Dec. 11, 2018

HARRISBURG – The Pennsylvania auditor general on Tuesday released his report on pharmacy benefit managers (PBMs) and “gag clauses,” which forbid some pharmacists from telling customers how to save money unless the customer specifically asks them. In response to the report, Rep. Seth Grove (R-York) and Sen.-elect Kristin Phillips-Hill (R-York), who have been following this issue and advocating for changes to correct these problems, issued the following statement:

“The practices outlined in the auditor general’s report are downright despicable. Though originally tasked to serve as third-party claims administrators, the role of PBMs now includes developing lists on which medications are covered by Medicaid and deciding financial reimbursements to pharmacies for those medications. Last year, Pennsylvania taxpayers paid PBMs nearly $2.9 billion for Medicaid enrollees, which is an increase of nearly 100 percent since 2013 when the cost was $1.4 billion.

“The stories we’ve heard from pharmacists, which are also outlined in the report, are very concerning. One recurring theme we’re heard is that in 2017, when a large PBM drastically slashed reimbursements, many pharmacists received letters from a related corporation offering to buy their businesses, citing the reduced reimbursements. This practice undermines these pharmacies, some of which have been family-owned and -operated for generations and provide much-needed services to small communities across the state.

“The gag clauses stipulated in some contracts pharmacies sign with PBMs is very disheartening. We’ve heard of some customers essentially being forced to overpay for medications because of this unfair practice. Under the clause, a pharmacist can’t tell a customer the medication would cost less if it’s paid for out-of-pocket instead of going through insurance.

“These practices aim to drive up costs, pad the pockets of corporate owners and drive out independent pharmacies, all while using customers reliant on medications as pawns. Should these practices succeed, all customers will end up paying more through lack of competition and higher Medicaid costs, which would be paid for by taxpayers.

“With the cost of our state’s human services programs ballooning at an alarming rate, this report gives us a blueprint for how to rein in costs, protect taxpayers and protect consumers. The auditor general and his team should be commended for their due diligence in finding ways to promote better oversight, increase transparency and hold these PBMs accountable. We look forward to addressing and correcting these injustices during the 2019-20 session.”

Pennsylvania Rep. Seth Grove
196th District

Media Contact: Greg Gross

Pennsylvania Sen.-Elect Kristin Phillips-Hill
28th District

Media Contact: Jon Hopcraft