The proposed legislation, sponsored by Sens. Chuck Grassley and Maria Cantwell, aims to increase transparency of PBM business practices.
The Senate Committee on Commerce, Science and Transportation approved in an 18-to-9 vote to send the bipartisan Pharmacy Benefit Manager Transparency Act (S.127) to the full Senate. Introduced in January 2023 by Sens. Maria Cantwell (D-Wash.), Chair of the Commerce Committee, and Chuck Grassley (R-Iowa), Ranking Member of the Budget Committee, the bill aims to increase transparency in prescription drug pricing.
According to a preliminary estimate by the Congressional Budget Office, the legislation would reduce the deficit by $740 million over the next 10 years.
“Drug prices have been increasing at an alarming rate and are compromising consumers, their budgets and the cost of health plans. Pharmacy benefit managers are middlemen in the drug pricing supply chain and today, three PBMs control 80% of the prescription drug market, operating out of the view of regulators,” said Sen. Cantwell said in a press release. “This committee has heard testimony showing how PBMs’ substantial market power and opaque practices impact patients, providers and pharmacies, including a Seattle pharmacist who had to close a pharmacy serving retirees because the PBM had clawed back over $538,000 in just a single year. So, I look forward to moving this out of committee again.”
The bill would make it illegal for PBMs to engage in “spread pricing” in which they charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy. It would also prohibit PBMs from clawing back payments made to pharmacies, or increasing fees or lowering reimbursements to offset reimbursement changes in federally-funded health plans. The bill would require PBMs to pass 100% of any rebate to the plan or payer and to disclose the cost and reimbursement of drugs to the health plan, any fees or discounts the PBM charges.
This bill has drawn support from a diverse group of healthcare and consumer organizations, including the Association for Clinical Oncology, the AIDS Healthcare Foundation, the American Pharmacists Association, the Crohn’s and Colitis Foundation and the National Community Pharmacists Association.
“ASCO members have reported that some patients have had their medication or dosage changed by PBMs without prior approval by or in consultation with the treating physician,” Lori J. Pierce, M.D., ASCO Chair of the Board, said in a letter in February 2023. “PBMs are also increasingly shifting drug dispensing away from physicians and toward pharmacies they own, which can negatively impact patient access to treatment. In these ways, PBMs are interfering with the doctor-patient relationship and lowering the quality of care for people with cancer.”
The Crohn’s & Colitis Foundation indicated in a letter in February that while inflammatory bowel disease patients have benefitted from biologic medications, but that PBMs have adopted a wide range of tactics that have perversely impacted access to biologics and biosimilars. “Hidden rebate schemes have complicated market entry and often result in patients paying much more for medications than they cost the PBM. Yet, PBMs are one of the least understood or regulated sectors of the health care system,” Erin McKeon, associate director, federal advocacy, said in the letter.
Pharmacists organizations, such as the American Pharmacists Association, have said the bill would address PBMs’ anticompetitive business practices that are putting many independent pharmacies out of business, such as spread pricing where PBMs charge health plans more for a prescription drug than they reimburse a pharmacy, and then pocket the difference.
The Pharmaceutical Care Management Association, which represents PBMs, has said in the past that PBMs play a positive role in securing savings and provide choice and expertise for employers about prescription drug benefit design and coverage. Pharmaceutical companies, the organization has said, are the ones responsible for high costs.