Regulations on pharmacy benefit managers pass in state House, head to Senate

Regulations on pharmacy benefit managers — third-­party intermediaries who work with drug manufacturers, pharmacies and insurance providers — took a leap forward Friday at the state level.

House Bill 1993 would put pharmacy benefit managers under more intense state scrutiny and limit certain practices that pose some of the greatest challenges to pharmacies. It passed nearly unanimously in the state House of Representatives.

It will next head to the state Senate, where bill sponsor Rep. Jessica Benham, D-South Side, hopes it will be approved and head to the governor’s desk.

Benham has spent the past several months visiting independent pharmacies across the state and listening to their concerns about their industry’s struggles.

She is hopeful that the bill will help prevent additional closures of community pharmacies — a significant issue in Pennsylvania, where over 140 stores have shuttered since the start of the year, she said Friday at a news conference in Harrisburg.

“In this House, we stick up for the little guy,” she said. “We defend our mom-and-pop shops, and we fight for our Main Street pharmacies. Now is the time for the state Senate to take action.”

What the bill does

The bill puts limits on pharmacy benefit managers, which reimburse pharmacies for the prescriptions customers buy through insurance.

Independent pharmacy owners say the reimbursements they receive from benefit managers are far less than the actual cost of medications. Low reimbursements can cause pharmacies to lose money on each transaction, especially on expensive brand-name medications such as Ozempic.

Pharmacies must enter into contracts with benefit managers to get reimbursed. They usually have few options other than to accept the terms of these contracts with the companies, even if they are disadvantageous to the pharmacy. That’s because so many insurance companies rely on benefit managers to distribute and formulate reimbursements.

House Bill 1993 and its counterpart, Senate Bill 1000, would ban certain practices in benefit manager contracts, including “patient steering.” That’s when a pharmacy benefit manager directs a patient to use a “preferred” pharmacy by approving only certain shops and lowering copays for the preferred pharmacies.

Another prohibited practice would be “spread pricing,” in which benefit managers reimburse a pharmacy for a prescription and then bill an insurer or an employer that provides health insurance at a higher price for the same medication.

Benefit managers also would have to be transparent about the rebates and payments they get from drug manufacturers as well as how they distribute them.

Mail order pharmacies, which pharmacy benefit managers often favor, would be prohibited from counting toward “network adequacy,” a measure of how many locations in a given area are included within a benefit manager’s network.

This, Benham explained at a discussion in May, would hopefully push benefit managers to offer better contracts to independent pharmacies so they include enough brick-and-mortar stores in their network to meet the requirement.

Opinions on the vote

Overall, Benham was optimistic about the House’s vote. She said she had heard from pharmacists across the state who are excited about the bill’s approval.

“This is absolutely something to celebrate,” Benham said. “We are in active negotiations with the administration and with the state Senate to get to agreement to a final product that will defend and protect our community pharmacies. I believe that the passage of HB 1993 is a critical first step as we continue these negotiations.”

Industry opposition

Greg Lopes, a spokesperson for the industry group Pharmaceutical Care Management Association, said the organization is concerned the bill could limit benefit managers’ ability to lower drug costs, leading to higher drug prices for patients and health plans.

“By significantly restricting the tools (pharmacy benefit managers) use to lower drug costs and mandating disclosure of information that could give drug companies more power to increase prices, the result of the legislation would be soaring drug costs for Pennsylvania health plans and patients,” he said.

“We urge the Pennsylvania Legislature to work toward an agreement on the legislation that avoids significantly increasing drug costs for Pennsylvania patients.”

In a statement, Rep. Valerie Gaydos, R-Aleppo, who co-sponsored the legislation with Benham, said the move is a crucial step toward ensuring transparency and accountability in how pharmacy benefit managers operate.

“Health care is rapidly changing and getting more and more complex each day,” Gaydos said. “Medication management is one of the most important aspects of health care, and it occurs at your pharmacy. By holding (pharmacy benefit managers) accountable and providing a structured process for resolving disputes, we are safeguarding both our community pharmacies and the patients who rely on them for essential medications.”

Benham said in the statement: “Patients should not be subjected to unfair practices that inflate costs and limit their choice of where to fill prescriptions. The legislation seeks to establish clear guidelines that promote competition and prioritize patient care over corporate profit.”