This year, multiple Congressional committees have been busy debating and drafting legislation targeting Pharmacy Benefit Manager (PBM) business practices and profits. PBMs are the “middlemen” between the doctor and the insurance company that determines which drugs are covered and which drugs require prior authorizations, making huge profits in the form of rebates from the pharmaceutical companies. The root of many of the practice problems we deal with each day, including payments for allergy shots, are driven by PBMs. These actions reflect broad bipartisan sentiment in Congress that PBMs are contributing to higher drug prices, as much as one-third of the total cost, and need to be regulated.
ACAAI has been supportive of lawmakers’ efforts to curb various PBM business practices that make it more difficult for patients to access their prescribed medications. These practices effectively make it more challenging for allergists to effectively manage their patient’s chronic condition.
While each Committee is taking its own legislative approach, several policy themes are common across the proposals. These include:
- prohibiting “spread pricing.1”
- increasing transparency requirements.
The College’s Advocacy Council has endorsed the following bills this year. These bills address problematic aspects of PBM practices. The bills:
- Limit efforts to curb access to important medications.
- Focus on increasing transparency for pricing practices through mandated reporting.
- De-link PBM compensation based on drug prices, incentivizing higher drug prices.
- Limit administrative fees.
- Ban spread pricing within Medicaid and Medicare Part D.
S. 2973, The Modernizing and Ensuring PBM Accountability (MEPA) Act, introduced by the Senate Finance Committee, would ban the use of “spread pricing” in the Medicaid program, prohibit PBMs from earning income based on manufacturer’s drug prices by requiring PBMs to instead implement a bona fide service fee for their services, and require the disclosure of important data to improve transparency for pharmacies participating in the Medicare Part D program. While the College believes that MEPA takes important steps to address PBMs’ role in increasing drug costs, the Advocacy Council’s endorsement urged the Senate Finance Committee to ban the practice of “spread pricing” for all health plans.
H.R. 5378, The Lower Costs and More Transparency (LCMT) Act, introduced by the House Energy and Commerce Committee, includes a proposal that would implement PBM transparency measures. One of these measures would require PBMs to semi-annually report to employers detailed data on prescription drug spending. The Government Accountability Office (GAO) would also be required to submit a report scrutinizing the practices of pharmacy networks of group health plans that are under common ownership.
H.R. 2880, the Protecting Patients Against PBM Abuses Act, and H.R. 5385, The Medicare PBM Accountability Act, both introduced by the House Energy and Commerce Committee, would restrict PBMs from engaging in abusive business practices and implement transparency requirements. Like the MEPA Act, PBMs would be prohibited from earning income based on drug prices, discounts, or rebates – but only if the PBM is under contract with a Medicare Part D plan. PBMs would also be required to disclose the total rebates received from drug manufacturers furnished by a health plan, the total administrative fees received from drug manufacturers, and the percentage of rebates received that were not furnished by a health plan. H.R. 5385 would implement further transparency measures for PBMs under contract with Medicare Part D.
Despite bipartisan support for these measures, none of these efforts have advanced to a vote on the House or Senate floor. However, the level of bipartisan support suggests at least some of these bills will advance in this Congress. The Advocacy Council will continue to advocate for these important measures in Washington to improve the accessibility of vital medications for our patients. Watch for a call to action in the future when we may need you to contact your Congressman and Senators.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
1Spread pricing is the PBM practice of charging payers like Medicaid more than they pay the pharmacy for a medication and then the PBM keeps the “spread” or difference as profit.