On Feb. 26, the House Energy & Commerce Committee held a hearing on Pharmacy Benefit Managers (PBMs) titled “An Examination of How Reining in PBMs Will Drive Competition and Lower Costs for Patients.”
PBMs act as middlemen between drug manufacturers, insurance companies, and pharmacies.
Curbing PBMs was a major point of bipartisan agreement during the 118th Congress. As a result, comprehensive PBM reform was initially included in the first bipartisan version of the Continuing Resolution (CR) at the end of last year. However, many policies, including the PBM reforms, were removed from the final version of the CR that was passed.
One of the most significant and impactful PBM reforms originally included in the CR was a ban on “spread pricing,” particularly within Medicaid. Spread pricing is when PBMs charge a health plan a higher amount than what is reimbursed to the pharmacy. As a result, this difference is usually charged to the patient in the form of high health insurance premiums and cost sharing. This raises the costs for patients and makes drugs unnecessarily expensive. Spread pricing can inhibit access to essential treatments – such as inhalers – for allergy patients.
Spread pricing was just one PBM reform initially included in the CR. Others originally included were:
- Requiring PBMs to disclose detailed drug spending data of group health plans.
- Ensuring 100% of negotiated drug rebates and discounts went to employers or health plans.
- Prohibiting PBMs from tying their compensation to a drug’s Medicare Part D price (or list price).
These measures were widely expected to save money for patients and thus make drugs more accessible.
Democrats expressed considerable frustration that these additional reforms were left out of last year’s end-of-year package. Republicans agreed that another attempt at passing PBM legislation is necessary in the 119th Congress.
Beyond this, the hearing echoed many of the PBM-focused hearings held last year. Lawmakers examined how PBMs’ business practices, such as spread pricing and vertical integration, harm competition. Vertical Integration is when one business buys other businesses crucial to the supply chain for their product or service. Another key concern was that independent pharmacies are frequently reimbursed less than major pharmacy chains for the same drugs.
One witness offered partial support for PBMs, arguing that drug manufacturers play a larger role in driving high drug prices, and adding more PBMs would increase market competition. However, many lawmakers appeared unconvinced by this argument.
Supporting PBM reforms remains an important advocacy priority for ACAAI’s Advocacy Council. Reining in PBMs will help ensure that allergy patients have access to life-saving drugs and other treatments. The Advocacy Council endorsed every major PBM reform bill considered during the last Congress and will continue to support similar legislation this year.
PBM reforms could be included in the budget reconciliation bill House Republicans are developing. However, those reforms would likely be limited to government payers such as Medicare and Medicaid because reconciliation bills generally cannot impact commercial health plans.
PBM reform remains one of the most bipartisan issues in health policy of the 119th Congress. The Advocacy Council will continue to monitor potential PBM reforms and ensure that we continue to represent your interests.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
