Senate bill aims to crack down on how drug company ‘middlemen’ negotiate prices

It’s something many people have likely never heard of, but they play a big role in how much money you pay for prescription drugs.

They’re called Pharmacy Benefit Managers, also known as PBMs.

PBMs negotiate and manage drug benefits on behalf of health insurers.

Critics argue their practices are leading to higher drug costs for consumers.

Now a bipartisan bill in the Senate co-sponsored by Sen. Maria Cantwell (D-WA) and Sen. Chuck Grassley (R-IA) aims to crack down on alleged unfair practices by PBMs.

“We are looking at the mysterious middlemen in this,” said Cantwell during a Senate hearing about the proposal. “The systematic interference by PBMs in the drug supply chain is picking the pockets of independent pharmacies and driving up consumer costs.”

“Imagine a world where a cheaper product, yet equally effective, has a harder time selling,” said Grassley. “That’s the prescription drug industry.”

The Pharmacy Benefit Manager Transparency Act of 2023 would make it illegal for PBMs to take part in what’s known as spread pricing, according to the lawmakers behind the bill.

Spread pricing is when a PBM charges health plans more for a prescription drug than what they reimburse to the pharmacy and then pocket the difference.

The bill also requires PBMs to file a yearly report with the Federal Trade Commission (FTC) showing how they operate.

Lawmakers heard from a pharmacist who warned about how his customers were stuck paying more for a generic cholesterol medication due to PBM involvement.

“The PBM manipulated the patient co-pay to intentionally overpay the pharmacy, costing the patient an extra $500 dollars a year in out-of-pocket expense without the PBM contributing a penny to the transaction,” said Dr. Ryan Oftebro, owner of Kelley-Ross Pharmacy Group in Seattle, WA. “These patients would have been better off without using their insurance and that’s not right.”

The PBM industry is fighting back against the bill and alleges it does nothing to address the root cause of high prescription drug costs.

“S. 127 fundamentally misconstrues the role of pharmacy benefit companies and unfairly proposes to take away employers’ choice and flexibility in how they construct their pharmacy benefits to best fit the needs of their patient populations. PCMA would welcome the opportunity to work with the committee to advance policies that will address prescription drug affordability without undermining the parts of the system that have been proven to drive value for patients and employers,” said Pharmaceutical Care Management Association (PCMA) President and CEO JC Scott.

“Instead of promoting legislation that doesn’t achieve our shared goal of reducing patients’ costs, Congress should focus on solutions to increase, rather than constrain, competition in the prescription drug market as the most effective, time-tested way to drive down prescription drug costs. PCMA is calling on Congress to end big drug companies’ abuse of the patent system and of their pricing power, which is the fundamental cause of high prices,” said Kristin Bass, PCMA’s Chief Policy and External Affairs Officer.

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