Senate Finance Committee Advances Bill Targeting PBMs

Senate Finance Committee Advances Bill Targeting PBMs
Senate Finance Committee Advances Bill Targeting PBMs

The Senate Finance Committee approved the Modernizing and Ensuring PBM Accountability Act Wednesday in a 26-1 vote. The bill would increase oversight of pharmacy benefit managers, which are often blamed for rising drug prices.

The bill has several provisions, including delinking PBM income from prescription drug prices under Medicare Part D, requiring accurate payments to pharmacies under Medicaid and banning spread pricing in Medicaid. The latter is when a PBM reimburses a pharmacy at a lower amount than what it charged the insurer and then keeps the difference.

“These targeted changes to Medicare and Medicaid are going to stop the infuriating games and steer America’s prescription drug market to a state of rationality where the incentives are always about lowering costs for the patients and the taxpayers,” said Senator Ron Wyden (D-Oregon), chairman of the committee, during the hearing on the bill.

Wyden added that PBM practices are outdated after a series of consolidations. The three largest PBMs (Express Scripts, OptumRx and CVS Caremark) control 80% of the marketplace. 

“Decades ago, the PBM served a role and the role was to assemble mountains of claims data and use bargaining power on behalf of insurance companies to negotiate with drug makers for lower prices,” Wyden said. “In recent years, these businesses have consolidated into mega corporations that dominate the market. The consolidation has allowed PBMs to adopt tactics and play games with their data that results in higher profits for themselves and higher costs for everybody else. Each year, the United States spends more than $4 trillion on healthcare and too much of that is frittered away on outdated middlemen practices.”

Senator Mike Crapo (R-Idaho), Senate Finance Committee ranking member, echoed Wyden’s comments.

“The resulting bill comprises a strong set of bipartisan, patient-focused proposals aimed at fueling competition, improving transparency and mitigating misaligned incentives in Medicare Part D and Medicaid,” Crapo said during the hearing.

The only one to vote against the bill was Senator Ron Johnson (R-Wisconsin), who argued that it would just add another layer of government control without removing others.

“I often describe our government as the ship of state with barnacles on the hull,” Johnson said at the hearing. “Now … the obvious solution would be to scrape the hull clean. What happens here in Washington is we just come up with another barnacle and stick it on that hull on top of the other ones. I’m happy to be convinced — and I’ll continue to work with everybody in the committee to convince me — that this is not just another barnacle and this will actually scrape a couple barnacles off that hull, which would be a good thing. But at this point, I’m just not convinced.”

The House Ways and Means Committee also voted to advance the Health Care Price Transparency Act, which includes action against PBMs as well. The Pharmaceutical Care Management Association (PCMA), which represents PBMs, came out against both bills.

“What problem is Congress trying to solve?” PCMA said in a statement. “If the goal is to lower drug costs for patients, taxpayers, and employers, these bills focused on pharmacy benefit companies and others approved this year by several committees, would not meet that goal. In fact, each bill would risk cuts to pharmacy benefits and increased drug costs.”

Several other bills addressing PBM practices have also been introduced in the Senate and House, though they will all eventually have to be combined.

Photo: Rawf8, Getty Images

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