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Lawmakers from both parties introduced a new bill Tuesday aimed at cracking down on the business practices of: Pharmaceutical supply chain intermediaries who has been widely accused of exaggerating prescription drug prices and harming American patients and pharmacies.
The legislation aims to ensure community pharmacies can provide care to patients enrolled in federal health care programs while receiving reimbursement in what is called a “fair and transparent” manner. Pharmacy Benefit Manager, or PBM. Under the Pharmacists Fight Back Act, seniors, government employees and active-duty military members and other patients covered by Medicare and Medicaid would see lower health care costs and more freedom in choosing which pharmacy to get their prescription drugs from. Fact sheet.
Reps. Jake Auchincloss, D-Mass., and Diana Harshbarger, R-Tenn., unveiled the bill before the House Oversight and Accountability Committee hearing About the tactics of drug middlemen on Tuesday. Executives at three of the largest PBMs – UnitedHealth GroupOptum Rx, CVS Healthcare markings and CignaExpress Scripts – will testify against allegations that they play a role in rising health care costs as federal scrutiny of their practices grows.
The new bill joins dozens of bipartisan efforts at the federal and state levels to reform PBMs, which negotiate rebates with drug manufacturers on behalf of insurance companies, large employers and federal health plans. These middlemen also create drug lists (also called formularies) that are covered by insurance and reimburse pharmacies for prescription costs.
But lawmakers and drugmakers alike argue that PBMs overcharged the rebate programs they negotiated, underpaid pharmacies and failed to pass on the savings from those discounts to patients. Auchincloss said these practices have allowed PBMs to capture $300 billion in revenue from being in the middle of the drug supply chain between manufacturers and patients.
At the same time, PBMs believe that drug companies should set high list prices for drugs, arguing that their strategies protect patients from high medical bills.
Last year, with bipartisan support, House and Senate committees advanced legislation targeting PBMs, and A proposal passed overwhelmingly House of Representatives in December. But momentum for the legislation has stalled since Congress excluded PBM reform from a massive government spending package earlier this year.
Meanwhile, the Biden administration has increased pressure on pharmacy benefit managers as Americans struggle to afford prescription drugs. The Federal Trade Commission is Plan to sue Caremark, Express Scripts and OptumRx, according to previous reports by CNBC.
Pedestrians walk past a CVS store in San Francisco, California, in November.
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The new bill would do some of the same things as earlier legislation, such as making some PBM business practices more transparent and prohibiting spread pricing, or charging plans more for drugs than they pay pharmacies.
But Auchincloss co-led another study. PBM Act The bill that passed the House last year said his new legislation was “bigger, more stringent” and focused on dispensaries. Tuesday’s announcement about the bill also called it “the most comprehensive PBM reform ever introduced at the federal level.”
“It tries to ask the question from a pharmacist’s perspective, ‘What is it that prevents pharmacists from thriving as small business owners and providing clinical and pharmacological advice to the patients they serve?'” Auchincloss told CNBC. “We are systematically addressing the barriers to that mission…This bill is about those pharmacists fighting back against corporate greed.”
Auchincloss noted that the bill proposes a new pharmacy reimbursement model that would largely revolve around the so-called national average drug acquisition cost of drugs, or Expansion. This metric measures the average price pharmacies pay to purchase drugs from manufacturers or wholesalers, based on invoice surveys.
“This will ensure that the actual cost of the goods is what the price is based on,” Auchincloss said, adding that the bill’s reimbursement model is most relevant to generic drugs rather than brand-name prescription drugs.
Pharmacies often use complex systems for payment rather than paying them directly based on how much they spend on the drugs. This model involves a multi-layered network of insurance companies, manufacturers, PBMs, and pharmacies, resulting in fees and markups that are obscured from the original cost of the drug.
Other efforts in the bill include requiring PBMs to share 80% of rebates with patients and banning some other practices. It would prohibit strategies such as requiring patients to buy brand-name drugs when cheaper generics are available, directing patients to PBM-affiliated pharmacies, and preclude any in-network pharmacy dispensing.
Harshbarger said in a statement that the bill would “enact much-needed reforms to stop fraud at independent pharmacies, make life-saving medications more affordable for patients, and implement solutions that save taxpayers money.”
