Key PBM reform bills advance in Senate, House committees
As Congress scrutinizes the pharmacy benefit manager industry, on Wednesday, the Senate Finance and House Ways and Means committees advanced legislation that would regulate PBM's control over drug prices.
Key committees in both houses of Congress on Wednesday voted to advance legislation targeting the actions of pharmacy benefit managers.
The Senate Finance Committee, which has jurisdiction over Medicare and Medicaid, overwhelmingly passed the Medicare PBM Accountability Act. The bill would establish new requirements for PBMs to submit annual reports to Medicare drug plans, disclosing price negotiations and rebate information that affect what seniors pay in premiums and co-pays. With six PBMs now controlling 95% of the private market, enhanced transparency around how PBMs are delivering and paying for prescription drugs would help Medicare drug plans select PBMs that best serve the needs of beneficiaries, lowering costs for seniors and taxpayers, said Catherine Cortez Masto, D-Nev., who sponsored the bill.
“I will continue working to stop these companies from squeezing our families by passing this commonsense bill and getting seniors on Medicare the best possible deal on their prescription drugs,” she said.
The legislation also would ban spread pricing, which occurs when a PBM charges Medicaid more than it pays for prescription drugs. Additional proposals that didn’t make it into the bill could be added during the August recess, according to Committee Chairman Sen. Ron Wyden, D-Ore., and ranking member Sen. Mike Crapo, R-Idaho.
“The incentives of PBMs are just wrong,” Wyden said. “They win when prices are higher, not lower. Today’s proposals will flip that on its head.”
The U.S. spends more than $4 trillion annually on health care, he said, and too much of that is being “frittered away on outdated middlemen practices.”
Pharmaceutical manufacturers and PBMs blame each other for the high cost of prescription drugs, with the PBM industry saying its role is misunderstood. PBMs argue that they can negotiate with insurers and manufacturers for lower drug costs, secure larger discounts for medications and pass the savings on to insurance plans, resulting in lower premiums for consumers.
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On the other side of the Capitol, the House Ways and Means Committee voted along party lines, 25-16, to pass the Health Care Price Transparency Act of 2023, which requires PBMs to disclose to employers information about their workers’ drug claims and out-of-pocket expenses.
The bill will:
- Provide key patient protections by promoting transparency and use of health insurance pricing information.
- Codify an existing rule that health insurers are already complying with while strengthening transparency.
- Mandate price transparency requirements via a patient-specific transparency tool.
- Implement a requirement to make machine readable files for out of network rates, in-network rates, and drug prices public.
“Health insurance is one of the biggest expenses for millions of American employers and their workers and coverage details are hard to come by and even harder to understand,” said Ways and Means Committee Chairman Smith. “This bill empowers small businesses and families to more easily compare health care costs and understand their benefits.”
The separate bills in the House and Senate now must be combined into one floor-friendly package.