Pharmacists nervous but optimistic as Shapiro signs regulation into law

Even as Gov. Josh Shapiro signed a bill regulating pharmacy benefit managers into state law July 17, some local pharmacists remained apprehensive about the future.

The bill sets restrictions on pharmacy benefit managers, third-­party intermediaries who work with drug manufacturers, pharmacies and insurance providers. Pharmacy benefit managers, known as PBMs, reimburse pharmacies for the prescriptions customers buy through insurance, but independent pharmacy owners say the reimbursements they receive from them are far less than the actual cost of medications.

"Pennsylvanians are getting screwed by the high cost of prescription drugs and too many rural pharmacies have been forced to close their doors, while the few PBMs that dominate the market are raking in billions," Shapiro said in a statement.

The original bill, House Bill 1993, passed nearly unanimously in the state House of Representatives at the end of June, and cleared the state Senate last week, with revisions that altered some of the potential regulations. Those revisions were approved 172-30 in the House last Thursday.

The bill creates more rules for pharmacy benefit managers, such as restricting clawbacks, or ways that pharmacy benefit managers can charge pharmacies additional fees after drugs are dispensed. It creates more rules around patient steering, when benefit managers try to direct customers to a preferred pharmacy, as well as network adequacy, a measure of how many locations in a given area are included within a benefit manager's network.

Pharmacists said they are grateful for the regulations that came with the bill, but some were wishing for more.

"We did come away with some positive results. However, (it's) obviously not what we were hoping for." said Ed Christofano, owner of the independent Hayden's Pharmacy, which has locations in Donegal, Youngwood and Mt. Pleasant.

He had hoped to see more restrictions on spread pricing, a practice in which benefit managers reimburse a pharmacy for a prescription and then bill an insurer or an employer that provides health insurance at a higher price for the same medication. The bill that was approved by the Senate will require a study of data analysis of spread pricing.

"Hopefully the study can be completed quickly and efficiently," he said.

"Let's keep this moving so that we have pharmacies accessible in our communities."

Some other pharmacies in rural Westmoreland County could close soon, Christofano said. And since January 2024, over 140 pharmacies have closed in Pennsylvania, according to the ACT Pharmacy Collaborative.

"If those pharmacies in those rural areas close, the purpose of this bill is to prevent that," he said. "The study is going to take time, and with the study taking time, we are risking more pharmacy closures to come."

Start of further regulation?

State Rep. Jessica Benham, D-South Side, who sponsored the bill, said she was proud to have introduced and shepherded the regulations across the finish line.

"Obviously I did not get everything that I wanted in the bill, but one of the provisions of the bill is for a study of the impact of spread pricing," she said. "I do believe that the results of that study are going to give us an indication of what legislation that we need to introduce next."

She hopes to address spread pricing in the next legislative session and looks forward to receiving the data from the study.

"Putting middlemen like PBMs in check is essential in giving power back to community pharmacies and the patients they serve every day," she said in a statement. "HB1993 delivers real relief to our pharmacies and the pocketbooks of patients, leveling the playing field between big corporate pharmacies and the small ones in our neighborhoods, and I'm thrilled it will be law."

Shane Daugherty, pharmacist and one of the owners at New Stanton Pharmacy, said he was extremely pleased to hear the bill had passed. Daugherty had previously attended a roundtable discussion to explain the plight of independent pharmacies to state legislators like Benham.

Low reimbursements from pharmacy benefit managers can cause pharmacies to lose money on transactions, especially on expensive brand-name medications. Pharmacists like Daugherty say they don't have much choice other than to enter contracts with the benefit managers to get their reimbursements, even if they are disadvantageous to the pharmacy. That's because so many insurance companies rely on benefit managers to distribute and formulate reimbursements.

Daugherty is hopeful that the bill will be the beginning of pharmacy benefit manager reform in Pennsylvania.

"The final bill does not address all areas of concern I have for the sustainability of community pharmacies, particularly with reimbursement, however, it is a starting point," he said. "Looking to the future, I'm hoping this bill will provide the state with the information necessary to encourage further legislation targeting fair reimbursement. This will ensure patients continue to have access to high quality care."

David Cippel, president of Klingensmith's Drug Stores -- with seven locations in Leechburg, Kittanning, West Kittanning, Ford City, New Bethlehem, NuMine and Rimersburg -- said he was optimistic about the bill as a start. He is glad that the bill grants the Pennsylvania Insurance Department more authority and oversight over benefit managers.

"The best portion for pharmacies and for our patients is the fact that the state insurance department is now in charge of regulating or oversight of the PBMs," he said. "They had no oversight previously, now they do, and they're going to be able to determine the degree of spread pricing and how much spread pricing impacts the state and the managed care organizations."

As the year goes on, Cippel is also hopeful that independent pharmacies like his own will be able to survive. Other sources of revenue, like the fall respiratory virus vaccine season, may help, he said.

He hopes that Pennsylvania will follow the example of surrounding states, like Ohio, which have instituted further regulations on PBMs when dealing with Medicaid insurance.

"It's not like Pennsylvania is this unique society or geography. Pharmacy is pharmacy. We all buy drugs and dispense drugs and take care of people," he said. "I think that if you look at the amount of money that Ohio has saved, and you look at a state the size of Pennsylvania, we have much more potential, much more."