Pa. Pharmacists Urge Support For Bills To Increase Pricing Transparency

Sep. 16--Independent pharmacists are urging residents to press state legislators to support several bills that would result in more oversight of companies that administer prescription drug plans for the state Medicaid program.

The firms, known as pharmacy benefit mangers, or PBMs, operate in virtual secrecy, with no state oversight or control over their pricing practices, Dunmore pharmacist Tom DePietro said in a recent meeting with the Times-Tribune's editorial board.

That has created a system that allowed PBMs to drastically under-reimburse pharmacists for the cost of many medications, sometimes paying them less than the pharmacies paid for the drug, said DePietro, who is among several local pharmacists leading efforts to enact reforms.

The pharmacists' losses are not necessarily taxpayers' gain, however. Because of how the system is set up, PBMs are not required to report how much profit they make on each prescription.

The state Department of Human Services contracts with managed care organizations, or MCOs, to manage health care and prescription benefits for Medicaid enrollees. The MCOs subcontract with PBMs to administer prescriptions and pay them a set price for each prescription. The PBM then pays a portion of that to the pharmacy.

The practice is known as spread pricing. The problem, officials say, is the state does not know how much more it's being charged for prescriptions over what the PBM paid the pharmacy because the contract is between the PBM and MCO, so it has no right to review the terms.

For instance, a PBM may pay a pharmacy $75 for a prescription, but charge the taxpayer-funded MCO $120, said Patricia Epple, chief executive officer of the Pennsylvania Pharmacists Association.

"The PBM got the difference between the $75 and $120," Epple said. "That's probably a little exaggerated in some cases, but not all of them."

State Auditor General Eugene DePasquale first raised red flags in December, when he reported the state's prescription bill for Medicaid patients more than doubled, from $1.41 billion in 2013 to $2.86 billion in 2017. He suspects that's largely due to spread pricing.

State Sen. John Blake, D-22, Archbald, said legislators are deeply concerned about secrecy shrouding PBMs. The state House and Senate have each proposed several bills, which largely mirror each other, to address several issues.

"Everyone knows we have a problem," Blake said. "It's really about accountability for the Medicaid dollars we're spending."House Bill 941

, sponsored by state Rep. Doyle Heffley, R-122, Lower Towamensing Twp., would allow DHS to review the contracts between MCOs and PBMs, which would reveal how much the PBM earns. Based on findings in other states, Heffley said he suspects the PBMs "are raking in pretty big profits."

A recent report in Ohio revealed PBMs charged the state 8.8% more than they paid pharmacies, pocketing more than $220 million.

"These are tax dollars and we need to make sure we have oversight of how the money is spent," Heffley said.

Epple said Heffley's bill largely reflects changes DHS implemented in January, when it modified contracts with MCOs to require them to report the difference between what they pay PBMs and what the PBMs pay pharmacies. She said the bill is still necessary, however, to ensure those modifications remain.

"While it's not likely it will change, unless it is in legislation, it could," Epple said.

Other bills include:

House Bill 943 and Senate Bill 639: Both would prevent PBMs from enforcing "gag" rules that prevent pharmacists from advising a patient of less costly options for their prescriptions.

DePietro said sometimes a medication costs less than the patient's copay if they pay out of pocket instead of using their insurance. Pharmacists' contracts with the PBMs forbid them from telling the patient that, however.

The gag rule also prevents pharmacists from sharing with outside sources, including state legislators, financial data they say illustrates how badly they're being underpaid on certain drugs.

DePietro said he faced that situation Thursday, when he sought a copy of his contract with a PBM in preparation for a meeting with state officials.

"They told me I'd be in breach of the contract if I shared it with elected officials," DePietro said.

House Bill 945 and Senate Bill 789: Both would prevent the state from contracting with PBMs that also own pharmacies, addressing concerns those PBMs might pay their own pharmacies more than their competitors.

House Bill 944 and Senate Bill 829: Both would allow the state auditor general to audit PBMs.

Blake said both chambers are committed to a bipartisan effort to address issues. He hopes to get at least one bill passed and presented to the governor by December.

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