Frankel: Auditor General’s report on pharmacy benefit managers misses mark
Suggests a ‘struggle to understand’ how PBMs are fleecing consumers
Rep. Dan B. Frankel August 28, 2024 | 2:59 PM
HARRISBURG, Aug. 28 – Majority House Health Committee Chair Dan Frankel issued the following statement in response to state Auditor General Timothy L. DeFoor’s audit released today:
“I’m embarrassed for the auditor general, but he’s not the first person to struggle to understand our health care system. It’s far too complicated, and these massive companies intentionally use that fact to fleece health care consumers.
“Those of us working on this issue understand that spread pricing is a specific way that pharmacy benefit managers make money – by collecting the difference between how much they pay for drugs and how much they charge. Our Department of Human Services banned spread pricing in Medical Assistance years ago, and it is prohibited in contracts.
“Unsurprisingly, PBMs still do find a variety of ways to extract profits from pharmacies, even though they are already barred from doing so through spread pricing specifically. PBMs are extremely savvy corporations that excel at finding loopholes and making money off our pharmaceutical distribution system. In fact, they are currently being investigated for these practices by the Federal Trade Commission.
“While I’ll allow that this industry is allergic to transparency and intentionally confusing, I am genuinely shocked that a public official charged with protecting the interests of this commonwealth could be so easily snookered.
“Ultimately, it’s good news that the auditor general cares about this issue, even if he is playing some significant catch-up. In fact, I’m glad to report that our Department of Human Services identified the very same issues he notes and has already made changes in new contracts to prohibit the practices.
“Rep. Jess Benham’s legislation, which passed through my committee and was signed into law as Act 77 of 2024, also called for statutory bans on spread pricing and contained the limitations when it passed the House.
"It’s unfortunate that those provisions were removed by Senate Republicans. I’m hopeful the auditor general will communicate his concerns regarding spread pricing to his own party.”