Tucked in the Pa. state budget, a win for pharmacies looking for PBM regulation

The measure addresses an issue facing a handful of struggling Pennsylvania pharmacies.

• By Ian Karbal, Pennsylvania Capital-Star

This story was originally published by the Pennsylvania Capital-Star.

Pennsylvania’s most recent state budget includes a number of policy provisions agreed to by negotiating lawmakers.

One is aimed at helping pharmacies that say they have been arbitrarily prevented by a pharmacy benefit manager from accepting certain Medicaid plans.

The new provision will require pharmacy benefit managers, or PBMs, to allow pharmacies that they previously ended contracts with to reapply to their networks after 12 months, assuming they’re in good standing with state and federal laws.

While the measure does not address many of the issues pharmacists have raised about PBMs, including low reimbursement rates for medications they dispense, it does address an issue facing a handful of struggling Pennsylvania pharmacies.

“It’s a very good thing for probably several dozen pharmacies throughout the state who are having network problems with PBMs that don’t allow them to be in the MCO network,” said Rob Frankil, executive director of the Philadelphia Association of Retail Druggists.

Pharmacy benefit managers, or PBMs, are middlemen in the pharmaceutical supply chain. They’re hired by insurance companies to handle the prescription drug sides of their healthcare plans.

In that role, PBMs reimburse pharmacies when patients pick up drugs that are covered by their insurance. If a pharmacy wants to accept a patient’s insurance, they have to sign a contract with the PBM that represents them, agree to the reimbursement rates they set, and follow any other rules they outline.

Pharmacists have long blamed PBMs for declining revenues and rising drug costs. The three largest PBMs — CVS Caremark, Express Scripts and Optum — are part of massive healthcare conglomerates and collectively process about 80% of all prescription drug claims in the United States.

That means pharmacists must maintain good standing with them if they want to accept large numbers of their patients’ insurance plans.

But a number of pharmacists have warned that PBMs can be capricious with their contracts, kicking pharmacies out of their networks for reasons that can appear arbitrary.

A spokesperson for the Pharmaceutical Care Management Association, a trade group that represents the largest PBMs, declined to comment for this story.

For the last several years, attempts to regulate PBMs have brought Democrats and Republicans together.

Since 2020, more than 1,000 pharmacies have closed across the state. Pharmacists and the trade groups that represent them have been pushing the legislature to pass legislation reining in PBMs.

The provision in the budget was championed by Republican Sen. Dave Langerholc (R-Clearfield) and Democratic Rep. Frank Burns (D-Cambria).