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The exterior of a closed Rite Aid pharmacy can be seen in downtown York.
\nSpotlight PA photo by Ed Mahon\n<\/p>\n
HARRISBURG \u2014 Some Pennsylvania lawmakers want to give the state\u2019s top prosecutor more power to take on pharmacy benefit managers, the corporate middlemen that are frequently blamed for pharmacy closures across the state.<\/p>\n
A recent proposal from three Republican state senators would empower the Office of Attorney General to play a greater role in challenging the practices of these businesses, often known as PBMs, on behalf of patients. It would also authorize the office to review how PBMs handle contract renewals and terminations with pharmacies. Those deals shape how much reimbursement pharmacies receive for their work and where patients can access medications.<\/p>\n
The proposal comes at a critical time for pharmacies. Pennsylvania has lost hundreds of the stores in recent years, Spotlight PA previously found. Pharmacy operators here have painted a dire picture for the industry, and lawmakers and pharmacists have been reckoning with the limits of a 2024 law that promised help.<\/p>\n
The legislative action in 2024 was intended \u201cto rein in PBMs that were destroying local pharmacies and jeopardizing the health and safety\u201d of Pennsylvania residents, the Republican lawmakers said in a February memo to colleagues. \u201cWhile these reforms were an important step forward, more must be done to protect access to essential medical care.\u201d<\/p>\n
These PBMs administer drug plans for employers and insurance companies. Critics say they drive up drug costs for patients, offer insufficient reimbursement to pharmacies, and use predatory practices \u2014 all while prioritizing their own profits. <\/p>\n
The Pennsylvania Pharmacists Association said last year that closures would continue and patients would be at risk without further state action.<\/p>\n
\u201cIndependent community pharmacies have a choice: Either stay in business and lose money, or go out of business,\u201d Eric Pusey, a Lackawanna County pharmacist and pharmacy owner, told Spotlight PA. \u201cThe crisis still does exist because of the reimbursement issues and the issues that the PBMs are forcing upon individual pharmacies.\u201d<\/p>\n
In interviews with and comments to Spotlight PA, patients described a number of problems as a result of the closures: increased travel, longer wait times, difficulty accessing medications, a loss of personal relationships, and limited options.<\/p>\n
The Pharmaceutical Care Management Association, which represents PBMs, has pushed back on the idea that the businesses are to blame for pharmacy closures. Greg Lopes, a spokesperson for the association, said PBMs are hired \u201cto negotiate lower drug prices and create more access to affordable medicines for patients.\u201d<\/p>\n
\u201cWe depend on a healthy network of independent pharmacies in Pennsylvania,\u201d Lopes added. \u201cAnd PBMs are working to help rural, community pharmacies by paying Pennsylvania\u2019s rural and community pharmacies more than retail chain pharmacies.\u201d<\/p>\n
While the attorney general\u2019s office and the CEO of the Pennsylvania Pharmacists Association declined to weigh in with support or opposition to the new plan, some pharmacy advocates welcomed the effort.<\/p>\n
Rob Frankil, executive director of the Philadelphia Association of Retail Druggists, said community pharmacies, including many big chains, currently have very little leverage to negotiate with PBMs.<\/p>\n
\u201cAny increased oversight would be good,\u201d he told Spotlight PA.<\/p>\n
New powers<\/p>\n
The 2024 law, known as Act 77, gave new powers to the Pennsylvania Insurance Department which operates under the governor, and added a number of new protections and requirements for prescriptions filled through some health insurance plans.<\/p>\n
The law places new restrictions on a PBM\u2019s ability to steer patients to a pharmacy that is affiliated with the same benefit manager. Those \u201cpatient steering\u201d practices make it harder for community pharmacies to compete and limit the ability of patients to make their own choices, pharmacists and their advocates say.<\/p>\n
Other measures in the law, including ones dealing with transparency requirements and payment rules, are also meant to help level the playing field.<\/p>\n
But the law has limits.<\/p>\n
It applies to about 24% of the state\u2019s health insurance market, the Shapiro administration said last year. This includes fully-funded commercial plans \u2014 the kind people buy on their own or that their employer purchases, according to the Pennsylvania Insurance Department.<\/p>\n
Over the summer, a bipartisan group of lawmakers raised concerns about the Shapiro administration\u2019s enforcement of the 2024 law, Spotlight PA reported, based on records obtained through the state\u2019s open records law.<\/p>\n
State Senate Majority Leader Joe Pittman, R-Indiana, recently told Spotlight PA \u201cwe have not seen the desired effectiveness of Act 77 because the Insurance Department has given PBMs a free pass on the statute.\u201d<\/p>\n
The Shapiro administration has highlighted the benefits of the new law and said it\u2019s enforcing the legislation as it was written.<\/p>\n
Adrian Sipes, a Pennsylvania Insurance Department spokesperson, told Spotlight PA that \u201cmany of the protections in Act 77 are just now taking effect,\u201d but the agency \u201chas worked consistently to implement the protections in Act 77 since its passage.\u201d<\/p>\n
And despite the limits, Pennsylvania Insurance Commissioner Michael Humphreys said last year that new oversight under the law \u201cbrings needed transparency and fairness to our healthcare system for all Pennsylvanians.\u201d<\/p>\n
The proposal from Republican state Sens. Wayne Langerholc, Cambria; Judy Ward, Blair; and Pat Stefano, Fayette, would add new oversight and restrictions.<\/p>\n
Langerholc was listed first on the co-sponsorship memo for the plan. His office declined an interview request and didn\u2019t answer specific questions about the proposal. A spokesperson said a \u201cpress release serves as his comment to the forthcoming legislation\u201d and that \u201cwe would be open to discuss any specific questions on the language\u201d after the bill is introduced.<\/p>\n
In the memo, the lawmakers described significant changes.<\/p>\n
Under the bill, the Office of Attorney General would be authorized \u201cto review all contractual renewals and terminations between pharmacies and PBMs to assess their impact on local communities,\u201d lawmakers said. If there were a dispute over a termination, then a public hearing in the affected community would be required.<\/p>\n
Those terminations can be sources of big tension. They cause pharmacies to lose customers and reduce options for patients, according to Frankil of the Philadelphia Association of Retail Druggists.<\/p>\n
A news release from the Republican lawmakers also said the measure would give the attorney general\u2019s office new \u201cauthority to pursue legal remedies against PBMs on behalf of the commonwealth and its residents.\u201d<\/p>\n
Their proposal also tries to address where court cases involving PBMs take place, with the lawmakers saying residents \u201cshould not be forced to travel across the country to defend their access to essential medical care.\u201d They say their legislation would require PBMs to appear in Pennsylvania courts \u201cfor any cause of action arising from conduct within Pennsylvania.\u201d<\/p>\n
PBMs would also be prohibited from directly owning a pharmacy license in the state. Critics of that type of relationship say it gives an unfair advantage to PBM-affiliated pharmacies.<\/p>\n
Pusey, the Lackawanna County pharmacy owner, and Frankil both said that measure would affect CVS Health \u2014 as the parent company includes both retail pharmacy locations and one of the country\u2019s leading PBMs. A spokesperson for CVS\u2019 pharmacy benefit manager previously told Spotlight PA independent pharmacies are \u201ca vital part\u201d of its pharmacy network and that it reimburses those companies in Pennsylvania more than it does CVS locations.<\/p>\n
There\u2019s been litigation over this issue elsewhere.<\/p>\n
Arkansas\u2019 governor last year signed legislation aimed at stopping PBMs from also owning pharmacies in the state. CVS has challenged the measure in court and has argued it\u2019s an unconstitutional law that would shut down about two dozen of its pharmacy locations, \u201celiminate hundreds of jobs and drive-up costs for Arkansans.\u201d Others have filed suit as well. Those cases were pending as of late February.<\/p>\n
In Pennsylvania, pharmacists say they continue to wait for relief.<\/p>\n
Richard Ost, a pharmacist and owner of Somerset Pharmacy in Philadelphia, told Spotlight PA he\u2019s been disappointed by other attempts to rein in the power of PBMs.<\/p>\n
If this attorney general oversight plan were to pass, Ost would like to see a pharmacist-led department within the office focus on these complex issues.<\/p>\n
\u201cYou need to understand everything,\u201d he said, \u201cbecause if you don\u2019t, you\u2019ll get the sheets pulled over your head.\u201d<\/p>\n
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