BETHLEHEM, Pa. - Gov. Josh Shapiro signed a new law that he said will help protect small, locally owned pharmacies as well as their customers.
The law cracks down on Pharmacy Benefit Managers, or PBMs, operating in the state.
“For too long, we’ve had PBMs, these unseen middlemen, manipulating and profiting off of the pharmaceutical system at the expense of consumers and our community pharmacies,” Shapiro said.
Last week he signed House Bill 1993 into law, providing stronger protections for commercially insured patients and increasing regulatory oversight of PBMs.
“They’ve been failing to significantly reduce prices, unilaterally changing the terms of contracts with pharmacies, and picking and choosing who wins and who loses."Governor Josh Shapiro, Pennsylvania
“They’ve been failing to significantly reduce prices, unilaterally changing the terms of contracts with pharmacies, and picking and choosing who wins and who loses," Shapiro said.
“These predatory practices have been screwing over the good people of Pennsylvania, forcing dozens of local independent pharmacies to close in the process.
"But my administration and lawmakers from both parties came together to do something about it and put a stop to PBMs’ unsavory practices. We’ve shown that we can work together and get stuff done, giving Pennsylvanians transparency and more peace of mind.”
The local impact
Nick Patel, owner ofAllentown Pharmacy at 416 Tilghman St., recently said he lost $50,000since the start of the year because of PBMs.
PBMs are separate companies hired by health plans, large employers, unions and government entities to manage prescription drug benefits programs, giving them the power to negotiate prices and push extra costs on pharmacies and patients.
The three largest PBMs in the country are Express Script, Optum RX and CVS Health, which control 80% of the market. Until recently, those companies operated without regulation.
Under the new law, the Pennsylvania Insurance Department has the authority to regulate PBM practices.
“Governor Shapiro has been unwavering in his push for bipartisan legislation that had the tools to reform the operations of PBMs,” said Pennsylvania Insurance Commissioner Michael Humphreys in a statement.
“With the signing of this bill, our department now has the necessary resources to protect commercially insured Pennsylvania consumers and increase transparency and accountability when it comes to PBMs. Most importantly, this allows PID to gain a stronger understanding of the drivers of prescription costs, which will subsequently help us ensure consumers are paying a reasonable price for their medication, at a pharmacy nearby.”
The law had bipartisan support, with state Rep. Josh Siegel, D-Lehigh, working to help get the new regulation passed. He was in Allentown touting the bill in June where he explained that around 140 pharmacies across Pennsylvania have closed since the start of 2024.
How regulation will help
House Bill 1993 bans patient steering, spread pricing and retroactive recoupment of money paid by the PBM to the pharmacy.
Lawmakers say spread pricing is when a PBM overcharges an insurance company and then underpays a pharmacy and pockets the difference. Patient steering happens through practices such as letters encouraging patients to order prescriptions through the mail and through preferential copays.
PBMs across the state will soon have to submit reports to the Pennsylvania Insurance Department to show more transparency, the bill's proponents say.
After Nov. 14, the new law will be applicable to health insurance policies approved and pharmacy contracts issued, renewed or amended.
