Restrictions on pharmacy benefit managers approved in Pa. Senate

Some revisions were made, so those have to be OK’d by the House.

A bill placing regulations on pharmacy benefit managers — third-party intermediaries who work with drug manufacturers, pharmacies and insurance providers — passed overwhelmingly in the Pennsylvania Senate on Wednesday with some revisions.

The new version of the bill now returns to the House to approve the revisions before heading to Gov. Josh Shapiro’s desk.

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 on June 28.

In the state Senate, it passed 48-1, with Sen. Doug Mastriano, R-Adams County, as the only “no” vote. Sen. Tracy Pennycuick, R-Berks County, did not vote.

Bill sponsor Rep. Jessica Benham, D-South Side, said the legislation will go a long way toward relieving the concerns of pharmacists.

“Admittedly, the legislation is not everything I wanted, but it does take enormous steps toward constraining the abuses of some (pharmacy benefit managers),” she said. “I do believe that we have won the fight against corporate greed and the powerful (pharmacy benefit managers’) monopoly, but of course we are going to continue to look at what more we can do to protect local pharmacies and save patients money.”

What the bill does

The bill creates more rules for 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.

Changes to the bill

The Senate-amended version of the bill contains similar provisions to what was passed in the House with regard to scrivener’s errors, clawbacks, network adequacy, patient steering and transparency.

Scrivener’s errors are errors made by pharmacies that can be penalized by benefit managers. Clawbacks are ways that pharmacy benefit managers can charge pharmacies after drugs are dispensed, and network adequacy is a measure of how many locations in a given area are included within a benefit manager’s network.

Among other changes, the new version of the bill does not prohibit 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. Instead, it will require a study of spread pricing.

According to Benham, revisions also removed the contract requirements specific to pricing of drugs. It also removed some of the provisions around patient steering — 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. Exceptions also were made for specialty pharmacies.

“All legislation is a product of compromise. I will say I am quite proud of the results of our bipartisan negotiations here,” Benham said. “Certainly, we would have liked to have seen a prohibition on spread pricing and a reimbursement floor in this legislation, but I cannot fault my Senate colleagues for wanting to see more data before we took those efforts.”

Sen. Kim Ward, R-Hempfield, described the bill as a win for neighborhood pharmacies.

“These neighborhood pharmacies have not only provided personalized services to our families for many generations but have also struggled to survive in the inequitable world of the (pharmacy benefit managers) calling the shots that have forced many small pharmacies to close,” she said. “These same pharmacies are an important part of the fabric of our local communities.”