Sen. Baker introduces bill to place tighter controls on pharmacy benefits managers

Sen. Lisa Baker (R-20) recently introduced legislation that would address concerns related to pharmacy benefits managers (PBMs) and aims to reduce prescription drug costs paid by consumers.

Pharmacy benefits managers are third-party administrators of drug benefit programs for health plans. Baker noted these PBMs have seen success in containing costs but expressed concerns about the effectiveness of some of their practices.

“Our interest is in limiting as much as possible what Pennsylvanians have to pay for prescription drugs,” Baker said. “We need to be more aggressive in policing this process so our citizens are not unknowingly paying more than they should for medicines they need.”

The legislation would ban spread pricing, which allows PBMs to charge a plan sponsor more for a drug than it pays the pharmacy, and gag clauses, which prohibit pharmacists from informing customers that they can save money by paying for medications out-of-pocket rather than using their insurance coverage. The bill would also require the use of federal guidelines when setting the price of prescription drugs filled through Medicaid and create a program that rewards pharmacies and pharmacy benefits managers for meeting compliance and cost-saving measures.

“There are certain practices, such as spread pricing and gag clauses, which may result in bigger profits for companies and higher costs for customers,” Baker said. “We find there are available remedies to correct the situation. We can draw on what neighboring states – Ohio and Maryland – have successfully done to save money for their consumers.”

Maryland now regulates how PBMs may negotiate with pharmacies and bans gag clauses. Ohio has forced its Medicaid Managed Care Organizations to renegotiate the terms of its contracts, saving an estimated $220 million annually.

The bill is the result of a public hearing that Baker conducted last year into concerns regarding aspects of the system of pharmacy benefit managers.

“This is not to diminish the importance of the savings realized since the pharmacy benefit manager system has been in place,” Baker said. “Rather, our experience shows there are changes that can and should be made to provide a better deal for prescription drug purchasers.”