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Pennsylvania auditor general to review prescription drug pricing

HARRISBURG, Pa. - Bringing transparency and accountability to prescription drug prices in Pennsylvania, that is the goal of a review by the auditor general into how drug prices are set.

Auditor General Eugene DePasquale will focus on practices by pharmacy benefit managers, also known as PBMs. PBMs negotiate with drug companies and insurers to determine which drugs are covered by insurance and they also set the drug reimbursement rate for community and chain pharmacies.

"The idea is that they would negotiate better prices with drug manufacturers," said DePasquale. "But, questions have been raised about whether the PBMs are passing better prices and rebates from drug companies on to consumers at the pharmacy counter."

The way the PBMs are currently funded doesn't allow for any state of federal oversight into their practices. In 2017, $3.4 billion of Pennsylvania taxpayers money went to PBMs, up from $2.8 billion in 2013. On top of that, DePasquale says community pharmacists have said PBMs are cutting their reimbursement rates below what it costs to purchase the drug.

"This is not the way this process was supposed to work," said DePasquale. "It could be forcing small pharmacies out of business and that affects people's access to prescription."

DePasquale says these small pharmacies are critical to delivering drugs to many people in the state. While he says he understands some mom and pop stores going out of business is market drive, his problem is the use of taxpayer money.

"As much as people may be upset about Target or Walmart, the reality is that was not done with taxpayer money," said DePasquale. "This is being done with billions of dollars of taxpayer money."

DePasquale plans to hold regional hearings and invite local pharmacists, PBMs, health insurance companies, and health care providers to discuss how to best resolve this complicated issue.