called “spread pricing,” when pharmacy benefit managers bill a health insurance plan at a single price per drug, rpay pharmacies at a lower price and then earn the difference.
It would also establish standards for how pharmacy benefit managers set reimbursement rates for pharmacies, a move aimed at stemming losses that independent pharmacists say are driving them out of business.
A recipe for trouble: Pennsylvania pharmacists say PBMs are causing pharmacy closures
The bill would also ban so-called “patient steering,” in which PBMs direct patients directly or indirectly (through incentives such as discounts on drugs) to preferred pharmacies, often owned by the same parent company as the PBM.
The Federal Trade Commission is currently conducting an antitrust investigation into some of the largest pharmacy benefit managers in the country. The three largest PBMs, CVS Caremark, Optum Rx and Evernorth Express Scripts, control about 70% of all insurance prescription plans for Americans.
These pharmacy benefit managers also belong to parent companies that own their own major health insurance plans as well as pharmacy chains. CVS Caremark, for example, owns Caremark, one of the largest pharmacy benefit managers in the country; United Health, one of the largest health insurance plans; and CVS, the largest pharmacy chain in the country.
The bill also seeks to prohibit pharmacy managers from refunding money already paid to pharmacists for drugs that were properly dispensed in the form of additional fees added later.
In addition, the bill clarifies the 2016 law, which was intended to stop aggressive “audits” of pharmacies.
Audits are a way for pharmacy benefit managers to ensure that the drugs they are billed for are being prescribed and dispensed correctly by pharmacists. But audits are regularly used to charge pharmacists gigantic sums for documentation errors, according to pharmacists and the lawyers who represent them.
The bill would prohibit pharmacy managers from demanding money because of the so-called “clerical errors” or errors in documentation that do not affect the patient receiving prescribed medications.
However, A 2016 law that attempted to do the same thing was largely deemed unenforceable by both the Pennsylvania Department of Insurance and pharmacy benefit managers themselves.
Pennsylvania lawmakers have passed a law regulating the activities of pharmaceutical intermediaries. However, the state does not enforce it.
This is largely because federal regulations are designed to provide some uniformity in state regulation of the broader health insurance industry. Lawyers for pharmacy benefit managers have repeatedly argued in courts across the country that these federal regulations trump many state regulations.
Benham said that’s why her bill is just one part of a broader effort to reform pharmacy benefit managers. She told the Capital-Star earlier this month that she “encourages my friends in the federal government to take action.”
Pennsylvania state Senator Bob Casey told the Capital-Star that pharmacy benefit manager reform has “significant bipartisan support, both Democrats and Republicans, especially on the committee I serve on.” [the chair] With.”
His committee has introduced a bill that would prohibit pharmacy benefit managers from charging Medicare patients more for drugs.
“The key will be to introduce broader legislation around pharmacy benefit managers and focus on lowering the cost of prescription drugs,” Casey added.
According to Benham, perhaps the most vital part of her bill is the transparency requirements. This requires brokers to report their sources of revenue to the state department of insurance.
“Having a sense of what’s going on there is really helpful and could lead to potential future regulation,” Benham told the Capital-Star earlier this month. “We don’t know what else is needed until we have a little more clarity.”
The bill will go to the state Senate, where an almost identical bill has passed through that chamber’s committees. Although that will likely change before final passage through ongoing negotiations with Gov. Josh Shapiro’s office and Senate Republicans, according to Benham.
“I firmly believe that HB 1993, in its current form, is good legislation that will save our community pharmacies and prevent more pharmacies from closing,” Benham said at a press conference on Friday. “We are in active negotiations with the administration and the state Senate to create a final product that we hope will reflect the defense of community pharmacies, but is also feasible.”
Shapiro has repeatedly expressed support for pharmacy benefit management reform.
“It’s time for reform in how PBMs operate here,” Shapiro said during his budget speech earlier this year. “But we need legislation to go further.”
