New bill would crack down on PBM spread pricing, increase transparency
The bipartisan Pharmacy Benefit Manager Transparency Act of 2022 would empower FTC to hold PBMs accountable.
Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced the Pharmacy Benefit Manager Transparency Act of 2022 on May 24, which would make it illegal for PBMs to engage in “spread pricing.”
Spread pricing occurs when PBMs charge health plans and payers more for a prescription drug than what they reimburse to the pharmacy — and then keep the difference. 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.
Related: New PBM players banking on drug pricing transparency for success
The bipartisan legislation would empower the Federal Trade Commission (FTC) to increase drug pricing transparency and hold pharmacy benefit managers (PBMs) accountable for unfair and deceptive practices that drive up the costs of prescription drugs at the expense of consumers. It also would prohibit arbitrary clawbacks of payments made to pharmacies and require PBMs to report to the FTC how much money they make through spread pricing and pharmacy fees.
“I hear stories about rising drug costs all the time at my 99 county meetings, and middlemen pocketing consumer and taxpayer money is a big reason for those high costs,” Grassley, a ranking member of the Judiciary Committee, said in a statement. ”Pharmacy benefit managers and other intermediaries in the pharmaceutical supply chain must be held accountable for increasing the cost of health care in the United States. It is critical for Congress to direct the Federal Trade Commission to go after these arbitrary, unfair and deceptive practices while also establishing more transparency and accountability.”
“The increasing cost of prescription drugs has a devastating effect on the pocketbooks of American consumers,” Cantwell, chair of the Committee on Commerce, Science and Transportation, added via a statement. “PBMs are the middlemen in the prescription drug supply chain and it’s time for Congress to give the FTC the ability to shine a brighter light on any deceptive and abusive practices.”
The Pharmacy Benefit Manager Transparency Act has the backing of the National Community Pharmacists Association. “PBM insurers have manipulated our complex health care system so they can set their competitors’ prices; dictate their competitors’ reimbursements; use competitors’ data to steer patients to PBM-affiliated retail, specialty, and mail-order pharmacies; and limit where and what consumers can buy,” NCPA CEO B. Douglas Hoey, said in a statement. “There are plenty of PBM actions for policymakers and regulators to address in order to ease the havoc they have wreaked on patients and small business independent pharmacies.”
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.
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