Pennsylvania has enacted a Pharmacy Benefit Reform Act to help regulate Pharmacy Benefit Mangers (“PBMs”) in the state. Frier Levitt previously discussed the Pharmacy Benefit Reform Law (House Bill 1993), which Pennsylvania Governor Josh Shapiro signed into law on July 17, 2024. The Pharmacy Benefit Reform Act (“Law”), codified under 40 P.S. 4501-4562, recently took effect November 14, 2024.
Overview of Pennsylvania’s Pharmacy Benefit Reform Act
Pennsylvania’s Pharmacy Benefit Reform Act addresses pharmacy audits conducted by various entities including managed care companies, third-party payors, and importantly, PBMs. [1] This law also applies to any contract between a pharmacy or a PBM and a health insurer or health benefit plan, as well as contracts between a pharmacy and a PBM on behalf of a health insurer or health benefit plan. [2]. According to Pennsylvania Insurance Commissioner Michael Humphreys, the goal of the Law is to create transparency and accountability for PBMs operating in Pennsylvania.
Expansion of Any Willing Provider Law in Pennsylvania
Pennsylvania’s new Law expands “Any Willing Provider” (“AWP”) protections in the state and has the potential to greatly enhance the legal protections available to pharmacies including under 40 P.S. 4528. Pennsylvania’s current AWP law, which is primarily found under 62 P.S. 449, typically relates to Medicaid. However, under the new Law, AWP protection is significantly expanded. PBMs must ensure they establish a “reasonably adequate and accessible retail pharmacy network” that cannot be limited to affiliated pharmacies only. The network must also provide for convenient patient access to pharmacies within a reasonable distance from a patient’s residence. These are substantial enhancements to Pennsylvania’s already favorable laws and should be utilized by Pennsylvania based providers going forward.
In addition, beginning April 1, 2026, the Law requires a PBM to annually file a network adequacy report describing the PBM network and the PBM network’s accessibility in Pennsylvania. The report must include the aggregate amount of all rebates that the PBM received from all pharmaceutical manufacturers for all health insurer clients. [3]. It must also include the aggregative administrative fees that the PBM received from all manufacturers for all health insurer clients. [4] The report must also include the aggregate-retained rebates that the PBM received from all pharmaceutical manufacturers and did not pass through to health insurer clients. 40 P.S. 4533.1(a)(3). The report will be posted on the department’s website for the public within 60 days of receipt.
With this Law now in effect and a New Year fast approaching, pharmacies should ensure they are familiar with this Law so that they can take advantage of it going forward including as it relates to PBM relationships.
How Frier Levitt Can Help
Frier Levitt represents numerous pharmacies in Pennsylvania and across the United States in challenging unfair and aggressive PBM practices. Contact us to speak with an attorney about how your pharmacy can leverage the protections afforded by the Pharmacy Benefit Reform Law and other laws governing PBMs. Independent pharmacies should familiarize themselves with the Law and consider hiring qualified legal counsel to ensure they are maximizing the protections and legal rights afforded to Pennsylvania pharmacies under Pennsylvania law, as well as other applicable laws including federal law and Medicare law.
[1] 40 P.S. 4502
[2] Id.
[3] 40 P.S. 4533.1(a)(1)
[4] 40 P.S. 4533.1(a)(2)
[5] 40 P.S. 4533.1(a)(3)
