In his budget address, Governor Shapiro called for legislative reform of PBM operations – and HB 1993 grants the Pennsylvania Insurance Department regulatory oversight over PBMs to end predatory practices and save Pennsylvanians’ money on prescription drugs.

Harrisburg, PA - On July 17, 2024, Governor Josh Shapiro followed through on his commitment to increasing transparency and accountability to support Pennsylvanians and local pharmacies by signing bipartisan House Bill (HB) 1993 into law, providing stronger protections for patients in Pennsylvania and increased regulatory oversight of pharmacy benefit managers (PBMs). PBMs are the hidden “middlemen” of the pharmaceutical supply chain. They negotiate the price of prescription drugs between health insurance companies and drug manufacturers, set compensation formulas for pharmacy payments, and determine patient co-payments. Despite their influence and outsized role in our healthcare system, many Pennsylvanians are unaware of the existence of PBMs.

During his 2024-25 budget address, Governor Shapiro called for legislation to reform the operations of PBMs to help Pennsylvanians impacted by the rising costs of prescription drugs and bring price transparency into the pharmaceutical supply chain. HB 1993 grants the Pennsylvania Insurance Department (PID) the authority to regulate PBM practices and contains several important protections that will benefit Pennsylvanians, resulting in lower out-of-pocket costs for prescription medication.

“Pennsylvanians are getting screwed by the high cost of prescription drugs and too many rural pharmacies have been forced to close their doors, while the few PBMs that dominate the market are raking in billions. My Administration is doing everything in our power to cut costs and put money back in their pockets so they can receive the medication they need to live healthy lives while supporting our communities,” said Governor Josh Shapiro. “I called for this overdue PBM reform in my budget address - and I am proud to see that the General Assembly came together in a bipartisan manner to cut costs and safeguard healthcare access for all Pennsylvanians. This is another example of the big things we can do to make a difference in Pennsylvanians’ lives when we work together.”

According to the Center for Rural Pennsylvania, approximately 540,000 rural Pennsylvania residents lived in a pharmacy desert at least five miles from the nearest pharmacy in 2022. Since January 2024, over 140 pharmacies have closed in Pennsylvania according to the ACT Pharmacy Collaborative, and the Pennsylvania Pharmacists Association estimates that over 70 of those pharmacies are independently run. Currently, 21 of Pennsylvania’s 67 counties already have fewer than 10 pharmacies.

Just last week, the Federal Trade Commission released an interim report describing how PBM’s practices affect the accessibility and affordability of prescription drugs. HB 1993 provides several tools to help Pennsylvania address these issues - specifically:

- HB 1993 will prohibit certain “steering” practices, such as requiring a policyholder to purchase drugs exclusively through a mail order pharmacy or at a pharmacy owned or controlled by the PBM.
- HB 1993 prohibits a pharmacy from charging a price that is more than the consumer would pay if they walked in off the street and paid in cash or that is more than the pharmacy would receive from the insurer or PBM.
- HB 1993 contains robust network adequacy requirements that require a PBM to establish a network that meets or exceeds federal Medicare access standards. This will ensure Pennsylvanians always have a pharmacy within a reasonable distance to fill their prescriptions.

This law also prevents PBMs from hiding certain predatory practices that drive up profits by requiring the submission of several reports to PID, including one that requires each PBM to disclose all the manufacturer rebates it receives and does not pass through to its clients. Another report will require each PBM to disclose the adequacy of its pharmacy networks. Both reports will be posted on PID’s website after full implementation in 2026.

“The Governor has been clear that it is past time to reform the operations of PBMs for the protection of Pennsylvanians, and that is exactly what HB 1993 does,” said Pennsylvania Insurance Commissioner Michael Humphreys. “For PID, this new authority will allow us to delve into PBM practices, so that we can have a stronger understanding of the drivers of prescription costs. Most importantly, it’s going to help the Department protect Pennsylvanians from unfair business practices and ensure they have somewhere relatively close to get their prescriptions filled at a reasonable price.”

HB 1993 received bipartisan support in both chambers of the General Assembly, where legislators worked across the aisle to champion PBM reform.

“Putting middlemen like PBMs in check is essential in giving power back to community pharmacies and the patients they serve every day,” said Rep. Jessica Benham, prime sponsor of HB 1993. “HB1993 delivers real relief to our pharmacies and the pocketbooks of patients, leveling the playing field between big corporate pharmacies and the small ones in our neighborhoods, and I’m thrilled it will be law.” 

“Too many pharmacies are disappearing in Pennsylvania and the time is now for meaningful reform to the relationship between pharmacies and pharmacy benefit managers,” said Sen. Judy Ward, prime sponsor of SB 1000. “Many Pennsylvanians depend on Pharmacies for access to care and prescription medication and cannot afford to lose that resource. This bill would put the needs of patients and their ability to access medicine first and brings much-needed relief to pharmacies across the Commonwealth.”

“Medication management is one of the most important aspects of health care and it occurs at your pharmacy,” said Rep. Valerie Gaydos. “While PBMs can serve a valuable role in controlling drug costs, greater transparency, more accountability, and oversight will help ensure that PBMs act in the best interests of patients, the health care system as a whole, and to?ensure that the free market is working to provide the best care at the best price to all.”

"Our Commonwealth’s community pharmacies ensure Pennsylvanians in underserved areas across the Commonwealth help patients get connected with the care they need in their community. The closure of any pharmacies due to the overburden from PBMs is unacceptable, and that’s why legislation like House Bill 1993 and the companion legislation I co-authored, Senate Bill 1000, were so critically needed, said Sen. Christine Tartaglione. “By addressing PBM practices such as patient steering, spread pricing, lack of transparency, and more, we are taking a sorely needed step towards relieving our community pharmacies and our constituents who rely on them. I am thankful for the bicameral, bipartisan efforts that will protect Pennsylvanians and the pharmacies they rely on."

“Medications are not luxury items, and they are too important to the health of Pennsylvanians to allow the companies that wield influence over costs to set their own rules,” said Rep. Frankel, Majority Chairman of the House Health Committee. “This bill will protect consumers and independent pharmacies, and it’s a crucial step forward in our ongoing effort to increase access to quality healthcare in the commonwealth.”

“Passing House Bill 1993 is an important step in PBM reform that brings greater transparency and fairness into the process that I hope will help our local pharmacies,” said Sen. Michele Brooks. “Understanding that families rely on their local pharmacist as part of their health care team, I look forward to continuing this conversation to remove barriers for our hometown pharmacies so that they are able to continue to provide the personal services that so many rely on.”

“Since the beginning of the year, more than 140 pharmacies have closed in Pennsylvania, with more likely to close if we do not act,” said Representative Kathy Rapp, Minority Chair of the House Health Committee. “This legislation will help level the playing field for our independent pharmacies, giving Pennsylvanians more choices to fill their prescriptions.”

"We heard from independent pharmacists and we responded with significant new protections,” said Senator Art Haywood.

The law has a staggered effective date. However, all provisions of the new law will be applicable to health insurance policies approved and pharmacy contracts issued, renewed, or amended after November 14, 2024. The first of the newly required PBM reports will become due in 2026, after a full year of data is available. The first annual Network Adequacy Reports will be filed on April 1, 2026, and the first annual Transparency Reports will be published by August 30, 2026.