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The Federal Deposit Insurance Corporation on Friday said that Republic First Bank has been closed by Pennsylvania state regulators, in what the FDIC said was the first US bank failure this year.

“Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank,” the FDIC said in a statement.

The bank had about $6 billion in total assets and $4 billion in total deposits at the end of January, the FDIC said in its release.

That makes Republic Bank (FRBK) far smaller than the regional bank failures that rocked the financial world last year. Silicon Valley Bank, for example, had about $209 billion at the end of 2022; it collapsed in March 2023.

The FDIC said the former bank’s “32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours.”

Those who have deposits at Republic Bank will become depositors at Fulton Bank, the FDIC said. The agency’s deposit insurance covers up to $250,000 per depositor.

Bloomberg News reported earlier in the week that the FDIC had approached buyers for the regional lender.

The FDIC said that Republic Bank was the first bank to fail in the United States since Citizens Bank in Sac City, Iowa, in November 2023.

Republic First Bank is a separate entity from First Republic Bank, a San Francisco-based commercial bank that was closed in May 2023. The majority of the bank’s assets were sold to JPMorgan Chase.

The Philadelphia-based bank’s failure comes at a tumultuous time for regional banks, as elevated interest rates have hurt the credit-dependent industry.

Silicon Valley Bank’s collapse sparked a broader crisis last year. Signature Bank’s failure followed days later, and First Republic Bank failed a few weeks after that. In total, there were five bank failures in 2023, according to the FDIC.

Recently, New York Community Bank saw wild swings in its stock price as customers began pulling their cash from the regional lender after it said it had identified “material weakness” in the company’s controls. The bank got a $1 billion equity investment lifeline from investors, including former Treasury Secretary Steven Mnuchin’s firm, Liberty Strategic Capital, in March.

This story has been updated.

By Sen. Judy Ward (R-30), Sen. Christine Tartaglione (D-2), Rep. Jessica Benham (D-36) and Rep. Valerie Gaydos (R-44)

It’s hard to believe that right now, in the 21^st century, countless Pennsylvanians are losing access to affordable prescription drugs. But that’s exactly what’s happening as more and more community pharmacies are being forced to close their doors due to the little-known role pharmacy benefit managers (PBMs) play in our health care system.

Because of PBMs, our commonwealth’s community pharmacies are faced with Medicaid reimbursement costs that do not cover the expenses incurred to purchase drugs. For some of our pharmacies, this challenge threatens their very survival.

PBMs were created with the best intentions to negotiate pricing with drug companies for prescription drugs through Medicaid to lower costs. But today, three PBMs — CVS Caremark, Express Scripts and Optum Rx — control 80% of the marketplace. With the big three in place, Pennsylvania’s Medicaid spend on the pharmacy benefit has drastically increased, from $1.41 billion in 2013 to $3.7 billion now annually, according to the National Community Pharmacy Association (NCPA).

In February, Mainline Pharmacy announced PBM pricing was forcing the closure of nine of its pharmacies in the greater Pittsburgh region across several counties, including Blair, Cambria and Westmoreland. This happened despite a record year for filling prescriptions because they lost $350,000 in the first six weeks of this year from PBM underpayments. Philadelphia lost several community pharmacies in underserved communities, including the 18^th Street Apothecary and Haussemann’s Pharmacy.

We’re seeing this issue repeated across the commonwealth and the nation. The University of Pittsburgh has created a website (ActForPharmacy.com) that tracks community pharmacy closures and provides a sobering view of the challenges Pennsylvania community pharmacies face in staying open — and of Pennsylvanians who desperately need their prescriptions. 

That’s why we’re sponsoring bipartisan legislation in the state House (House Bill 1993) and Senate (Senate Bill 1000) to stop this vicious cycle and bring transparency to the process. Transparency is critical to solving this problem because no one really knows how much PBMs are making at the expense of Pennsylvania’s dedicated community pharmacies and their patients.

We’re pleased the need for PBM reforms was cited by Gov. Josh Shapiro in his recent state budget address. Our legislation will direct the state Insurance Department to develop a process for hearing and resolving pharmacy complaints against a PBM. It also will require PBMs to report financial information on rebates and payments received from drug manufacturers and how those rebates and payments were distributed by the PBM. In addition, the legislation will limit or ban several practices by PBMs, including patient steering and spread profit schemes. 

 The time to enact comprehensive PBM reform is now. Nationally, the issue is taking center stage. A recent White House roundtable on lowering health care costs and bringing transparency to prescription drug middlemen included Pennsylvania pharmacist Dr. Chichi Ilonzo Momah, CEO and founder of Springfield Pharmacy in Delaware County. Speaking for community pharmacists, Dr. Momah detailed what’s happening to community pharmacists and the negative impact PBMs have on the Pennsylvania patients they serve.

Also at the roundtable was billionaire philanthropist Mark Cuban, a co-host of Shark Tank and owner of the NBA’s Dallas Mavericks. An outspoken critic of PBMs, Cuban has formed Cost Plus Drug Company, which provides complete price transparency from manufacturing to prescription delivery.

Let’s stop the needless closure of any more community pharmacies. Pennsylvania has the ability to better protect our commonwealth’s pharmacies, which are vital to their communities through the jobs they create and Pennsylvania families who depend on them for their prescription medications.

Republican Sen. Judy Ward represents Blair County and Democrat Christine Tartaglione represents parts of Philadelphia. Democratic Rep. Jessica Benham and Republican Rep. Valerie Gaydos represent parts of Allegheny County.

Sources:

Mainline closing: https://www.wtae.com/article/mainline-pharmacy-closing-harrison-city-blairsville/46853558

Mainline Pharmacy to close 9 stores

Map of pharmacy closures: https://www.actforpharmacy.com/pharmacy-closures

Legislation: https://www.legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?sYear=2023&sInd=0&body=S&type=B&bn=1000

Statistics:https://ncpa.org/sites/default/files/2023-02/medicaid-managed-care-reform-2-pager_0.pdf

White House:https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/05/readout-of-white-house-roundtable-on-lowering-healthcare-costs-and-bringing-transparency-to-prescription-drug-middlemen/

Media Contact: Nathan Akers
717-787-2421

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A judge that released a fentanyl dealer last year on non-monetary bond has been barred from overseeing arraignments. Voter turnout during the primary elections this week was rather abysmal. An airport has rolled out facial recognition technology to screen passengers (although this isn’t making the process faster, mind). Finally, this Pennsylvania’s go-to bagel order.

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