It is already shaping up to be a tough year for Pharmacy Benefit Managers (PBMs) as federal regulators and politicians work to shed light on the questionable and purposefully opaque practices that are resulting in higher drug costs for patients.
Already there have been a number of hearings on PBMs amid a vocal push to reform. February especially got the ball rolling when the Senate committee on Commerce, Science, and Transportation held a hearing “Bringing Transparency and Accountability to Pharmacy Benefit Managers” where Sen. Jon Tester said, “I don’t know why the hell they even exist.”
He continued, “There is no transparency in PBMs. When you combine that with anti-competitive tactics, this is a recipe where the only people who win in healthcare costs are PBMs,” as reported by Fierce Healthcare.
The top six actions Bio.News is watching this year on PBMs
1. Markup scheduled for PBM Reform Act
May 2 is the next big day to watch for as “The PBM Reform Act” is slotted for markup alongside a number of other bills targeting the rising cost of healthcare. Initially introduced by Sens. Sanders, Cassidy, Murray, and Marshall on April 27, 2023, the markup is the next step that the bill takes before a vote later this year.
“We are happy to announce that we’ve come to an agreement to consider critical pieces of legislation to reform pharmacy benefit managers and expand the availability of low-cost generic drugs through the HELP Committee,” said Sens. Sanders and Cassidy.
The move comes a week before the Senate HELP Committee hearing that will include three PBM CEOs on May 10.
2. The “Need to Make Insulin Affordable for All Americans” hearing
The Senate HELP committee holds its hearing on “The Need to Make Insulin Affordable for All Americans” on May 10, and PBMs are expected to come up. While the hearing is largely focused on insulin costs (as the name implies), it is notable that there are three PBM CEOs on the witness panel: David Joyner, Executive Vice President and President of Pharmacy Services at CVS Health; Adam Kautzner, President of Express Scripts; and Heather Cianfrocco, Chief Executive Officer at OptumRx.
This hints at Sen. Bernie Sander’s interest and increased attention on tackling the PBM problem.
3. Sen. Comer launches investigation into PBMs
In early March, Sen. James Comer, the House Committee on Oversight and Accountability Chairman, launched an investigation into PBMs stating:
“[PBM’s] anticompetitive tactics are driving up healthcare costs for Americans and harming patient care…Greater transparency in the PBM industry is vital to determine the impact that their tactics are having on patients, the pharmaceutical market, and healthcare programs administered by the federal government. The House Oversight and Accountability Committee is shining a light on this issue in the healthcare system and will continue to examine solutions to make prescription drugs more affordable for all Americans.”
Sen. Comer’s move came on the heels of the aforementioned February hearing “Bringing Transparency and Accountability to Pharmacy Benefit Managers” and adds further fuel to the fire of legislation like Sens. Maria Cantwell and Chuck Grassley’s bill “The Pharmacy Benefit Manager Transparency Act of 2022.”
4. FTC 2022 inquiry into PBMs
Back in June 2022, the Federal Trade Commission (FTC) launched an inquiry into the practices of PBMs amid growing outside pressure. The inquiry was built on a significant public record developed in response to the request for information about PBMs that the FTC launched on Feb. 24, 2022. By the time the inquiry was launched in June, the FTC had received more than 24,000 public comments.
From that, as Bio.News reported, “On April 18, the House Energy and Commerce Innovation, Data, and Commerce Subcommittee held a hearing on the Federal Trade Commission’s (FTC) budget for next year, where FTC members discussed the commission’s 6(b) study of the contracting practices of [PBMs].”
In response to Rep. Buddy Carter’s request for an update on the FTC’s work regarding the PBM study, FTC Chair Lina Khan responded that the commission is “in the process” of reviewing and hopes to share updates “in short order.”
“For Rep. Carter, investigating PBMs was a point of major priority as this request for the study was his first act upon being elected to Congress,” Bio.News reported.
5. Sen Wyden and Crapo release bipartisan framework to tackle PBMs
On the heels of the April 18 hearing, Senate Finance Committee Ranking Member Mike Crapo and Chair Ron Wyden announced their plan to release legislative framework to address PBMs within the Prescription Drug Supply Chain. The inception of the framework followed a Finance Committee hearing, “[PBMs] and the Prescription Drug Supply Chain: Impact on Patients and Taxpayers,” which took place on March 30 and examined PBM practices, as well as the impact on costs to patients and taxpayers.
As the Committee’s framework explains, “Ideally, all stakeholders participating in the supply chain, including PBMs, should have an incentive to prefer medications that deliver the best results at the lowest cost. Unfortunately, under the current system, higher drug list prices often translate into higher compensation for intermediaries.”
Also explained in the framework: “Furthermore, intermediaries in the healthcare system often earn revenue on both sides of the transactions in which they engage. For example, PBMs are paid fees both by health plans and the manufacturers with which they negotiate. These misaligned incentives and the multi-sided nature of the market can create potential conflicts of interest.”
The committee aims to identify potential policy solutions that will address these challenges, including:
- “Delinking PBM compensation from drug prices to align incentives for lower costs;
- Enhancing PBM accountability to health plan clients to drive cost-cutting competition and produce better choices for beneficiaries;
- Ensuring discounts negotiated by PBMs produce meaningful savings for seniors;
- Addressing and mitigating practices that unfairly inflate the prices patients and government programs pay for prescription drugs;
- Modernizing Medicare’s ‘Any Willing Pharmacy’ requirements to improve options and access for seniors; and
- Increasing transparency to foster a better understanding of how financial flows across the prescription drug supply chain impact government healthcare programs.”
6. The PBM Sunshine and Accountability Act
Most recently, in the House, Congresswoman Diana Harshbarger introduced the PBM Sunshine and Accountability Act on April 25. The bipartisan bill aims to establish new, public reporting requirements for PBMs, to ensure that patients, providers, and employers are able to make informed, cost-efficient, and value-based PBM choices.
The goals of the bill are to amend current laws to require PBMs to publicly report additional information to the Department of Health and Human Services (HHS), including:
- Aggregate dollar amount of all rebates, administrative fees, and other revenue the PBM receives from drug manufacturers and healthcare entities
- Highest, lowest, and total retained rebate percentages
- Post-adjudication payments or clawbacks that PBMs extract from pharmacies
“For far too long, PBM middlemen have exploited a lack of transparency and created conflicts of interest in ways significantly distorting competition at consumer expense—and where there’s mystery, there’s margin,” said Harshbarger. “My PBM Sunshine and Accountability Act will finally require PBMs to report critical financial information on their operations, which will enable patients and providers to see which PBMs are adding value, and which ones are printing their own money. This legislation will shine a bright light on the ways that PBMs avoid regulation and siphon off countless dollars from our supply chains, and equip policymakers to prevent these practices to save healthcare dollars.”
Co-sponsors of the bill include Representatives Abigail Spanberger, Mariannette Miller-Meeks, and Raja Krishnamoorthi.
“Patients and providers need greater transparency in the prescription drug market to ensure they are receiving the discounts and rebates they deserve,” said Krishnamoorthi. “I am proud to join my colleagues in introducing our bipartisan legislation to bring more accountability to the practices of pharmacy benefit managers, which will ultimately help bring down the costs of prescription drugs for Illinoisans and all Americans.”
Supporters of the bill lauded the representative’s efforts. “Patients need real savings now more than ever,” said Terry Wilcox, Co-Founder and CEO of Patients Rising. “This starts with bringing long overdue transparency to PBMs and their practices. Pharmacists and the patients they help deserve it.”