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Senate of Pennsylvania
Session of 2019 - 2020 Regular Session


Posted: April 22, 2019 09:41 AM
From: Senator Judy Ward
To: All Senate members
Subject: PBM Pricing Transparency in Medicaid
I plan to introduce legislation aimed at increasing transparency in pharmacy benefit manager (PBM) pricing practices in our Medicaid program.

Almost 90 percent of Pennsylvania Medicaid patients are served by managed-care companies (MCOs) that contract with the state. In turn, those companies contract with PBMs for their pharmacy programs to decide which drugs will be covered and how much to reimburse the pharmacies that fill the prescriptions.

Over the last two years, I have heard from our local pharmacies about severe cuts to pharmacy reimbursement rates by PBMs, especially in Medicaid. For many medications, payments are well below cost, forcing pharmacies to operate in the red. These pharmacy reimbursement cuts make it extremely difficult for the 900 independent pharmacies in our Commonwealth to maintain inventory, stay in business and serve our most vulnerable citizens. I share the pharmacists' frustration regarding this issue.

In December, Auditor General Eugene DePasquale released a special report (Bringing Transparency & Accountability to Drug Pricing) requesting action to decrease Medicaid prescription costs by increasing the transparency of how PBMs do business. The report concluded that “The time is now for the state and federal governments to act to bring transparency and oversight to the practices of these PBMs. Your money, taxpayer money and patient’s lives depend on it.” The special report recommended that the General Assembly pass legislation to increase transparency into PBM pricing practices.

Therefore, I plan to introduce legislation that would require transparency between the payments from the MCOs to the PBMs and then to pharmacies. It would enable the Pennsylvania Department of Human Services to review contracts with the MCOs and the PBMs as well as gather payment information so they can account for taxpayer dollars. The measure would also ensure fair reimbursement rates for community pharmacies. If reimbursement rates continue to diminish and pharmacies continue to operate substantially below cost, they will have to close their doors and patients will suffer.

This will be a companion bill to Representative Doyle Heffley and Representative Robert Matzie’s measure, House Bill 941.

Please join me in co-sponsoring this important legislation.

Introduced as SB825