HARRISBURG — Some Pennsylvania lawmakers want to give the state's top prosecutor more power to take on pharmacy benefit managers, the corporate middlemen that are frequently blamed for pharmacy closures across the state.
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.
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.
The legislative action in 2024 was intended “to rein in PBMs that were destroying local pharmacies and jeopardizing the health and safety” of Pennsylvania residents, the Republican lawmakers said in a February memo to colleagues. “While these reforms were an important step forward, more must be done to protect access to essential medical care.”
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 — all while prioritizing their own profits. The Pennsylvania Pharmacists Association said last year that closures would continue and patients would be at risk without further state action.
“Independent community pharmacies have a choice: Either stay in business and lose money, or go out of business,” Eric Pusey, a Lackawanna County pharmacist and pharmacy owner, told Spotlight PA. “The crisis still does exist because of the reimbursement issues and the issues that the PBMs are forcing upon individual pharmacies.”
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.
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 “to negotiate lower drug prices and create more access to affordable medicines for patients.”
“We depend on a healthy network of independent pharmacies in Pennsylvania,” Lopes added. “And PBMs are working to help rural, community pharmacies by paying Pennsylvania’s rural and community pharmacies more than retail chain pharmacies.”
While the attorney general’s 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.
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.
“Any increased oversight would be good,” he told Spotlight PA.
New powers
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.
The law places new restrictions on a PBM’s ability to steer patients to a pharmacy that is affiliated with the same benefit manager. Those “patient steering” 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.
Other measures in the law, including ones dealing with transparency requirements and payment rules, are also meant to help level the playing field.
But the law has limits.
It applies to about 24% of the state’s health insurance market, the Shapiro administration said last year. This includes fully-funded commercial plans — the kind people buy on their own or that their employer purchases, according to the Pennsylvania Insurance Department.
Over the summer, a bipartisan group of lawmakers raised concerns about the Shapiro administration's enforcement of the 2024 law, Spotlight PA reported, based on records obtained through the state’s open records law.
State Senate Majority Leader Joe Pittman (R., Indiana) recently told Spotlight PA “we have not seen the desired effectiveness of Act 77 because the Insurance Department has given PBMs a free pass on the statute.”
The Shapiro administration has highlighted the benefits of the new law and said it’s enforcing the legislation as it was written.
Adrian Sipes, a Pennsylvania Insurance Department spokesperson, told Spotlight PA that “many of the protections in Act 77 are just now taking effect,” but the agency “has worked consistently to implement the protections in Act 77 since its passage.”
And despite the limits, Pennsylvania Insurance Commissioner Michael Humphreys said last year that new oversight under the law “brings needed transparency and fairness to our healthcare system for all Pennsylvanians.”
The proposal from Republican state Sens. Wayne Langerholc (Cambria), Judy Ward (Blair), and Pat Stefano (Fayette) would add new oversight and restrictions.
Langerholc was listed first on the co-sponsorship memo for the plan. His office declined an interview request and didn’t answer specific questions about the proposal. A spokesperson said a “press release serves as his comment to the forthcoming legislation” and that “we would be open to discuss any specific questions on the language” after the bill is introduced.
In the memo, the lawmakers described significant changes.
Under the bill, the Office of Attorney General would be authorized “to review all contractual renewals and terminations between pharmacies and PBMs to assess their impact on local communities,” lawmakers said. If there were a dispute over a termination, then a public hearing in the affected community would be required.
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.
A news release from the Republican lawmakers also said the measure would give the attorney general’s office new “authority to pursue legal remedies against PBMs on behalf of the commonwealth and its residents.”
Their proposal also tries to address where court cases involving PBMs take place, with the lawmakers saying residents “should not be forced to travel across the country to defend their access to essential medical care.” They say their legislation would require PBMs to appear in Pennsylvania courts “for any cause of action arising from conduct within Pennsylvania.”
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.
Pusey, the Lackawanna County pharmacy owner, and Frankil both said that measure would affect CVS Health — as the parent company includes both retail pharmacy locations and one of the country’s leading PBMs. A spokesperson for CVS’ pharmacy benefit manager previously told Spotlight PA independent pharmacies are “a vital part” of its pharmacy network and that it reimburses those companies in Pennsylvania more than it does CVS locations.
There’s been litigation over this issue elsewhere.
Arkansas’ 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's an unconstitutional law that would shut down about two dozen of its pharmacy locations, “eliminate hundreds of jobs and drive-up costs for Arkansans.” Others have filed suit as well. Those cases were pending as of late February.
In Pennsylvania, pharmacists say they continue to wait for relief.
Richard Ost, a pharmacist and owner of Somerset Pharmacy in Philadelphia, told Spotlight PA he’s been disappointed by other attempts to rein in the power of PBMs.
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.
“You need to understand everything,” he said, “because if you don’t, you'll get the sheets pulled over your head.”