Lawmakers Continue to Challenge PBMs Through Legislation

Sen Ron Wyden (D-OR) introduced the C-THRU Act to regulate pharmacy benefit managers.

Pharmacy benefit managers (PBMs) have been scrutinized by patients, advocacy groups, and lawmakers over practices deemed by these groups to raise drug costs. However, PBMs have repeatedly said that their practices and tools help control spending.

Recently, multiple lawmakers have introduced legislation aimed at regulating PBMs to ensure that their practices truly are helping patients and not resulting in enormous profits for the companies. For example, the Prescription Drug Price Transparency Act (HR 1316), which was introduced by Rep Doug Collins (R-GA), would protect taxpayers and community pharmacists by demanding transparency in generic drug pricing.

Following in the footsteps of other legislators, Sen Ron Wyden (D-OR) introduced a bill that would require PBMs operating within Medicare to disclose rebates provided by pharmaceutical manufacturers and how much is actually being passed onto health plans, according to a press release from the United States Senate Committee on Finance, where Sen Wyden is a ranking member.

“Today is the first step of an effort to lift the veil of secrecy about prescription drug prices,” Sen Wyden said in the press release. “More and more, Americans are beginning to wonder whether prescription medicine will be available and affordable for their families, and there is little information about why these drugs are so expensive. This bill will shine a light on this opaque industry and promote competition to bring down the cost of prescription drugs.”

The Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act of 2017 would amend titles XI and XVIII of the Social Security Act to increase PBM transparency.

Currently, PBMs do not have to disclose their rebates, discounts, and price concessions, which makes it difficult to determine how much savings is being passed onto patients. The bill would ensure that this information becomes public on the websites for the Center for Medicare and Medicare Services.

Additionally, the C-THRU Act would increase the transparency of “price spreading,” which is the difference in payments received by pharmacies from a PBM, compared with payments received by PBMs from health plans.

After 2 years of reporting, the PBMs would be told the minimum percentage of savings that must be passed onto health plans in order to achieve greater savings by patients under the bill.

The C-THRU Act would also change the out-of-pocket structure for prescription drugs. Under the law, patients would pay for prescription drugs based on the negotiated price of the drug rather than the price the pharmacy pays, which is generally a higher, PBM-determined cost.

The National Community Pharmacists Association (NCPA) endorsed the bill, citing that PBMs need to become more transparent.

"NCPA agrees with Senator Wyden's goal for more transparency from PBMs. There's mounting evidence that PBM profits grow in lock step with—and contribute to—rising prescription drug costs. A big part of that problem is the manufacturer rebate revenue retained by PBMs, which is this intended focus of this legislation,” B. Douglas Hoey, RpH, MBA said in a press release. "In addition, it is critical to address head-on the direct and indirect remuneration (DIR) fees on pharmacies which lead to higher costs to Medicare and for beneficiaries. NCPA also calls for enactment of the bipartisan S 413 / HR 1038 to tackle this aspect of the drug pricing problem comprehensively.”

DIR fees are retroactive bills charged to pharmacies that can come many months after an initial transaction, and have been said by critics to have a negative impact on patients. Since the price of a prescription drug is changed after the patient has already paid their co-payment, they could be overpaying for some medications, which can be dangerous to beneficiaries who are likely to be on a fixed income.

"NCPA will continue to advocate for greater PBM transparency because it is vital to facilitating major changes to drug benefit management in the US,” Hoey said. “Namely, a better alignment of the interests of patients, plan sponsors and providers alike."

On the other side, the Pharmaceutical Care Management Association (PCMA) stated in a press release that the C-THRU bill will ultimately increase drug costs by incentivizing manufacturers and drugstores to conspire to increase prices.

“PBMs support the right kind of transparency that offers consumers and plan sponsors the information they need to make the choices that are right for them. However, this bill will increase premiums by undermining the tools employers, unions, and public programs, including Medicare, use to reduce prescription drug costs,” PCMA wrote in a press release. “The C-THRU Act would grant the kind of transparency that the Federal Trade Commission and economists say will raise costs by giving drug companies and drugstores unprecedented pricing power that could help them tacitly collude with their competitors.”

However, the Senior Care Pharmacy Coalition (SCPC), an advocate for long-term care pharmacies, retorted PCMA’s statements by saying that PBMs only support a certain type of transparency, and that the advocacy organization and PBMs put themselves ahead of patients’ needs.

“PBMs are under heavy scrutiny on both sides of the aisle due to their stubborn, blanket and unjustifiable resistance to transparency — and SCPC strongly supports Senator Wyden’s C-THRU bill as a way to lift the veil of secrecy surrounding PBM behaviors that result in higher costs to consumers and lower savings for the Medicare program,” said Alan G. Rosenbloom, president and CEO of SCPC. “Senator Wyden is precisely correct in his observation that ‘the public knows virtually nothing about whether PBMs are saving money for the consumer or pocketing it themselves.’”

With the recent increased scrutiny of PBMs, it is likely that the organizations will be facing additional legislation in the future.