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Senate of Pennsylvania
Session of 2017 - 2018 Regular Session


Posted: April 10, 2018 11:20 AM
From: Senator Richard L. Alloway, II
To: All Senate members
Subject: Fair pharmacy reimbursement in Medicaid Managed Care contracts
In the near future I will be introducing legislation addressing the inadequate reimbursement rates for community pharmacies as well as the lack of transparency in Medicaid Managed Care contracts.

Managed-care companies that contract with the State serve almost 90 percent of Pennsylvania Medicaid patients. Those managed-care companies then contract with pharmacy benefit managers (PBMs) to decide which drugs will be covered and how much to reimburse the pharmacies that fill the prescriptions. Recently this fall, one of these PBMs arbitrarily initiated severe reimbursement cuts in two of the managed care plans, forcing pharmacies to operate in the red. Many of these reductions were so severe that a single prescription was costing the pharmacy hundreds of dollars. Cuts like these make it extremely difficult for the community pharmacies in our Commonwealth to maintain inventory and serve our most vulnerable citizens.

PBMs operate largely unregulated in the much regulated sphere of health care. The manufacturer, wholesaler, prescriber, pharmacist and insurer are all very highly regulated while there is no oversight and very little transparency in the PBM’s operations and I am especially concerned when it involves Medicaid and taxpayer dollars.

I understand the frustration that the pharmacies and pharmacists face with unfair reimbursement rates and how this directly affects our communities. If reimbursement rates continue to diminish and pharmacies continue to operate substantially below cost, they will have to close their doors and patient care will suffer.

Therefore, I am planning to introduce legislation addressing the need for transparency in contracts and establishing fair pharmacy reimbursement in Medicaid Managed Care.

I hope you will join me in cosponsoring this important legislation.

Introduced as SB1105