Feb. 9, 2023

Federal PBM Reform in the Spotlight

As Senate Judiciary Takes Up Key Bill

The U.S. Senate Judiciary Committee is scheduled to lay out and discuss a key PBM regulation measure today (Feb. 9) as federal reform efforts continue to gain momentum.

The Pharmacy Benefit Manager Transparency Act of 2022 was introduced last May by Senators Maria Cantwell of Washington and Chuck Grassley of Iowa (right)and cleared the Senate Commerce Committee on a 19-9 vote on June 22. The bill never made it to the Senate floor for a vote, less due to opposition than scarce floor time remaining in the 2022 Senate. The bill was reintroduced as S127 by Cantwell and Grassley on Jan. 23 of this year.

The bipartisan legislation would make it illegal for PBMs to:

• Engage in spread pricing;
• Arbitrarily, unfairly, or deceptively reduce (claw back) any portion of a reimbursement already paid to a pharmacy; or
• Arbitrarily, unfairly, or deceptively increase or lower fees and reimbursements to a pharmacy to offset reimbursement changes under any federally funded health plan.

The bill also incentivizes transparency by stating that PBMs will be considered compliant with the Act if they:

• pass through 100% of price concessions to a health plan or payer;
• disclose the cost, price, and reimbursement of prescription drugs to each health plan, payer and pharmacy;
• Disclose all fees, markups, and discounts the PBM imposes on each health plan, payer and pharmacy; and
• Discloses the aggregate remuneration PBM receives from drug manufacturers, including any rebate, discount, administration fee, and any other payment or credit obtained or retained by PBM.

The bill also would require PBMs to annually report a variety of information to the Federal Trade Commission (FTC), including the aggregate amount of any (a) generic effective rate fee charged to each pharmacy; (b) DIR fees and any other price concessions charged to each pharmacy; and, (c) payment rescinded or otherwise clawed back from a reimbursement made to each pharmacy.

The FTC would have broad enforcement powers under the Act, including the power to assess civil penalties of up to $1 million for PBM violations.

The Senate Judiciary Committee convenes at 9 a.m. Eastern/8 a.m. Central this morning. The session might be televised on the CSPAN network as part of its Senate coverage-- check CSPAN2's Senate coverage tomorrow to see.

Federal Support Growing for Greater PBM Reform

Several prominent members of Congress have recently voiced support for taking a close look at PBM practices that affect payers, patients and community pharmacies. The issue is considered to be a growing Congressional priority for both parties.

U.S. Rep. Buddy Carter of Georgia, a pharmacy owner for 30+ years and one of independents' staunchest allies in Congress, recently told Roll Call that he and other lawmakers, including Democrats, will soon launch a bipartisan “Patient Access Caucus” to focus on issues affecting access to health care.

“That is going to be the first issue that we address: PBMs,” Carter said.

“If you’re going to have a serious discussion about prescription drug costs, certainly the PBMs, in the eyes of many, have actually increased the cost of prescription drugs to consumers,” said Rep. James R. Comer, R-Ky., chair of the House Committee on Oversight and Accountability. “We're concerned about a lot of the decisions being made by the PBMs, the lack of transparency by many of the PBMs, the vertical integration by many of the PBMs.” Comer said his committee would have hearings soon to address PBM issues.

"If Democrats focused more on why drugs’ list prices have increased so much instead of capping out-of-pocket costs in Medicare, we could have not only solved the problem for insulin but for other maintenance drugs that people have to take every day. And we can still do that,” said Rep. Brett Guthrie, R-Ky., who is considered the likely chair of the House Energy and Commerce Committee’s Health Subcommittee.

Meanwhile, the FTC continues its sweeping investigation of PBMs that it launched last year to scrutinize fees, clawbacks, reimbursement terms with pharmacies, patient steering and the impact of rebates on generic/biosimilar competition and patient costs.

In this changed landscape, it likely will be more challenging for PBMs to defend themselves in the Capitol. The nation's major health insurers could step into the fight: It is important to remember that Express Scripts is owned by Cigna, and OptumRx is a subsidiary of UnitedHealth Group. CVS Caremark is a subsidiary of CVS Health, which acquired Aetna in 2018. The insurance industry, represented in large part by the trade group America’s Health Insurance Plans, has more allies in Congress than do PBMs.

Roberti Global, our Washington lobby firm, continues to meet with key leaders in the House and Senate to gauge support for PBM reform and encourage cooperative efforts between supporters. Roberti has found that most, if not all, of the offices they visit acknowledge a need to at least investigate PBMs and require greater transparency and accountability, if not curb what many describe as abusive business practices.

Steven Irizarri, our chief liaison at Roberti, said the firm's interactions with members of Congress are identifying an ongoing need for independent pharmacists to educate members and their staffs on PBM issues, especially on how those issues affect patients and pharmacists' ability to serve them.

APRx and Roberti are in constant communication to strategize in advance of additional meetings in Washington and more planned visits to Congressional offices. American Pharmacies is finalizing the appointment of a multistate Federal Advocacy Advisory Panel that will provide policy input and help drive engagement with Congress in both district and Washington offices.

American Pharmacies strongly encourages all members to reach out to their U.S. representative and senators to start a dialog on the pressing need for PBM reform. Your involvement -- and your experiences and perspectives on these issues -- are critical.

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