House passes Lower Costs, More Transparency Act

U.S. Capitol

We are one step closer to pharmacy benefit manager (PBM) reform. The U.S. House approved the Lower Costs, More Transparency Act (H.R. 5378) on Dec. 11 by a bipartisan vote of 320–71.

“H.R. 5378 brings much-needed transparency to the health care system by codifying and strengthening important price transparency protections,” said Rep. Frank Pallone (D-NJ) before the vote. “It’s a victory for everyone who has ever struggled to navigate and understand the cost of a healthcare procedure or prescription drug at the pharmacy counter.”

Lower Costs, More Transparency Act would hold PBMs, insurers accountable

PBMs have historically acted as the middlemen between insurers and drug manufacturers. PBMs negotiate prices in exchange for including drugs in insurers’ formularies. They are supposed to pass the savings to patients. However, PBMs—often working hand-in-hand with insurance companies that own them—pocket the discounts, leaving patients to foot the bill.

The opacity of the American healthcare system has helped PBMs siphon money out of patients’ pockets in the years since the American Affordable Care Act. The Biotechnology Innovation Organization (BIO) has been pushing for reform as the appetite for PBM legislation has grown in Congress throughout 2023.

The Lower Costs, More Transparency Act would require PBMs to disclose drug rebates and discounts, revealing what they pay drug makers for prescription drugs. The bill would also require hospitals, insurance companies, labs, imaging providers, and ambulatory surgical centers to publicly list the prices they charge patients.

“These measures will empower consumers and employers with data on the prices hospitals charge and the rates insurers pay so that they can compare prices, and save money,” Rep. Pallone continued. “It also increases transparency of how pharmacy benefit managers or PBMs affect drug prices at the pharmacy counter. And this will also help increase competition and lower healthcare costs for Americans PBMs must be transparent with multi-employer public sector and retiree-only health plans along with all other employer health plans.”

“PBM must be transparent with multi-employer, public sector, and retiree-only health plans, along with all other employer health plans,” said Rep. Cathy McMorris Rodgers. “I do concur with you that we will address this issue in negotiations with the Senate, and I look forward to working with you to make sure this bill becomes law.”

PBM reform is popular among Americans

PBM reform is popular among both lawmakers and American voters. In fact, 95% of the public says it is important for Congress to pass a law to make health care costs more transparent to patients, according to a recent survey conducted by Morning Consult on behalf of United States of Care, a nonprofit dedicated to expanding access to affordable, quality health care. The survey was promoted by the House Energy and Commerce Committee.

The survey also found that:

  • 84% of participants think that health care is a high-priority issue for Congress to address this year.
  • 81% of voters support lawmakers requiring big corporate hospitals to report data on facility fees, including how much revenue they collect from facility fees.
  • 74% of voters support banning facility fees everywhere for outpatient, same-day services, regardless of the service or where it is being performed.

“Americans want transparency, and they don’t want to pay more out of pocket for services just because they’re provided by a hospital-owned doctor’s office,” says the Committee.

The Lower Costs, More Transparency Act was led by House Energy and Commerce Chair Cathy McMorris Rodgers (R-WA) and Ranking Member Frank Pallone, Jr. (D-NJ); House Ways and Means Chair Jason Smith (R-MO); and House Education and the Workforce Chair Virginia Foxx (R-NC). It will now head to the Senate. While it is not expected to pass in its current form, many included policies could eventually pass the Senate.

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