Recently Enacted Bill Authorizes Pennsylvania Auditor General to Audit PBMs Overseeing $3 Billion in Taxpayer Dollars

In October 2022, Pennsylvania’s former Governor Tom Wolf, before leaving office, signed House Bill 1630 (“HB 1630”) into law. HB 1630 grants the Pennsylvania Auditor General authority to audit pharmacy benefit managers (“PBMs”) that subcontract with Medical Assistance Managed Care Organizations (“MA-MCOs”) in Pennsylvania. This law is significant because in Pennsylvania, contracts between MA-MCOs and PBMs are not signed directly with the Commonwealth. Thus, prior to this law, the Auditor General was not authorized to audit or otherwise meaningfully review PBM conduct. Now that the Auditor General can audit PBMs, the Commonwealth will have greater capabilities to ensure taxpayer dollars are better managed by PBMs. Representative Jonathan Fritz previously stated that “almost 90% of Pennsylvania Medicaid patients are served by managed-care companies that contract with the state…[and] Pennsylvania taxpayers pay $3 billion annually to PBMs for Medicaid enrollees, yet the Department of the Auditor has not been able to audit these PBMS.” This is no longer the case as this law will help ensure that $3 billion in taxpayer money is properly distributed to Medicaid enrollees and not padding the PBMs’ pockets.

In addition to authorizing the Auditor General to audit PBMs, HB 1630 also serves to complement 62 Pa. Stat. Ann. § 449, a law considered by many to be an Any Willing Provider Law (“AWPL”). Under Pennsylvania’s AWPL, 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. The Auditor General’s audit capabilities would enable the Commonwealth to assess PBMs’ compliance, or lack thereof, with AWPL requirements, including by ensuring that patients are not being forced to use PBM-affiliated pharmacies, a practice known as “patient-steering” to the exclusion of unaffiliated independent providers.

HB 1630 grants the Auditor General the authority to audit PBMs in Pennsylvania, allowing for a more comprehensive review of their business practices especially in the context of the state’s Medicaid program. The purpose of this provision 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 taxpayers, Medicaid beneficiaries, and non-affiliated pharmacy providers.  With this enhanced authority, Pennsylvania can better safeguard its taxpayer dollars and ensure that PBMs are operating in compliance with state laws and regulations.

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.