The Senate Committee on Commerce, Science, and Transportation has recently passed the bipartisan Pharmacy Benefit Manager Transparency Act to increase transparency in prescription drug pricing and hold pharmacy benefit managers (PBMs) accountable for deceptive and unfair practices that drive up prescription drug costs. The bill was approved 18-9 and now heads to the full Senate for a final vote.
According to a preliminary estimate by the Congressional Budget Office, the legislation would reduce the deficit by $740 million over the next 10 years.
While pharmacy benefit managers (PBMs) were initially formed to process claims and negotiate lower drug prices with drug makers, today they administer prescription drug plans for hundreds of millions of Americans and three PBMs control nearly 80 percent of the prescription drug market.
They serve as middlemen, managing every aspect of the prescription drug benefits process for health insurance companies, self-insured employers, unions, and government programs. They operate out of the view of regulators and consumers — setting prescription costs, deciding what drugs are covered by insurance plans and how they are dispensed – pocketing unknown sums that might otherwise be passed along as savings to consumers, and undercutting local independent pharmacies.
This lack of transparency makes it impossible to fully understand if and how PBMs might be manipulating the prescription drug market to increase profits and drive-up drug costs for consumers.
This new legislation generally prohibits PBMs from engaging in certain practices when managing the prescription drug benefits under a health insurance plan, including charging the plan a different amount than the PBM reimburses the pharmacy.
The bill also prohibits PBMs from arbitrarily, unfairly, or deceptively (1) clawing back reimbursement payments, or (2) increasing fees or lowering reimbursements to pharmacies to offset changes to federally funded health plans.
Further, PBMs must report annually to the Federal Trade Commission (FTC) certain information about payments received from health plans and fees charged to pharmacies.
TSCL strongly supports this legislation and we want it to be passed by the full Senate very soon. This is one of the few bi-partisan pieces of legislation that Congress could pass this year and we will do all we can to see that it succeeds.