HB 2270 — An Act amending the act of November 21, 2016 (P.L.1318, No.169), known as the Pharmacy Audit Integrity and Transparency Act, in preliminary provisions, further providing for definitions; and, in pharmacy benefits manager contracts, providing for State pharmacy benefits manager.

PRINTER'S NO.   3006

                     THE GENERAL ASSEMBLY OF PENNSYLVANIA



                         HOUSE BILL
                         No. 2270
                                               Session of
                                                 2026

     INTRODUCED BY MATZIE, KLUNK, BENHAM, CEPEDA-FREYTIZ, McNEILL,
        DOUGHERTY, KAUFFMAN AND HADDOCK, MARCH 17, 2026

     REFERRED TO COMMITTEE ON HEALTH, MARCH 18, 2026


                                    AN ACT
 1   Amending the act of November 21, 2016 (P.L.1318, No.169),
 2      entitled, as amended, "An act providing for pharmacy audit
 3      procedures, for registration of pharmacy benefits managers
 4      and auditing entities, for maximum allowable cost
 5      transparency, for prescription drugs reimbursed under the
 6      PACE and PACENET program and for pharmacy benefit managers
 7      contract requirements and prohibited activities; and making
 8      related repeals," in preliminary provisions, further
 9      providing for definitions; and, in pharmacy benefits manager
10      contracts, providing for State pharmacy benefits manager.
11      The General Assembly of the Commonwealth of Pennsylvania
12   hereby enacts as follows:
13      Section 1.    The definitions of "specialty drug" and "spread
14   pricing" in section 103 of the act of November 21, 2016
15   (P.L.1318, No.169), known as the Pharmacy Audit Integrity and
16   Transparency Act, added July 17, 2024 (P.L.852, No.77), are
17   amended to read:
18   Section 103.    Definitions.
19      The following words and phrases when used in this act shall
20   have the meanings given to them in this section unless the
21   context clearly indicates otherwise:
22      * * *
 1    "Specialty drug."     [Either of the following:
 2        (1)   A prescription drug prescribed to a covered
 3    individual with a cost that meets or exceeds the cost of a
 4    drug on the specialty tier of Medicare Part D under 42 CFR
 5    423.104(d)(2)(iv) (relating to requirements related to
 6    qualified prescription drug coverage) and meets three or more
 7    of the following criteria:
 8              (i)    The drug requires specialized product handling
 9        or administration by the dispensing pharmacy.
10              (ii)    The drug requires specialized clinical care,
11        including, but not limited to, frequent dosing
12        adjustments to the prescription drug, clinical monitoring
13        or expanded patient service, intensive patient counseling
14        and ongoing clinical support, such as individualized
15        disease or therapy management to support patient outcomes
16        for a covered individual.
17              (iii)    The drug is prescribed for a covered
18        individual with a rare medical condition, complex or
19        chronic medical condition or life-threatening medical
20        condition.
21              (iv)    The prescription drug has a limited or
22        exclusive distribution and is not typically stocked or
23        dispensed by a retail pharmacy.
24        (2)   A prescription drug that is prescribed to a covered
25    individual and that is listed as a specialty drug on the
26    medical assistance fee-for-service specialty pharmacy drug
27    list.] Prescription medication used to treat complex or
28    chronic conditions that requires special handling, provider
29    coordination or patient education and monitoring for which a
30    retail community pharmacy is not reasonably equipped to

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 1      handle, store, provide counseling regarding use and safely
 2      distribute.
 3      * * *
 4      "Spread pricing."    A model of prescription drug pricing in
 5   which the PBM charges a health benefit plan or health insurer a
 6   contracted price for prescription drugs and the contracted price
 7   for the prescription drugs [differs from] is more than the
 8   amount the PBM directly or indirectly pays the pharmacist or
 9   pharmacy for prescription drugs and related pharmacist services.
10      Section 2.    The act is amended by adding a section to read:
11   Section 605.    State pharmacy benefits manager.
12      (a)   Duty of Department of Human Services.--The Department of
13   Human Services, by July 31, 2026, shall select and enter into a
14   master contract with a single third-party administrator to serve
15   as the State pharmacy benefits manager to administer all
16   pharmacy benefits for Medicaid recipients, including those
17   enrolled in a managed care organization by such date with whom
18   the Department of Human Services contracts for the delivery of
19   Medicaid services.
20      (b)   Requirement.--Each managed care contract entered into or
21   renewed by the Department of Human Services for the delivery of
22   Medicaid services by a managed care organization shall require
23   the managed care organization to contract with and utilize the
24   State pharmacy benefits manager for the purpose of administering
25   all pharmacy benefits for Medicaid recipients enrolled with the
26   managed care organization.
27      (c)   Contractor compliance.--The State pharmacy benefits
28   manager shall comply with the provisions of this act unless
29   otherwise prohibited by Federal law.
30      (d)   Procurement process.--

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 1        (1)   The Secretary of Human Services must, through a
 2    competitive procurement process that is in compliance with
 3    paragraph (2), select a State pharmacy benefits manager to
 4    comply with subsection (e).
 5        (2)   The competitive procurement process shall:
 6              (i)    accept applications for entities seeking to
 7        become the State pharmacy benefits manager; and
 8              (ii)    establish eligibility criteria that an entity
 9        must meet to become the State pharmacy benefits manager.
10        (3)   An applicant for the State pharmacy benefits manager
11    must disclose to the Secretary of Human Services the
12    following during the procurement process:
13              (i)    any activity, policy, practice, contract or
14        arrangement of the applicant that may present a conflict
15        of interest with performing as the State pharmacy
16        benefits manager or a managed care organization;
17              (ii)    all common ownership, members of a board of
18        directors, managers or other control of the applicant or
19        any of the applicant's affiliated companies with:
20                     (A)   a managed care organization administering
21              medical assistance, Pennsylvania Medical Assistance
22              program benefits in Pennsylvania or an affiliate of
23              the managed care organization;
24                     (B)   an entity that contracts on behalf of a
25              pharmacy or any pharmacy services administration
26              organization and its affiliates;
27                     (C)   a drug wholesaler or distributor and its
28              affiliates;
29                     (D)   a third-party payer and its affiliates; or
30                     (E)   a pharmacy and its affiliates;

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 1                (iii)    any direct or indirect fees, charges or any
 2          kind of assessments imposed by the pharmacy benefits
 3          manager on pharmacies licensed in this Commonwealth with
 4          which the applicant shares common ownership, management
 5          or control or that are owned, managed or controlled by
 6          any of the applicant's affiliated companies; and
 7                (iv)    any financial terms and arrangements between
 8          the applicant and a prescription drug manufacturer or
 9          labeler, including formulary management, drug
10          substitution programs, educational support claims
11          processing or data sales fees.
12    (e)   Contract requirements.--
13          (1)   The master contract shall prohibit the State
14    pharmacy benefits manager from:
15                (i)    requiring, enticing or coercing an enrollee to
16          obtain pharmacy services, including filling a
17          prescription drug, from a pharmacy owned, specialty
18          pharmacy owned or otherwise affiliated with the State
19          pharmacy benefits manager;
20                (ii)    communicating to an enrollee that the enrollee
21          is required to obtain a pharmacy service or have a
22          prescription dispensed at, or pharmacy services provided
23          by, a particular pharmacy owned by or affiliated with the
24          State pharmacy benefits manager if there are other
25          nonaffiliated pharmacies in network that have the ability
26          to dispense medication or provide services;
27                (iii)    requiring an enrollee to obtain pharmacy
28          services, including filling a prescription drug,
29          exclusively through a mail order pharmacy;
30                (iv)    requiring an enrollee to obtain pharmacy

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 1        services, including filling a prescription drug,
 2        exclusively through a mail order pharmacy or specialty
 3        pharmacy unless the service or drug can only reasonably
 4        be performed or dispensed at a specialty pharmacy;
 5              (v)    requiring a pharmacy to maintain or provide
 6        documentation that differs from requirements based on
 7        Federal or State law or State Board of Pharmacy
 8        regulations to demonstrate that a prescription is valid
 9        and intended to treat an enrollee's underlying condition;
10              (vi)    directly or indirectly retroactively denying or
11        reducing a claim or aggregate of claims:
12                     (A)    for prescription drugs when the prescription
13              is facially valid and consistent with Federal or
14              State law or State Board of Pharmacy regulations; or
15                     (B)    for pharmacy services, including
16              prescription drugs, after adjudication of the claim
17              or aggregation of claims;
18              (vii)    engaging in the use of spread pricing; and
19              (viii)       charging or recouping direct or indirect
20        remuneration fees, multiple network reconciliation
21        offsets, adjudication transaction fees or other fees to a
22        pharmacy.
23        (2)   The master contract required under subsection (a)
24    shall include provisions that require the State pharmacy
25    benefits manager to:
26              (i)    pay a rate for pharmacy services, including
27        filling a prescription drug, that is no less than the
28        National Average Drug Acquisition Cost guidelines for the
29        prescription drug or, if the National Average Drug
30        Acquisition Cost guidelines are unavailable, the

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 1            wholesale acquisition cost, plus the professional
 2            dispensing fee, as defined in 42 CFR 447.502 (relating to
 3            definitions), for outpatient drugs by pharmacies in the
 4            Medicaid program. The professional dispensing fee shall
 5            be set at 100% of the Medicaid fee-for-service dispensing
 6            fee determined in accordance with an in-State cost-of-
 7            dispensing survey conducted no more than every three
 8            years;
 9                (ii)    establish the State pharmacy benefits manager's
10            fiduciary duty owed to the Department of Human Services
11            as well as any pharmacy or pharmacist who provides
12            pharmacy services to an enrollee; and
13                (iii)   require the use of pass-through pricing.
14      (f)   Definitions.--As used in this section, the following
15   words and phrases shall have the meanings given to them in this
16   subsection unless the context clearly indicates otherwise:
17      "Pass-through pricing."     The model of prescription drug
18   pricing wherein a pharmacy benefits manager charges the health
19   benefit plan the same price for a prescription drug that it pays
20   the pharmacy for the same prescription drug.
21      "State pharmacy benefits manager."     The pharmacy benefits
22   manager contracted by the Department of Human Services pursuant
23   to the procurement process provided in subsection (d) to
24   administer pharmacy benefits for all Medicaid recipients in this
25   Commonwealth.
26      Section 3.     This act shall take effect in 60 days.




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