Senators Reintroduce PBM Legislation

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The proposed legislation, sponsored by Sens. Chuck Grassley and Maria Cantwell, aims to increase transparency of PBM business practices.

Chuck Grassley (R-Iowa)

Chuck Grassley (R-Iowa)

Maria Cantwell (D-Wash.)

Maria Cantwell (D-Wash.)

Sens. Chuck Grassley (R-Iowa), ranking member of the Judiciary Committee, and Maria Cantwell (D-Wash.), chair of the Committee on Commerce, Science and Transportation, have reintroduced two legislative bills that aim to bring transparency to the PBM industry.

“Year after year, the price of prescription drugs has skyrocketed, far outpacing inflation and leaving patients and taxpayers footing the increasingly outrageous bill. I’ve worked to battle price increases on many fronts, but we can’t truly restore sanity to drug prices without addressing pharmacy benefit managers. PBMs, the industry middlemen, operate in the shadows and drive up prices for consumers. These bills bring about greater transparency to their industry and prevent unfair or anticompetitive practices that harm consumers,” Grassley said in a press release.

Related: Bipartisan Bill Aims to Require Transparency Among PBMs

The senators had introduced the Pharmacy Benefit Manager Transparency Act (S. 127) last year with bipartisan support. This legislation would ban deceptive pricing and prohibit arbitrary claw backs of payments made to pharmacies. The bill would also eliminate “spread pricing” in which a PBM charges a health insurance plan more to process a prescription than it reimburses the pharmacy.

This bill would also require PBMs to file an annual report with the FTC, disclosing how many it charges health plans and pharmacies for a drug, the fees that PBMs charge pharmacies, and the difference between affiliated and nonaffiliated pharmacies pay for drugs, according to a summary.

Both senators also sponsored the Prescription Pricing for the People Act (S. 113), which requires the Federal Trade commission (FTC) to examine the effects of consolidation in the PBM industry on pricing. The senators want to know whether PBMs steer patients to pharmacies they own, use formulary designs to favor drugs with rebates over lower cost options, or charge certain payers a higher price. The bill instructs the FTC to provide policy recommendations to Congress to improve competition and protect consumers, according to a summary.

Several organizations — including the National Community Pharmacists Association, the Autoimmune Association, the Community Oncology Alliance — support the bills. “For years now, PBM tactics have led to increased costs and delayed access to care for consumers. They have also made it harder for small business pharmacies to keep their doors open. That weakens the entire health care system, because community pharmacies provide essential services to millions of Americans, especially underserved population,” Anne Cassity, senior vice president of government affairs at the national Community Pharmacists Association.

Grassley has been a critic of the PBM industry, and since 2018 has been working to have the FTC investigate the PBMs and their pricing tactics.

Related: FTC Launches Investigation of PBMs

Last year, the FTC launched an investigation into PBM business practices of the six largest PBMs, including the impact of rebates on formulary design, the costs of prescription drugs to patients, and methods to determine pharmacy reimbursement. At the same time, the FTC issued an enforcement policy stating that rebates and fees that exclude competitors offering lower-cost drug alternatives can violate competition and consumer protection laws.

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