Sen. Chuck Grassley (R-Iowa), a senior member of the Senate Judiciary and Finance committees, and Maria Cantwell (D-Wash), chair of the Senate Commerce, Science and Transportation Committee, are continuing to press for transparency and fairness in the prescription drug supply chain. They partnered on several efforts to hold pharmacy benefit managers accountable for opaque and often deceptive practices that contribute to high drug prices for consumers. Now they’re reintroducing a pair of bills to continue their work.
“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.
“For too long, Americans have been left in the dark while PBMs – the mysterious middlemen – manipulate prescription drug prices. We need to hold PBMs accountable for skyrocketing drug prices. With these bipartisan bills, I’m continuing to fight for accountability and transparency in the drug market so we can shine a light on unfair practices and make sure patients get a fair deal on the medications they need,” Cantwell said.
Prescription Pricing for the People Act (S. 113)
This bill, sponsored by Grassley and co-led by Cantwell, requires the Federal Trade commission (FTC) to examine the effects of consolidation in the PBM industry on pricing, as well as other potentially abusive behavior by PBMs. The bill instructs the FTC to provide policy recommendations to Congress to improve competition and protect consumers. While the FTC has initiated a 6(b) study into PBM business practices, it is important they conduct a thorough and timely study of the pharmaceutical supply chain.
The Prescription Pricing for the People Act is also cosponsored Sens. Marsha Blackburn (R-Tenn.), Richard Blumenthal (D-Conn.), Thom Tillis (R-N.C.), Tommy Tuberville (R-Ala.), Mike Braun (R-Ind.), Shelley Moore Capito (R-W.Va.) and James Lankford (R-Okla.).
Pharmacy Benefit Manager Transparency Act (S. 127)
This bill, sponsored by Cantwell and co-led by Grassley, bans deceptive unfair pricing schemes, prohibits arbitrary claw backs of payments made to pharmacies and requires PBMs to report to the FTC how much money they make through spread pricing and pharmacy fees.
The Pharmacy Benefit Manager Transparency Act is also cosponsored by Sens. Cindy Hyde-Smith (R, Miss.), Mike Braun (R-Ind.) and Jerry Moran (R-Kansas), Thom Tillis (R-N.C.) and Shelley Moore Capito (R.-W.Va.).
“The Biotechnology Innovation Organization (BIO) applauds Senators Maria Cantwell (D-WA), Chair of the Committee on Commerce, Science and Transportation and Chuck Grassley (R-IA), Ranking Member of the Judiciary Committee, for introducing the Pharmacy Benefit Manager Transparency Act of 2023 that would increase transparency and authorize the Federal Trade Commission (FTC) to hold pharmacy benefit managers (PBMs) accountable for unfair practices that harm patients,” the Biotechnology Innovation Organization said.
David Balat, Director of the Right on Healthcare Initiative at the Texas Public Policy Foundation, wrote, “Pulling Back the Curtain on Pharmacy Benefit Managers” discussing the importance of the bill.
“The Autoimmune Association applauds the Senate, especially Senators Cantwell (D-WA) and Grassley (R-IA), calling for transparency on the practices of pharmacy benefit managers. We are hopeful that PBMs will begin to understand how some of their protocols impact the patient community. The millions of autoimmune and chronic diseases patients may need not realize that PBMs receive large discounts or rebates in exchange for placement on an insurer’s formulary, and there is no expectation that PBMs disclose these rebates or pass the savings on to patients. PBMs’ role in healthcare is supposed to unlock value and cost savings. However, in practice, PBM policies foster many issues plaguing the US healthcare system. We are hopeful this legislation will shed light on the practices of PBMs, thus ensuring they become patient-centric,” said Quardricos Driskell, Vice President of Public Policy and Government Affairs for the Autoimmune Association.
“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 populations. We’re grateful to Sens. Cantwell and Grassley for continuing fighting to pull back the curtain on PBMs and push for FTC review of anticompetitive PBM practices. Policymakers, including those at the FTC, must act with urgency and ignore the mega-PBMs’ predictable attempts to slow down progress. For the sake of patients and independent pharmacies, reforms can’t come soon enough,” said Anne Cassity, Senior Vice President of Government Affairs at the National Community Pharmacists Association.
“Senator Cantwell reintroducing bipartisan legislation to shine the light of transparency on the murky underworld of PBMs is more critical than ever. The top PBMs use their inordinate market leverage to delay and even deny patients their cancer medications, lowball payments to pharmacists resulting in pharmacy closures, and fuel drug costs higher for all Americans. The Senator’s leadership is so critical in stopping the destructive influence of PBMs,” said Ted Okon, Executive Director of Community Oncology Alliance.
About Pharmacy Benefit Managers
PBMs were initially formed in the 1960s to process claims and negotiate lower drug prices with drug makers. Now, PBMs administer prescription drug plans for hundreds of millions of Americans.
Today, three PBMs control nearly 80 percent of the prescription drug market. They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers and undercutting local independent pharmacies. This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.
Some PBMs have been known to engage in “spread pricing” in which a PBM charges a health insurance plan more to process a prescription than it reimburses the pharmacy, keeping the difference – the spread. For example, when a pharmacist fills a prescription, a PBM handles the process, informing the pharmacy it will be reimbursed $90. The PBM then charges the health insurance plan $100 for processing the same prescription. The spread of $10 is pocketed by the PBMs.
In some cases, the pharmacy is reimbursed below its cost, driving independent pharmacies out of business, creating pharmacy deserts and increasing costs for health plans that can result in higher premiums. PBMs can also practice unfair claw backs, retroactively rescinding reimbursement payments made to pharmacies based on arbitrary guidelines and evaluations.
For years, Grassley has been working to hold PBMs accountable. In 2018, he requested the FTC to assess pharmaceutical supply chain intermediaries. As chairman of the Senate Finance Committee, Grassley and then-Ranking Member Ron Wyden (D-Ore.) called five PBM executives to testify before the committee in 2019. The bipartisan Prescription Drug Pricing Reduction Act contains dozens of accountability and transparency provisions to hold the pharmaceutical industry accountable, including PBMs. Grassley is still committed to passing these provisions into law. In 2021, Grassley and Wyden released a two-year bipartisan investigation into insulin price gouging. In 2020, Grassley led a bipartisan letter urging the FTC to complete its investigation into PBMs to shine light on drug pricing practices.