The landscape of pharmacy benefit management in Pennsylvania may be on the verge of significant change with the introduction of two new bills in the state. The Pennsylvania Legislature recently introduced dual bills in the House (House Bill 1993) and Senate (Senate Bill 1000) (collectively the “Bills”) to amend the Pharmacy Audit Integrity and Transparency Act (the “Act”) to provide reasonable regulation of Pharmacy Benefit Managers (“PBMs”) in the Commonwealth and promote PBM transparency. The Bills complement House Bill 1630 (“HB 1630”) which was signed into law in October 2022 and granted the Pennsylvania Auditor General authority to audit PBMs that subcontract with Medical Assistance Managed Care Organizations (“MA-MCOs”) in Pennsylvania.
If enacted, the Act’s amendments would provide significant protections for Pennsylvania’s independent pharmacies by prohibiting the following provisions which are commonly found in PBM contracts:
- Participation in a PBM’s network contingent on a pharmacy signing either an effective rate contract or a contract based on the National Average Drug Acquisition Cost guidelines;
- Retroactive recoupment of money paid to a pharmacy by the PBM, unless both parties agreed to that provision; and
- Spread pricing.
In addition, if enacted, the Act’s amendments would expressly prohibit PBMs from patient steering, which occurs when a PBM directs a patient to use a PBM-affiliated pharmacy over unaffiliated alternatives. Furthermore, the Act’s amendments would require PBMs to accept or reject pharmacies’ network membership applications within 30 days of submission, which would help to reduce significant delays pharmacies face when applying for PBM contracts. If a PBM fails to comply with these laws or other applicable regulations, the Pennsylvania Insurance Department (“Department”) would then be able to receive, hear and resolve complaints filed by a pharmacy against a PBM.
If these amendments are enacted, they would work in conjunction with 62 Pa. Stat. Ann. § 449. Under this law, PBMs that administer prescription benefits on behalf of MA-MCOs must contract on an equal basis with any pharmacy qualified and willing to participate in the Medical Assistance Program. If enacted, the Bills would allow the Department and the Pennsylvania Auditor General to assess PBMs’ compliance, or lack thereof, including by ensuring that patients are not being forced to use PBM-affiliated pharmacies to the exclusion of unaffiliated independent providers.
As stated above, the purpose of these Bills is to promote transparency and accountability in the PBM industry and ensure that PBMs are not prioritizing their business interests or those of their affiliates over the well-being of Pennsylvania’s non-affiliated pharmacy providers and most importantly patients. With this enhanced authority, Pennsylvania can more effectively monitor improper PBM business tactics and require compliance with the state’s laws and regulations. Pharmacies and pharmacists operating in Pennsylvania should monitor these Bills as they could lead to significant improvements for pharmacies’ ability to conduct business in Pennsylvania and provide additional legal rights when facing challenges with PBMs.
How Frier Levitt Can Help
Frier Levitt represents pharmacies throughout the United States in challenging abusive PBM conduct including as it relates to PBM audits, provider network access issues, reimbursement practices and other complex issues, such as DIR fees. Our attorneys have extensive knowledge in all aspects of the pharmacy-PBM relationship. Contact Frier Levitt to discuss how you can use the various laws and protections that regulate PBM conduct to your advantage.
