In preliminary provisions, further providing for definitions; and, in pharmacy benefits manager contracts, providing for State pharmacy benefits manager.
Summary
SB1186 would amend Pennsylvania’s Pharmacy Audit Integrity and Transparency Act to revise the statutory definitions of “specialty drug” and “spread pricing,” and to create a new framework for a single State pharmacy benefits manager (PBM) for Medicaid pharmacy benefits. The bill directs the Department of Human Services to competitively procure and contract with one third-party administrator by July 31, 2026, to administer pharmacy benefits for all Medicaid recipients, including those enrolled through managed care organizations.
The bill also requires Medicaid managed care contracts to use this State PBM and sets detailed procurement disclosure rules aimed at identifying conflicts of interest and ownership ties among PBMs, pharmacies, wholesalers, insurers, and manufacturers. It prohibits the State PBM from steering enrollees to affiliated pharmacies, forcing mail-order or specialty-pharmacy-only use except where necessary, imposing certain documentation demands beyond state or federal requirements, retroactively denying or reducing valid claims, using spread pricing, or charging various pharmacy fees. It further requires pass-through pricing and minimum reimbursement tied to NADAC or wholesale acquisition cost plus a dispensing fee.
Impact
SB1186 would significantly alter how Medicaid pharmacy benefits are administered in Pennsylvania by centralizing PBM functions under a single state-contracted entity and imposing new statutory limits on pricing and claims practices. It would affect the Department of Human Services, Medicaid managed care organizations, pharmacies, pharmacists, PBMs, and potentially affiliated specialty or mail-order pharmacies. The bill also changes the legal definitions of specialty drugs and spread pricing, which could affect how existing PBM transparency and audit rules are applied under state law.
Sentiment
No committee transcript or vote record is provided, so there is no documented floor or committee debate to gauge formal support or opposition. Based on the bill’s structure, the measure appears designed to address concerns about PBM conflicts of interest, opaque pricing, and pharmacy reimbursement practices, suggesting a reform-oriented and consumer/provider-protective intent. The introduction by a bipartisan group of senators also suggests the issue may have cross-party interest, though no recorded votes are available here.
Contention
The main points of contention are likely to be the bill’s restrictions on PBM business models and its mandate for a single state PBM for Medicaid. PBMs and affiliated entities may object to the ban on spread pricing, limits on affiliated pharmacy steering, disclosure requirements, and the requirement to use pass-through pricing and minimum reimbursement standards. Managed care organizations and state procurement officials may also scrutinize the operational complexity of transitioning Medicaid pharmacy benefits to one contracted administrator and the potential cost or administrative impacts.
In preliminary provisions, further providing for definitions; and, in pharmacy benefits manager contracts, providing for State pharmacy benefits manager.
A bill for an act relating to pharmacy benefits managers, pharmacies, prescription drugs, and pharmacy services administrative organizations, and including applicability provisions. (Formerly SSB 1074.) Effective date: 07/01/2025. Applicability date: 07/01/2025.